A A f THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW THE LAW RELATING TO BUILDING AND LOAN ASSOCIATIONS WITH FORMS AND SUGGESTIONS BY WM. W. THOENTON AUTHOR OF "GIFTS AND ADVANCEMENTS," "LOST WILLS," "RAIL- ROAD FENCES AND PRIVATE CROSSINGS," ETC. AND FRANK H. BLACKLEDGE OF THE INDIANAPOLIS BAR ALBANY, N. Y. MATTHEW BENDER 1898 T3974 b COPYEIGHT. 1898, By MATTHEW BENDER. ft PREFACE. The rapid growth of building and loan associations throughout the country has been attended with numerous and important decisions of the courts affecting them. It is the purpose of this work to record, as far as possible, the most recent information upon the subject, and to give a succinct and fairly comprehensive statement of the princi- ples settled by the decisions, as they may affect the methods and management of such associations, as well as their powers and duties, rights and remedies, not only with reference to members, but as to all persons interested therein. The many cases in this country and England have been critically examined, and all sources of information sought. The authors have made use, in the appendix, of much of Mr. Scratchley's work on building societies, a work but little known in this country. It is believed that a practical building association worker will find many useful hints and aids in this appendix. The authors have also thought it best to add the descriptions of the many plans in use in this country as embodied in the annual Report of the U. S. Commissioner of Labor for 1893. Wm. W. Thornton, Frank W. Blackledge. Indianapolis, August 1, 1898. &678ZQ TABLE OF CONTENTS. Preface Table op Cases. CHAPTER I. HISTORICAL. REVIEW. SEC. 1. Chinese Building Associations 1 2. Early English, Scottish and American Building Associa- tions 3 CHAPTER II. GENERAL DESCRIPTION OF BUILDING ASSOCIATIONS. 2. Definition 5 4. Favorably received by the Courts 6 5. General Scope and Methods of Association 6 6. Benefits Derived from the Plan of Building Associa- tions . . . , 7 7. Terminating Plan 8 8. Serial Plan • • • 9 9. Permanent Plan 10 10. Paid up and Prepaid Stock 11 11. Bowkett Societies 12 12. Starr-Bowkett Societies 16 12.a. Dayton or Ohio Plan 17 13. Concerning Methods of Business 18 CHAPTER III. INCORPORATION. 14. Legislature Must Create 20 15. Special Legislative Act 20 16. Validity of Special Charter 22 17. Amendments of Special Charter 23 18. Incorporation by Court 25 19. Incorporation by Articles of Association, Validity of Stat ute 25 20. The Charter 20 iii IV TABLE OF CONTENTS. PAGE Sec. 21. When Life of Corporation Begins 20 22. Substantial Compliance with Statutes necessary 27 23. Claiming More than Allowed by Statute 27 24. Specifying Powers 28 25. Place of Business 28 26. Amendments of Articles 28 27. Recording Articles 29 28. Name 30 29. Banking Powers 30 30. Irregular and De facto Corporations 31 31. Estoppel to Deny Corporate Existence 33 32. Foreign Building Associations 35 CHAPTER IV. MEMBERSHIP. 33. Acquisition 36 34. Who may acquire Membership 38 35. Infants 38 36. Married Woman 39 37. Status of Husband 39 38. Personal Representatives continuing Membership — Will 41 39. Heirs Succeeding to Member's Rights 43 40. Corporations as Stockholders 43 41. Subscription for the Purpose of Securing Loan 43 42. Depositors as Members 44 43. Society may be Estopped to Deny Membership 44 44. Person Estopped to Deny Membership 45 45. Evidence of Membership 45 46. Inspections of Books 46 CHAPTER V. GOVERNMENT OF BUILDING ASSOCIATIONS. 47. Repository of Supreme Power 49 48. Place of Holding Meetings and Doing Business 49 49. Assembling for a Corporate Election — Notice 51 50. The Quorum 53 51. Right to Vote 54 52. CondUcI of an Election 55 . Number of Votesa Stockholder may Cast 57 CHAPTER VI. II I III; POWERS AM) LIABILITIES. 54. Usual Officers 59 TABLE OF CONTENTS. V PRESIDENT. PACE SEC. 55. President's Election — Resignation 60 56. Proving President's Official Character 60 57. Power to Bind Association 61 58. Acts in Manifests Violation of his Duty 61 59. Acting for Another or for Himself 62 60. Implied Powers — Two Theories 62 61. Proof of Power to Act 66 62. Custom, Usage or Habit of Acting Enlarging his Powers 67 63. How he should Execute Contracts 67 64. Discharging Duties of Other Officers 68 65. Declarations and Admission 68 66. Notice to President on Effecting Corporation 69 67. Liability 69 68. Compensation 70 VICE-PRESIDENT. 69. Nature of Office 71 SECRETARY. 70. Status 72 71. Length of Office 72 72. Custodian of Seal 72 73. Keeper of Corporate Records 72 74. Medium of Communication with the Public 73 75. Power to Bind Corporation 73 76. Notice to. When not Binding on Corporation 75 77. Transfers of Stock. 76 78. Liability on Bond 76 79. Compensation 78 TREASURER. 80. Elections — Status— Duties , 79 81. Power to Contract for Association 80 82. Settlement of Debts — Release of Claims 81 83. Power to Bring Suit or Confess Judgment 81 84. Liability on Bond 81 ATTORNEY. 85. Appearance of Association by Attorney 83 86. Who may Employ 84 S7. Retainer and Authority 84 ACTUARY OR SURVEYOR. 88. Officers 86 yi TABLE OF CONTENTS. DIRECTORS. PAGE Sec. 89. Essential to Association— Tenure of Office 86 90. Election 88 91. Right to Vote at an Election 90 92. Proof of Acceptance of Office — Resignation 91 93. De Facto Directors, and the Validity of their Acts 92 94. Must Act Together 93 93. Individual Director's Powers 94 96. Voting by Proxy 94 97. Majority Rule— Quorum 95 98. Presumptions Concerning Acts of Board 96 99. Ratification of Act Performed by Less than Majority. . . 97 100. Board Contracting with One of its own Number 98 101. President Counts or a Director 98 102. Accidental Meetings 98 103. Meetings Outside of State 99 104. Board Must be Duly Assembled— Notice 99 105. Directors Cannot Delegate Powers 100 106. Directors' General Powers. ... 101 107. General Obligations of Directors — Liability 104 108. Contracts with Corporation 105 109. Liability of Directors 107 110. Liability in Particular Instances of Building Associa- tions 109 111. Association may Sue its Director for Losses Incurred. . . 114 112. Liability of Directors to Creditors 114 113. Director's Compensation 117 TRUSTEES 114. Nature of Office 119 CHAPTER VII. BY-LAWS. HULKS AND REGULATIONS. 115. Definition of a By-law 120 110. Differs from a Resolution 121 117. Differs from a Regulation or Rule 121 118. A Law for the Members of the Association 122 119. By-laws are a Contract between a Building Association and its Members 122 120. Members Conclusively Presumed to Know By-laws L23 121. Formalities bV<|uire 851. Cannot Evade Liability by Transfer of Stock .... 377 852. Insolvency Intervening after Notice of Withdrawal Given 378 ::"..:. Members Who Eave Withdrawn 380 854. Withdrawal Members Preferred to Those Remaining by RllleS of Society 382 TABLE OF CONTENTS. xiii PAGE SEC. 355. Borrowing Members Equally Liable with Unadvanced Members 386 356. Borrowing Member Equally Liable with Unadvanced Members, Continued 389 357. Advanced Shareholder Ceasing to be Member of Society — Paid-up Stock 394 358. Preference Shareholder 398 359. Amended Rules Imposing Liability 398 360. Liability of Borrower on his Note and Mortgage 399 361. Liability of a Minor or Married Woman to Contribute to Losses 403 362. Liability of Deceased Member's Estate to Contribute to Losses ... 403 363. Outside Creditors Paid First 404 364. Director Postponed to Stockholders 405 365. Subrogation of Shareholder having Advanced Shares. . . 406 CHAPTER XVIII. POWER TO BORROW" MONEY. 366. Original Plan of Building Associations 407 367. English Cases Prior to 1874 407 368. No Rule of the Society Empowering Trustees to Borrow Money 409 369. Rule Placing no Limit on Amount to he Borrowed 410 370. Subrogation when Loan Illegal 413 371. Society Cannot Exceed its Rules in Borrowing 413 372. English Statutes of 1874 414 373. Personal Liability of Directors 415 374. Power of Directors to Bind Individual Members of the Society 416 375. American Cases 416 376. Overdrafts — Deposits 421 377. Rights of Borrowers on Distribution of Assets 423 378. Lenders Liable to Refund Society's Moneys Received in Reduction of Debt 423 379. Postponement of Depositor's Right of Action — Available Balance 424 CHAPTER XIX. TAXATION. 380. Mortgages 426 381. Tax on Stock 427 382. Payment into State Treasury — Inter-State Commerce. . . 428 383. Exemptions 428 384. Covenant to Pay Taxes 430 XIV TABLE OF CONTENTS. CHAPTER XX. DISSOLUTION — RECEIVER. PAGE Sec. 385. Insolvency as a Ground for the Appointment of a Re- ceiver 431 386. Who may Demand a Receiver for an Insolvent Building Association 433 387. Right of Member to Ask for Receiver when Shares Reach Par Value 434 388. Mortgages not Assets for the Purpose of Determining the Solvency of the Association 435 389. Effect of Society Reaching Limits of its Corporate Ex- istence 436 390. Dissolution by Agreement 436 391. When Abandonment of Corporate Existence may be In- ferred 438 392. Forfeiture of Franchise 438 393. Suit to Wind Up 439 394. Liability of Member for Payment of Dues and the Like after Association Suspends Operations 440 395. Apportioning Profits in Serial Association — Estoppel 442 396. Distribution of Assets 443 397. Effect upon Mortgages or Loans 448 CHAPTER XXI. MISCELLANEOUS. 398. Introduction 449 399. General Powers 449 400. Power to Hold Real Estate — Leasing 450 401. Power to Build Houses 452 402. Mechanic's Lien 452 403. Seal 453 404. Suits 453 405. Expense Fund — Withdrawals 454 406. Unincorporated Associations 455 407. Miscellaneous 455 408. Assignment for Benefit of Creditor 456 409. Bankruptcy Law of 1898 458 410. War KVvenue Law — Stamps 458 411. To what Companies Revenue Law Applies 459 II.'. W'liai [n vestments Exempt from War Tax 459 LIS. Power to Purchase Real Estate 459 APPENDIX I. I'AK'l I. On Benefit Societies 461 Chapter [.— 462-470 CHAPTER II.— On the Nature of the Operation of Com- pound [nteresl 471-487 TABLE OF CONTENTS. XV PAGE Chapter III. — On Benefit Building Societies as Originally Constituted 488-506 Chapter IV. — On Permanent Benefit Building Societies. . 507-518 Chapter V. — The Practical Management of a Benefit Building Society 519-528 Chapter VI.— The Balance Sheets of Benefit Building Societies 529-540 Rules for a Permanent Benefit Building Society 541-575 Scratchley's Form of Account Books 576-586 APPENDIX II. Premium Plans 589-610 Plans for Distributing Profits 611-636 Withdrawal Plans 636-651 APPENDIX III. By daws of a Permanent Association 653-664 APPENDIX IV. General Legislation Relating Especially to Building and Loan Associations 665-914 Index 915-950 TABLE OF OASES. PAGE Abbott v. Building Association, IDel. (Pa.) 397 428 Abbott v International Build- ing and Loan Association, 23 S. W. Hep. 629 ; 86 Tex. 467 ; 46 Amer. & Eng. Corp. Cas. 508 268 Abbott v. International Build- ing and Loan Association (Tex.), 25 S. YV. Rep. 620. . . 258 Abbott v. Omaha Smelting, etc., Co.. 4 Neb. 414 26 Aberdeen R. R. Co. v. Blaikie, 1 Macq. H. L. (Sc.) 461 ; s. c. 1 Pat, App. (Sc.) 119 105 Adams v. Crosswood Printing Co., 27 111. App. 313 65 Addison v. Lewis. 75 Va. 701.. 106 Agricultural Bank v. Burr, 24 Me. 256 162, 163 Albany, etc., R.R.Co.v. McCor- mick, 10 Ind. 499; s. c. 71 Am, Dee. 337. 37 Albion Mutual Permanent Ben- efit Building Society, In re, L. R. 43 Oh. Div. 410, note. . 391 Albright v. Lafayette Building and Saving Association. 102 Pa. St. 411 25, 27, 33, 235 Alexander v. Worman, 3 L. T. (N. S.) 477; s. c. 6 H. & N. 100 ; 30 L. J. Exch. 198 113 Allen v. American Building and Loan Association, 49 Minn. 544; s. c. 52 N. W. Rep. 144 ; 40 Amer. & Eng. Corp. Cas. 144 201 Allen v. Hill, 16 Cal. 113 ..... . 54 Allen v. Pegram, 16 la. 163 140 Allemania Loan and Building Association v. Mueller, 8 Wkly. L. Bull. 97. . .261, 270, 272 Allemong v Simmons, 124 Ind. 199 ; s. c. 23 N. E. Rep. 768. . 94 All Saints Church v. Lovett, 1 HallN. Y. 191 31 Almon v. Busch, R. E. D. (N.S.),362 75 PAGE Almon v. Fairbanks, 10 N. S. 407 33, 261, 322 Alpena National Bank v.Green- baum, 80 Mich. 1; s.- c. 44 N. W. Rep. 1123 61, 62 Ambition Building Society. In re, (1896) 1 Cli. 89 ; s. c. 65 L. J. Ch. 113; 73 L. T. 508; 44 W. R. 141 350 Amer National Bank v. Orient- al Mills, 17 R. I. 74; s. c. 23 Atl. Rep. 795 163 Amer v. Union Building and Loan Association, 50 N. J. Cb. 170 ; s. c. 24 Atl. Rep. 552 321, 434 American Building and Loan Association v. Mordock, 39 Neb. 413; s. c. 58 N. W. Rep. 107 325 American Building and Loan Association v. Rainbolt, 48 Neb. 434. 476 ; s. c. 67 N. W. Rep. 493 152. 153, 323 American, etc., R. R. Co. v. Miles, 52 111. 174 117 American Homestead Co. v. Linigan, 46 La. Ann. 1118 ; s. c. 15 So. Rep. 369 250, 455 American Insurance Co. v. Oak- ley, 9 Paige, 496 ; s. c. 36 Am. Dec. 561 64, 84 American Railway Frog Co. v. Haven. 101 Mass. 398; s. c. Am. Rep. 377 51 Amesburv v. Bowditeh, etc., Insurance Co., 6 Gray, 596. . 135 137 Anderson v. Cleburne Building and Loan Association (Tex. ) . 16 S. W. Rep. -JOs 282 Anderson v. Nicholas. 28 N. Y. 600 165 Anderson, etc.. Association v. Thompson, 88 Ind. 405 200 Anthracite Saving Fund v. Cake. 2 Leg. Rec. Rep. 172. . 174 Anthracite Building and Loan xvii XV111 TABLE OF CASES. PAGE Association v. Lyons, 2Kulp, (Pa.) 409 284 Anson, In re, L. R. 30 Ch. Div. 434 ; s. c. 34 W. R. 143 ; af- firming L. R. 29 Ch. Div. 182; s. c. 54 L. J. Ch. 493; 52 L. J. (N. S.)406; 33 W. R. 575 416 Appeal of Callahan, 124 Pa. St. 138 ; s. c. 16 Atl. Rep. 638 ; 46 Leg. Int. 200 : 23 W. N. Cas. 233; 19 Pitts. L. Jr. 411 322 Appeal of Hammond, 123 Pa. St. 503; s. c. 16 Atl. Rep. 419....: 105 Appeal of Mechanics and Work- ingmen's Building Associa- tion (Pa.), 7 Atl. Rep. 728; 6 Cent. Rep. 580 351 Arapahoe Cattle, etc., Co. v. Stevens. 1 3 Colo. 354 ; s. c. 22 Pac. Rep. 823 104, 123 Archer v. Am. Water Works, 50 N. J. Eq. ; s. c. 24 Atl. 508 164 Archer v. Baltimore, etc., Ass'n (AY. Ya.),30S.E. Rep. 241 - 288 Archer v. Harrison, 7 De G. Mac. & G. 404 ; s. c. 3 Jur. (N. S.) 194 ; 21 J. P. 515 192 194. 360. 381 Ardesco Oil Co. v. N. A. Oil, etc., Co., 66 Pa. St. 375 457 Argus Printing Co., In re. I X. I). 434 : s. c. 12 L. R. A. 781 ; 9 Rail. & Corp. L. J. 347; 26 Am. St. Rep. 6:;:;: 18 X. \Y. Rep. 347... 89, 90, 157, 169 Arkens \ . Rouse, 26 Ohio L. J. 221 62 Armitage v. Walker, 2 Jur. (X. S.)13; 26 L.T. 182; '2 Kay & J. 211 ; 20 .1. P. 53 335, 362 Arm. v. Conant, 36 Yt. 744... 99 rong v. Karshner, I i oi,i., si. 276 ; s. c. 24 N. E. Rep. 897 153 A rnison v. Smith. L. R. II < !h. Div. 348 L15 Arnold v. Ruggles, I R. I. 165. IK) Am. i hi v. Suffolk Bank, :, Barb. 124 158 \ bui v R. W. Co. v. Richie, 7 E. «S I. \pi'- 653 450 Ashton \. Dashaway Associa- tion, -I Cal. 61 : s. c. 22 Pac. Rep. 660; 7 L. R. \. 809 ... L17 uelol R. K. Co. v. Eliot, 51 I. 897 51 PAGE Ashurst Appeal, 60 Pa. St. 290 107 Association v. Kribs, 7 Leg. and Ins. Rep. (Pa.) 21.. 169, 198 Association v. Reid, 3 Phila. 345 ; s. c. 16 Leg. Int. 157. . . 259 Association v. Wall, 7 Phila. 189 203, 307 Atkins v. Gamble, 42 Cal. 86 ; s. c. 10 Am. Rep. 2S2. . . .162, 165 Atkinson v. Atkinson, 8 Allen, 15 163 Atkinson v. Bradford 3d Equit- able Building Society, 25 Q. B. Div. 377 ; s. c. 59 L. J. Q. B. 360 ; 62 L. T. 857 ; 38 W. R. 630 325, 425 Atlantic Mutual Fire Insurance Co. v. Sanders, 36 N. H. 252 52, 97 Atlantic, etc., R. R.Co.v. John- son, 70 N. C. 348 31, 92 Atlantic Delaine Co. v. Mason, 5R. I. 463 53 Atlas Bank v. Gardner, 8 Biss. 537 92 Attaway v. Third National Bank, 93 Mo. 485 ; reversing 15 Mo. App. 578 104 Attorney-General v. Abbott, 154 Mass. 323; s. c. 28 X. E. Rep. 346; 13 L. R. S. 251.... 95 Attorney-General v. Clarendon, 17 Ver. 491 90 Attorney-General v. Great Eastern Ry. Co., 5 App. Cas. 481 ! 450 Attorney-General v. Houchett. 42 Mich. 436 27 Attorney-General v. Lormer, 59 Mich. 157 28 Attorney-General v. Oakland (',.. Bank, 1 Walk. Ch. Mich. 90 50 At wood v. Dumas, 149 Mass. 167; s. c. 21 X. E. Rep. 236.. 328 337, 345, 445 At wood v. West Roxbury, etc., Bank, 156 Mass. 166 ; s. c. 30 X. E. hep. 558 328, 345 AuM v. Clasgow Working Men's B. S., 12 App. Cas. lit; : s. c. 56 L. J. P. C. 57 ; 56 L. T. 756; 35 W. R. 632.. 130 296, 330, 341, 380 Aurora. etC.R.R. Co. v. I.aw- renceburg, 56 End. 80 32 Austin Case, L. R. 3 Eq. 135.. 92 A w a It v. Eutaw I luilding As- sociation, :;i Rid. 435 265 Ayre's Case, 25 Beav. 513 153 TABLE OF CASES. XIX PAGE Avres v. French, 41 Conn. 142 165 Babcock v. Middlesex, etc., Co., 28 Conn. 302 180, 184 Bacon v. Mississippi Insur- ance Co., 31 Miss. 116 63 Baer v. Hudson, etc., Associa- tion. 75 Hun, 419; s. c. 56 N. Y. St. Rep. 760 ; 27 N. Y. Supp. 102 337 Baliia. etc., R. R. Co., In re, L. R. 3 Q. B. 584 168 Bailey, Ex Parte, 5 D. G. Mac. &G., 380; s.c. 18 Jur. 988; 23 L. Bank 36 83 Bailey v. Champlain, etc., Co., 7? Wis. 453; s.c. 46 N. W. Rep. 539 156 Baird v. Bank of Washington, US. &R. 411 92 Baker's Appeal, 108 Pa. St. 510 ; s. c. 56 Am. Rep. 231 157 Baker, Ex Parte, 6 Wend. 509. 54 Baker v. Harpster, 42 Can. 511 ; s. c. 22 Pac. Rep. 415 106 Baker v. Leighton Lea Ass'n, 46 N. Y. Supp. 35 52 Baker v. Marshall. 15 Minn. 177 165 Baker v, Neff, 73 Ind. 68. . . . 30, 32 Baldwin v. Canfield, 26 Minn. 43 94 Ballon v. Manhattan, etc.. Co., 19 Misc. Rep. 698 ; s. c. 45 N. Y. Supp. 109 157, 337 Baltimore Permanent Building and Land Society v. Taylor (In Md.), 41 Md. 409 231, 247 Baltimore B. & L. Ass'n v. Titlow, 19 Pa. C. C. 518. . . 35, 286 Baltimore, etc., R. R. Co. v. Wilkinson. 30 Md. 224 121 Baltimore City Passenger R. R. Co., v. Sewall. 35 Md. 238 ; s. c. 6 Am. Rep. 402 166 Bambrich v. Campbell, 37 Mo. App. 4fi0 63 Banet v. Alton, etc.,R. R. Co., 13 111. 504 25 Bank v. Cook, 38 Ohio St. 412. 67 Bank v. Hill, 56 Me. 385 ; s. c. 96 Am. Dec. 470 108 Bank v. Lannier, 11 Wall. 369 134 Bank v. Rutland, etc., R. R. Co., 30 Vt. 159 101 Bank of Alabama v. Martin, 4 Ala. 615 84 Bank of Commerce's Appeal, 73 Pa. St. 59 169 Bank Commissioners v. Bank of Brest, Har. Ch. (Mich.) 106 103 Bank Commissioners v. St . Lawrence Bank. 8 Barb. 436. 70 Bank of Hearldsburg v. Bail- liache, 65 Cal. 327 94 Bank of Holly Springs v. Pin- son, 58 Miss. 421 ; s. c. 38 Am. Rep. 830 126, 159 Bank of Ireland v. Evans' Char- ities, 5 H. L. Cas. 389 167 Bank of Little Rock v. McCar- thy, 55 Ark. 473; IS S. W. Rep. 759; 29 Am. Rep. 00.. 99 Bank of Maryland v. Ruff, 7 Gil. & J. 448. 98 Bank of Metropolis v. Jones, 8 Pet. 12 62 Bank of Middlebury v. Rut- land, etc., R. R. Co.,30Vt. 159 94 Bank of St. Mary's v. St. John, 25 Ala. 566 116 Bank of United States v. Dan- dridge, 12 Wheat. 64 66 Bank of the United States v. Dunn, 6 Pet. 51 62, 66 Barcus v. Hannibal, etc., Plank Road Co., 26 Mo. 102 94 Bargate v. Shortridge, 5 H. L. Cas. 297 ; s. c. 24 L. J. Ch. 457 107,109 Barker v. Bigelow, 15 Cray, 130 179, 221, 222. 223, 242, 249 Barnard v. Pilsworth, 6 C. B. 692 ; s. c. 14 L. T. Rep. 132 ; 18 L. J. C. P. 330. note 430 Barnard v. Thomson, [1894] 1 Ch. 374 ; s. c. 8 Rep. 585 : 63 L.J. Ch. 488; 70 L. T. 306; 43 W. R. 2 334, 346. 347, 386 Barndt v. Greul, 4 Leg. Gaz. (Pa.) 388 ; s. c. 1 Leg. L. Reg. 737 205 Barnes v. Brown, 80 N. Y. 527. 105 Barnes v. Trenton Gas Light Co., 27 N. J. Eq. 33 69 Barr v. Pittsburgh Plate Glass Co., 51 Fed. Rep. 33 105 Bartholomew v. Bentlev. 1 Ohio St. 37 92. 114 Bartlett v. The Mystic River Corporation, 151 Mass. 433 ; s.c. 24 N. E. Rep. 780 71 Barton v. Enterprise Loan and Building Association. 1 14 Ind. : s.c. 16 N. E. Rep. 13 West Rep. 816; 22 Amer. and Eng. Corp. Cas. 612 : 5 Amer. St. Rep. 608.. .29, 301, 435, 437, 440 Barton v. Pioneer S. & L. Co. (Minn.),71N.W.Rep. 906 252 456 XX TABLE OF CASES. PAGE Barwick v. Clement, U. C. Q. B. 549 454 Bassett v. Monte Cristo, etc., 15Nev. 293 105 Basshor v. Dassel, 34 Md. 503 32 Batelle v. N. W. Cement, etc., Co., 3? Minn. 89 ; s. c. 33 N. W.Rep. 327 106 Bates v. Equitable, etc., Co., 65 111. App. 529 37,43 Bates v. People's Saving and Loan Association, 42 Ohio St. 655 ; 14 Wkly. L. Bull. 396 31 33,44,227.234,261.267,422, 430 Bath, Ex Parte, L. R. 27 Ch. Div. 509 ; s. c. 51 L. T. (N. S.) 520 ; 32 W. R. 808 228, 239 Batz.v.Equitable, etc., Society, 65 111. App. 529 33 Bauer v. Samson Lodge, 102 Ind. 262 ; s. c. 1 N. E. Rep. 571 ; 13 Am. & Eng. Corp. Cas. 618 ,...123, 135 Bauman v. Manistee Salt, etc., Co.. 94 Mich. 363; s. c. 53 S. W.Rep. 1113 62 Baxter v. Mclntire, 13 Gray, 168 249, 455 Beach v. Co-operative S. & L. Co. (S. D.),74S.W. Rep. 889 406 Beach v. Miller, 130 111. 162; s. c. 32 N. E. Rep. 464 ; 17 Am. St. Rep. 291 106 Beach v. Muller 23 111. App. 151 106 Beadle v. Chenango Insurance Co., 3 Hill, 161 136 Beardsley v. Johnson, 121 N. Y. 224 ; s. c. 24 N. E. Rep. 380: . Y. St. Rep. 691 jaffirm- ing 1 N. Y. Supp. 608; s. c. 16 N. Y. St. Rep. 773 89 Bechtold v. Brehm, 26 Pa. St. 1 189, 259 Becker v. Berlin Benefit Socie- iv. Ill Pa. St. 232 ; s. c. 22 At!. Rep. 699 129 . CJniontowg Buildii .:ui Association, 88 Pa. St. 211 22, 33, 439 m v. Bouston, 32Ind.393. 37 • ! !:. R. Co. v. Bowser, 48 Pa. St. 29 103 ■ Loven Building Associa- tion v. Weber, 5 Atl. 235 (Pa.); .; Cent. Rep. 916 331 Behler v. ( German, etc.. [nsur- .,68Ind. 347 I '! Belanger v. Gauthier, 5 1 1 no Bell' . Appeal, 115 Pa. . 2 Am. si. Rep. 582 158 PAGE Bell's Gap R. R. Co. v. Christy, 79 Pa. St. 54 ; s. c. 21 Am. Rep. 39 118 Bennett v. Eastern B. & L. Ass'n, 177 Pa. St. 233 ; s. c. 35 Atl. L. 684 ; 34 L. R. A. 595. 286 Bennett v. St. Louis Car Roof- ing Co., 23 Mo. App. 587 78 Bent v. Lewis, 15 Mo. App. 40, 578 105 Bent v. Priest, 86 Mo. 475 ; af- firming 10 Mo. App. 557.. 105, 114 Bergman v. St. Paul, etc., As- sociation, 29 Minn. 275; s. c. 13 N. W. Rep. 120... 26.29, 124 127, 129, 189, 236, 244 Berks, etc., Turnpike Road v. Myers, 6 S. & R. 12 ; s. c. 9 Am. Dec. 402 98. 101 Bermingham v. Maryland Land and Permanent Homestead Association. 45 Md. 541 247 Bethany v. Sperry, 10 Conn. 200 51 Bettelev v. Reed, 4 Q. B. 511 ; s. c. 3G. & D. 561 264 Betz v. Fulton Building and Saving Association, 1 Ohio Dec. 42 129, 284 Bexar, etc. . Association v. Rob- inson, 78 Tex. 163 ; s. c. 14 S. W. Rep. 227 258, 265 Bexar B. & L. Ass'n v. Seebe (Tex.) , 40 S. W. Rep. 875. ... 258 Bibb County Loan Assn. v. 3 Richards, 21 Ga. 592. . 22. 37, 253 Bigelow v. Gregory, 73 111. 197 27, 29 Birmingham Co. v. White, 1 Ad. &.E1. (N. S.) 282 48 Birmingham v. Maryland Land, etc., Association, 45 Md. 541. 233 288 Bismarck Building and Loan Association v. Bolster, 92 Pa. St. 123 291 Bjorngaard v. Goodhue Coun- ty Bank, 49 Minn. 483; s. c. 5-2 X. W. Rep. 48 91 Black v. Tompkins, 63Ark. 502 ; 39 S. W. Rep. 553 250 Blackburn's Appeal, 39 Pa. St. 160 237, 259 Blackburn and District Benefit Building Society, In re, 48 L. T. (N. S.) 134 337 Blackburn Benefit Building Society v. Cunliffe, L. R. 22 Ch. Div.c.l ; s. c. 81. W. R. 98 ; on appeal, 9 App. Cas. 865; s. o. 54 L. J. Ch. TABLE OF CASES. XXI PAGE 376 ; 50 L. T. 225 ; 33 W. R. 20oug. Mich. 124 ; s. c. 43 Amer. Dec. 457 60, 67, 92, 126, 136 Cain v. Piillen, 31 La. Ann. 511 48 Callender v. Painesville, etc., I.'. R. Co., 11 Ohio St. 516... 34 Callahan's Appeal. 121 Pa. St. . c. 16 Ml. h'ep. 638; 19 Pitts. L.Jr. Ill : 2:; W.N. 233 ( !amel v. Poull ney, 6 Gill & J. 94 ' ion v. I [unter, L. I.'. 1 7 Vict. ( Vustr.) '.'i; < 'aiiiiin\ it v. I nit ill < rerman l.ut hcrian < Ihurches, 2Sandf. Ch. 186 < :i mpbell's < '■■!-'■. I -. I.'. I ( 'li. Div. 470 ( !ampbell v. A tnerican Zylonite 122 X. Y. 455; s. c. 25 : : reversini 13 . c. 3 N Y. Snpp. 822 Ill ( !ampbell « . Mercha ats 1 I nsur- 403 55 12 93 107 PAGE ance Co., 37 N. H. 41 ; s. c. 72 Am. Dec. 324 102 Canada Mutual Building So- ciety. In re, 3 Leg. News, 58 292 Canada Permanent Building Society v. Bank, 10 Grant Ch. 203 454 Canada Permanent Building and Saving Society v. Lewis, 8 U. C. C. P. 352. 282, 292 Canada Permanent Building and Saving Society v. Harris (In Can.), 16 U. C. C. P. 54 231, 261, 268, 281 Canada Permaiient Building and Saving Society v. Ro- wed, 19 U. C. Q. B. 124. .261, 263 Cann v. Eakins, 23 N. S. 475. . . 102 Cannon River Manf. Associa- tion v. Rogers, 51 Minn. 388 ; s. c. 53 N. W . Rep. 759 94 Cape May, etc., Co., In re. 51 N. J. L. 78; s. c. 16 Alt. Rep. 191 24. 55 Capitol Hill Building Associa- tion v. Hilton. 1 Mackey, 107 203, 319 Carr v. Carr, 1 C. B. (N. S.) 197 : s. c. 26 L. J. C. P. 113. .45, 113, 201 Carlisle Banking Co. v. Thomp- son, L. R. 28 Ch. Div. 398; s. c. 53L.T.(N.S.)115;33W. R. 119 321 Carpenter v. Richardson (Term.), 46 S. W. Rep. 452. . 447 Carr v. Chartiers, 25 Pa. St. 337 78 Carr v. City of St. Louis, 9 Mo. l'.il 127 Carrick v. North British Build- in g Society, 12 Rettie, 1271 ; s. c. 22 Scot. L. 1!. 837 349 Carrick v.Wills, L2 Rettie, 1271 ; s. <•. 22 Scot. L. R. 833 331 Carroll v. Cone, 40 Barb. 220.. (;:; ( larroll v. Mullanphy Savings Bank,8Mo. A.pp.249. .49, 126, 158 ('arson v. Iowa City Gaslight Co.. si) [ a . 638; s. C.45N. W. Rep. iocs 157 Carson v. Seldner. 77 Va. 293 381 < barter v. . El na Loan Co., 1 Mm. A pp. Repr. 3.")."i ; s. c. 61 Mo. A pp. 218 324, 337 Carver Co. v. Mi. Insurance Co.,6Gray,21 1 81 Caryl v. McElrath, 3 Sandf. 176 61 Cascade, etc.. [nsurance Co. \ . Journal Pub. Co., I Wash. 152; s. <•. 25 Pac. h'ep. 331.. 94 TABLE OF CASES. XXV Cason v. Seldner, 77 Va. 293 ; s. c. 6 Amer. & Eng. Corp. Cas. 630 142, 254, 284, 378 434 440 Casswell v. Oberly, 17 Bradw. 281 29 Catlin v. Eagle Bank, 6 Conn. 2:;:! 151 Cattron v. First Universalist Society, 4(5 la. 106 66 Cavendish-Bentinck v. Fenn, L. R. 12 App. Cas. 652 104 Cawley, En re, L. R. 42 Ch. Div. 209 ;s. c. 31 Am.&Eng. Corp. Cas. 425 157, 158 Cecil. In re. 36 How Pr. 477 56 Ceeder v. Load A" Sons Lumber Co., 86 Mich. .",41 ; s. c. 24 Am. St. Rep. 134 63, 67 Cefor Cilcen Mining, In re, L. R. 7 Eq. 88 ; s. c. 19 L. T. 593; 38 L. J. Ch. 78 421 Central Building Association v. O'Connor, 5 Wkly. L. Bull. 853 ; s. c. 9 Amer. Rec. 486 273, 274 Central Building Association v. Schmitt, 12 W. N. Cas. 239. . 308 Central, etc., R. Co. v. Twenty- third St.R., 53 How. Pr. (N. Y.) 45 48 Central Building Association v. Witzell, 13 Phila. 54 ; s. c. 36 Leg. Int. 174 437 Central Building.and Loan As- sociation v. Lampson, 60 Minn. 422 ; s. c. 62 N. W. Rep. 544 252, 280 Central R. R. Co. v. Collins, 40 Ga. 617 24 Centre, etc., Co. v.McConaby, 16 S. &R. 140 152 Chadwell, Ex Parte, 59 Tenn. 98 25 Chaffin v. Cummings, 37 Me. 76 37, 46 Chambersburg Woollen Co. v. Chambers! >urg Manufactur- ing and B. A., 31 Leg. Int. 357 404 Chamberlain v. Painsville, etc., R. R. Co., 15 Ohio St. 225. ... 51 Champoux v. Lapierie, 31 Leg. News, 302 446 Chandler v. Hoag, 5 T. & C. 197; a. c. 2 Hun. 613 93 Chapman v. Young. 65 111. App. 131 191, 344, 350, 432, 446 Chapleo v. Brunswick Per- manent Building Soci°tv. L. R. 6 Q. B. Div. 696 ; s. c. 50 PAGE L. J. Q. B. Div. 372 ; 44 L. T. (N.S.) 449; 29 W. R. 529 ; reversing L. R. 5 C. P. Div. 331 ; 49 L. J. C. P. Div. 796: 42 L. T. (N. S.) 741 ; 29 W. R. 153 410 Charles River Bridge v. War- ren Bridge, 7 Pick. 371 34 Charles Tyrell Loan and Build- ing Association v. Ealey, 139 Pa. St. 476; s.c. 20 AtLRep. 1063; 48 Leo-. i n t. 345: re- versing 27 \V. N. Cas. 244 187 193, 317, 320, 434 Charles Tyrell Loan and Build- ing Association v. Haley, 163 Pa. St. 30] : 35 W. N. Cas. 269; 30 Atl. Rep. 154 184 193, 442 Charlotte Building, etc., As- sociation v. Commissioners, 115 N. C. 410: s. ■ oS. E. Rep. 526 428 Charter Philadelphia Artisana Institute, In re, 8 Phil. 229. . 25 Chase v. Merrimac Bank. 19 Pick. 564 37 Chase v. Tuttle, 55 Conn. 455 : s. c. 3 Am. St. Rep. 64; 12 Atl. Rep. 874 97, 10(1. 158 Charlestovrn Boot. etc.. Co. v. Dunsmore. 60 N. 11. 85 102 Cheeney v. Lafayette, etc., R. R. Co., 6S 111. 570; s. c. 18 Am. Rep. 584 117, 118 Chemical National Bank v. Col- well, 132 N. Y. 250; s. c. 30 N. E. Rep. 644 : 43 N. Y. St. Rep. 876 : reversing 29 N. Y. St. Rep. 726 ; 9 X. Y. Supp. 288 87, 92 Chenango Mutual Insurance Co., In re. 19 Wend. 635 89 Chesapeake, etc., Co. v. Rob- ertson, 4 Cranch C. C. 291 . . 25 Chester Glass Co. v. Dewey, 16 Mass. 94; s.c. 8 Am. Dec. 128 31. 37 Chicago Building Society v. Crowell, 65 111. 453 .'.74, 308 Chicago, etc., R. R. Co. v. Boone County. 44 111. 240. . . 63 Chicago, etc., 11. R. Co. v. Coleman, is 111. 297; s. c 68 Am. 1 tec. 514 63 Chicago, etc. R. R. Co. v. James. 22 Wis. 1 94 94 Child v. Hudson Bay Co.. 2 P. Wins. 207 126 Childs v. Hard. 3,2 W. Ya. 66 ; s. c. 9 So. Rep. 362 29 XXVI TABLE OF CASES. PAGE Childs v. Smith, 55 Barb. 45. . . 26 Chillicotte Savings Associa- tion v. Ruegger. 60 Mo. 218.. 453 Choir Insurance Co. v. Cram, 43 X. H. 641 27 Clioisser v. Young, 69 111. App. 252 446, 447 Choteau v. Allen, 70 Mo. 290. . . 104 105 Choteau v. Dean, 7 Mo. App. 210 162 Choteau Insurance Co. v. Holmes, 68 Mo. 601 ; s. c. 30 Am. Rep. 807 97 Choteau Springs Co. v. Harris, 20 Mo. 382 163 Christian's Appeal, 102 Pa. St. 184 : s. c. 13 W. N. Cas. 181 ; 30 Pitts. L. J. 435 ; 40 Leg. Int. 261 80, 337. 344, 345, 346 379, 380, 383, 395, 420, 432, 444 Christensen v. Eno, 106 N. Y. 97 : s. c. 12 N. E. Rep. 648 ; 60 Am. Rep. 429 140 Christie v. Northern Coun- tries, etc., Society, L. R. 43 Cli. Div. 62 : 59 L. J. Ch. 210 ; 61 L. T. 796 ; 38 W. R. 280 130, 284 Chriswell's Appeal, 100 Pa. St. 188 ; s. c. 12 W. N. Cas. 483; 40 Leg. Int. 132 395, 422. 423 b v. Upton, 95 TJ. S. 665.. 24 Cincinnati German Building iciation v. Flack. 1 I Supr. Ct. Rep. 4GS.. 261,270, 272 as' Bank v. Elliot, 55 la. 101 : s. c. 39 Am. Rep.167... 71 Building, Loan, and rial ion v. Cor- riel, 34 X. .1. Eq. 383 Ii !. 284, Citizens' Loan Association v. Logan, 29 X. J. Eq. 110 109 ( ,'ii izens' 1 n 'o. v. Sort- well i, 217 51 « 'ii Lzens 1 Mul ual Loan and Ac- cumulating Fund Associa- . 25 Barb. 263. . .133, 180, 215 . J67, 2 6 Citizens' Saving and Loan . v. Ruhl, 55 III. A pp. 62, r5, 80,93, L32, 121 3ecuril v. etc., < !o. \ . Uhler, i i 246 City Bank v. Allen, I X. s. W. L. R. 170 33 ■ lank v. Bavtletl . 1 1 Ga. 1 52 1 Building and Loan < !om- PAGB pany v. Fatty, 1 Abb. Dec. 347 230, 231, 252, 267 City Building-, etc., Associa- tion v. Jones, 32 S. C. 308; s. c. 10 S. E. Rep. 1079 39 City Council of Montgomery v. National Building and Loan Ass'n, 108 Ala. 336; s. c. 17 So. Rep. 816 430 City of St. Louis v. Alexander, 23 Mo. 483 98 City Loan Co. v. Cheney, 61 Minn. 83 ; s. c. 63 N. W. Rep. 250 252 City Loan, etc., Association v. Goodrich, 48 Ga. 445 436 437 Claflin v. Farmers', etc., Bank, 25 N. Y. 293 61 Clagg v. Hamilton, etc., Co., 61 la. 121 27 Clark v. Barnard, 108 U. S. 436 50 Clark v. Central, etc., Co., R0 Fed. Rep, 338 ; s. c. 15 L. R. A. 683 91 Clark v. Dunham Lumber Co., 86 Ala. 220 ; 5 So. Pep. 560. . 69 Clark v. Edgar, 84 Mo. 106 ; s. c. 54 Am. Rep. 84; 12 Mo. App. 345 115 Clark v. N. E. Mutual Fire In- surance Co., 6 Cush. 342 : s. c. 53 Am. Dec. 44 124 Clarke v. Pratt. 4? Me. 55 66 Clarke v. Brooklyn Bank, 1 Edw. Ch. 361 22 Clarke v. Thomas, 34 Ohio St. 46 156 Clarksville Building and Loan Association v. Stephens, 26 N. J. Eq. 351.. 173, '104. 204. 220 222. 251, 298 I !1 a rwater v. Meredith, 1 Wall. 25 24 Clem v. New< lastle, etc., R. R. Co., 9 hid. 488 ; s. c. 68 Am. Dec. 653 150 < lleveland, etc., R. R. Co. v. Robbins, -'>r> Ohio St. 483 166 Close v. Glenwood Cemetery, 10? U. S. 466 23 Cochran \. Arnold, 58 Pa. St. 399 34 Cockburn v. Union Bank, 13 La. Ann. 289 46,47 ( loel tnor Benefit Building So- ciety, 51 L. T. 'r>:\ 410 Collin v. Reynolds. 37 N. Y. 640 ' 72 Cole v. Ryan, 52 Barb. 168. . . 37 ( loles \ . Bank of England, 10 Ad. & El. 137 L67 TABLE OF CASES. XXVU PAGE Collins v. Collins, L. R. 12 Eq. 455 140 Colonial Bank of Australia v. Curtain, L. R. 4 Vict. L. (Austr.) 38 415 Colonial Bank of Australia v. Draper, L. R. 4 Vict. L. (Austr.) 527 415 Columbia Bottom Levee Co. v. Meier, 39 Mo. 53 26, 53 Columbia Building Association of East Baltimore v. Crumb, 42Md.l92 279, 302 Columbia Building and Loan Association v. Bollinger, 12 Rich. Eq. 124; s. c. 78 Amer. Dec. 463 257 Columbia Buildiug Association v. Dobleims, 15 Leg. Int. 45 259 Columbia Insurance Co. v. Ma- son Hiemer, 76 Pa. St. 13.. 73 Coleman v. West Va. Oil, etc., Co., 25 W. Va. 148 71 Colt v. Woolaston, 2 P. Wins. 154 107 Combination Trust Co. v. Weed, 2 Fed. Rep. 24 105 Commercial B. & L. Associa- tion v. Mackenzie. 85 Md. 132; s. c. 36 Atl. Rep. 754... 241 Commissioners v. Gas Co.. 12 Pa. St. 318 133 Commissioners v. Lemly, 85 N. C. 341 .... 48 Commonmealth v. Crompton, I - Pa. 138 ; s. c. 20 Atl. Rep. 417 164 Commonwealth v. Cnllen, 13 Pa. St. 133 ; s. c. 53 Am. Dec. 450 99 Commonwealth v. Dalzell, 152 Pa. St. 217; s. c. 25 Atl. Rep. 535 ; 34 Am. St. Rep. 640 ; reversing 1 Pa. Dist. Rep. 657 ; s. c. 23 Pitts. L. J. (N. S.) 67 90 Commonwealth v. Detwilter, 131 Pa. St. 614; s. c. 25 W.N. Cas. 329 ; 47 Leg. Int. 144 ; 20 Pitts. L. J. (N S.) 378 : 7 L. R. A. 857; 18 Atl. Rep. 990 55, 56 Commonwealth v. Empire Pass. R. R.Oo.. 134 Pa. St. 237; s.c. 19 Atl. Rep. 629 ; 7 Rail. & Corp. L.J. 470 47 Commonwealth v. Heming- way, 131 Pa. St. 614; s. c. 7 L. R. A. 360 : 25 W. Mass. 337; 18 Atl. Rep. 963 55 Commonwealth v. McKean County Hank, 32 Pa. Si. is;,.. •„>■> Commonwealth v. Phoenix Iron Co.. 105 Pa. St. I 1 1 : s. c 51 Am. Rep. 184 : 23 Amer. L. Reg. 388 ; 23 Cent. L. J. 524 46, 17 Commonwealth v. Pennsylva- nia B. & L. Association. 'JO Pa. C. C. 589 4:1:2. 4:19, -156 Commonwealth v. Pottersville Saving Fund Association, 2 Chest. 189 428 Commonwealth v. Smith, 45 Pa. St. 59 51 Commonwealth v. Redd i n gs Saving Bank, 133 Mass. 16; s. c. 43 Am. Rep. 495 81 Commonwealth v. St. Mary's Church, 6 S. & R. 508 102 Commonwealth v. St. Patrick's Society, 2 Binn. 441 ; s. c. 4 Am. Dec. 45:1 134 Commonwealth v. Turner, 1 Cush. 493 121 Commonwealth v. West Ches- ter Co., 3 Grant Cas. 200 21 Commonwealth v. Woe] per, 3 S. & R. 29; s. c. 8 Amer. Dec. 628 56, 97, 138 Commonwealth v. Worcester, 3 Pick. 461 183 Concordia Savings, etc., Asso- ciation v. Reed, 93 N. Y. 471 ; s. c. 4 Amer. & Eng. Corp. Cas. 175.. 32, 36, 45, 132 229, 252, 299 Connecticut, etc., R. K. Co. v. Bailey, 24 Vt. 465 ; s. c. 58 Am. Dec. 181 150, 152 Connolly v. Association, 6 W.N. Cas. 176 432 Connor v. Hill, 11 Rich. (S. C.) 193 166 Conservative Building & Loan Association v. Cad v. 55 Til. App. 469 .".252. 313, 314 Continental, etc. So. v. Peo- ple, 167 111. 195 ; s. c. 47 X. E. Rep. 381 432, 433 Converse v. Hood, ! 19 Mass. 471 ; s.c. 21 N. E. Rep. 878.. 55 Conway v. Log Cabins Perma- nent Building Association. 3:3 Md. 137 84 Conyngham's Appeal, 57 Pa. St. 474 105 Cook v. Berlin Mill Co.. 13 Wis. 433 101 Cook v. Henderson, 8 Am. Law Rec. 429 163 XXV111 TABLE OF CASES. PANE Cook v. Kent, 105 Mass. 246... 202 438 Cooley v. Dominion Building s, >ciety, 24 L. Can. Jur. Ill . . 422 Cooper v. Mclndoe, 2 Montreal Supr. 388 ; s. c. 10 Leg. News 35 : affirmed. 32 Lower Can. Jur. 210 452, 461 Cooper v. Oriental Saving and Loan Association, 100 Pa. St. . KIT ; s. c. 12 W. N. ( las. 332 228, 436 Corbett v. Woodward, 5 Sawy. 403 50, 108 Cork, etc., R. R. Co. v. Cazen- ove, 10 Ad. & El. (N. S.) 935 38 Corn Exchange Bank v. Cum- berland Coal Co., 1 Bosw. 436 96 Corporation Officers, In re, 3 Pa, C. C. 188 79 Corporation . etc. , Society, In re. 22 Vict. L. Rep. (Aus- tralia ) 47 350, 351 Coryell v. New Hope, etc., Co., 9N. J. Eq. 437 96 Cotterell v. Stratton, 8 Ch. 205: 45 L. J. Ch. 417; 28 L. T. 218; 21 W. R. 234: 37 J. P. 4 371 Cottrill v. Crum, 100 Mo. 397: s. c. 13 S. W. Rep. 753 : L8 a. St. Rep. 54!) 116 on v. Davis. 1 Stra. 53 96 County Life Insurance Co., re,L. R. 5 Ch. 288 94 ley v. Smyth, 46 X. J. L. 380; s. c. 50 Am. Rep. 432.. 116 Crabtree v. Old Dominion, etc.. ;. i''.. p. 711 251, 289 Craft v. & ton R. R. Co., 150 Mass. 207 : s. c. 22 X. E. Rep. 920; 5 1.. R. A. 'ill : 28 Am. & iai-. Corp. . 579 80 Craig v. Firsl Presbyterian Church, 88 Pa. St. 42 : s. c. \h,. Rep. 117 5:;. 1)1, 114 Medicine < '■>. 7. Mer- chants' Bank, 5!) Hun, 561 ; I 1 X. Y.Supp. Mi : 36 X. Y. St. Rep. 923 115 ■ r. 12 Me. 351. . . . 1)5 Crawford v. Branch Bank, 7 Ala Co i v. Powell, '.' I.. I). Raym. L013 ; 8. «■. 1 W. Black. 92 I Brewing Co. \ . PAGE Flanner, 44 La. Ann. 22 ; s. c. 10 So. 384 107 Crescent City, etc., Co. v. Deb- lieux, 40 La. Ann. 155 ; s. c. 3 So. Rep. 726 168 Cunningham's Appeal, 108 Pa. St. 546 157 Cresswell v. Oberly, 17 Bradw. 281 27 Criswell's Appeal, 100 Pa. 488 44 Cross v. Fisher. 65 L. T. Rep. 114: (1892) 1 Q. B. 467: 61 L. J. Q. B. 409 : 66 L. T. 48 : 40 W. R. 265 : 56 J. P. 372. .95, 111 Crone v. Crone. 26 Giant Ch. 459 275 Crump v. United States Min- ing Co., 7 Gratt. 353 : s. c. Am. Dec. 116 153 Culbertson v. Wabash Navi- gation Co., 4 McLean. 545. . . 107 Cullerne v. London and Sub- urban Building Society , L. R. 25 Q. B. Div. 485 ! s. c. 59 L. J. L. B. 525 : 63 L. T. 511 : 39 W. R. 88; 6 T. L. R. 449 : 55 J. P. 148. . . 110. 128, 280 Cumberland, etc., R. R. Co. v. Sherman, 30 Barb. 553 107 Cummings v. Citizens' Build- ing, Loan and Savings Asso- ciation, 142 Ind. 600 : s. c. 42 N. E. Rep. 213 299 Cummings v. Webster, 43 Me. 192 122 Cunliffe B. Blackburn and Dis- 1 rict Building Society. 9 App. ( !as. 857 : s. c. 54 L. J. Ch. 376 : 52 L. T. 225 : 33 W. R. 309 410 Cunningham v. Alabama Life Insurance Co., 4 Ala. 652 . . . 158 Cunningham v. Mutual, etc., Ass'n, 6 Pa. Dist. Rep. 99. ... 86 Curry v. Bank, 8 Port. (Ala.) 360 85 Curtis v. Portland. 59 Me. 483. . 96 Curtiss v. Granite State. et"\, Association, 69 < 'onn. 6 ; s o. '.:!. Rep. L023 417, 448 Cushman v. Thayer Manufact- uring Co., 76 N. Y. 365 : s. c. 32 Am. Rep. 315 164 Custer v. Titusville, etc., R. R. Co., 63 Pa. St. 381 152 Cutbill v. Kingdom. I Exch. 494 : s. c. 17 L.J. Exch. 177. 57 246 1 )' \ rcy v. Tamar, etc., R. R. Co.,L. R.2Exch. 158; 8. c. 2 TABLE OF CASES. XXIX PAGE Hurl. & C. 463; 36 L. J. Exch. (N. S. ) 37 ; 14 W. R. 96 94 Daggett v. Davis, 53 Mich. 35 ; s. o. 18 N. W. Rep. 548; 51 Am. Rep. 91 105, 166 Dahl v. Palache, 68 Cal. 248 ; s. c. 9 Pac. Rep. 94 89 Damon v. Granby, 2 Pick. 315 96 Dana v Bank of United States, 5 W. & S. 223 102, 4r,7 Dane v. Young, 61 Me. 160.... 163 Dartmouth College v. "Wood- ward, 4 Wheat. 518 ; revers- ing 1 N. H. Ill 21, 23 Davenport Bank v. Gifford, 47 la. 575 163 Davidson v. Old People's Mut- ual Society, 39 Minn. 303 ; s. c. 39 N. W. Rep. 803 124 Davies v. Second Chatham Building Society, 61 L. T. Rep. 680 130 Davis v. Bank of England, 2 Bing. 393 168 Davis v. Memphis City R. R. Co. , 22 Fed. Rep. 883 69 Davis v. United States Electric, etc., Co., 77 Md. 3.", ; s. c. 25 Atl. Rep. 982 91 Davis v West Saratoga Build- in- Union, 32 Md. 285 417 Davis Mill Co. v. Bennett, 39 Mo. App. 460 98 Dawes v. North River Insur- ance Co., 7 How. 462 61, G3 Dawkins v. Antrobus, L. R. 17 Ch. Div. 615; s. c. 44 L. T. (N. S.) ."",57 ; 29 W. R. 511.. . 137 Day v. Mill Owners' Mutual Fire Insurance Co.. 75 la. 094 ; s. c. 78 N. W. Rep. 118. 29 Dayton, etc., R. R. Co. v. Hatch, 1 Disney, 84 102 Dearborn v. Northwestern Sav- ings Bank, 42 Ohio St. 017, 31, 422 Deadrick v. Wilson, 8 Baxt. 108 94 Dean v. Davis, 51 Cal. 406 21 De Camp v. Alward, 52 Ind. 468 458 Decatur Building and Invest- ment Co. v. Neal. 97 Ala. 717 ; s. c. 12 So. Rep. 780 335, 336 Dedham Institute for Savings v. Slack, 6 Cush. 408 81 Deering v. Bishop Baley Build- ing and Loan Association (N. J.). 24 Atl. Rep. 575 352 De Hascot's Case, Comb 202. . . 127 De la Cuesta v. Insurance Co., 136 Pa. St. 62, 658 ; s. c. 26 PAGE W. N. Cas. 337 ; 47 Leg. Int. 466 ; 20 Atl. Rep. 505 ; 9 L. R. A. 631 157 Delano's Case, 121 111. 247 ; s. c. 12 N. E. Rep. 676; 2 Am. St. Rep. 81 ; 171 111. App. 531 108 Delano v. Smith Charities, 138 Mass. 63 79, 97 Delano v. Wild, 6 Allen, 1 ; s. c. 83 Am. Dec. 605. .180, 204, 249 Delaware, etc., Canal Co. v. Pennsylvania Coal Co., 21 Pa, St. 131 92 Delaware R, R. Co. v. Tharp, 5 Hair. Del. 454 23 Delta Lumber Co. v. Williams, 73 Mich. 86 ; s. c. 40 N. W. Pei>. 940 ; 5 Rail. & Corp. L. J. 139 73 Deniston v. Terry, 141 Ind. 67 : s. c. 41 N. E. Rep. 142.42!). 430 Dennison v. Alpena, etc., Asso- ciation, 75 N. W. Rep. 300. . 337 338, 456 Dennison v. Jeffs, 65 L. J. Ch. 43r> ; s. c. (1896) 1 Ch. 611 ; 74 L. T. 270 ; 44 W. R. 476. . 38 39. 40, 54, 456 Denny v. ."West Philadelphia, etc., Association, 39 Pa. St. 154 189, 237, 259 De Ruyter v. St. Peter's Church , 3 N. Y. 238; affirmin Barb. Ch. 124 457 Despatch Line v. Bellamv Manf. Co., 12 N. H. 20; c. 37 Am. Dec. 203 92, 95, 97 Detwilter v. Commonwe 131 Pa. St. 614 ; s. c. 25 W. N. C. 329 ; 47 Log. Int. 144. 55 Deveaux, In i~e, 54 Ga. 675 25, 26, 27 DeWitt v. Hastings, 40 N. Y. Supr. Ct. 463 ! Dickerson v. Raleigh Co-oper- ative Land and Building Association 89 N. C. 37 266 Diemer v. Egolf, 1 Cheast. Pa. 55 177, 178 Dill v. Wabash, etc., R. R. Co., 21 111. 91 150 Dilzer v. Beethoven BuiL Association; 103 Pa. S;. s. c. 15 Phil. 344 ; 39 Leg. In i 230 Dime Savings Institution v. Mulford, 31 N. J. Eq. 99 .... 266 Directors v. Kisch, L. E. 2 II. L. 99 152 bch Line v. Bellamy Mf. XXX TABLE OF CASES. Co., 12 N. H. 205; s. c. 37 Am . Dec. 203 98, 99, 100, 203 District of Columbia v. Wag- gernan, 4 Mackey, 328 134 Dobinson v. Hanks. 16 Sim. 497 ; s. c. 39 Eng. Ch. Rep. 406; 12 L. T. O. S. 238 46 Dobson v. Simonton, 86 (N. C.) 492 34 Dodd v. Wilkinson. 42 N. J. Eq. 647 ; s. c. 9 Atl. Rep. 685 109 Doernbecher v. Columbia City Lumber Co.. 21 Ore. 573; s. c. 28 Pac. Rep. 899 ; 28 Am. St. Rep. 766 ; 11 Rail. &Corp. L. J. 153 100 Dominion Building and Loan Association v. Gordon, 26 N. S. 551 317 Doncaster Permanent Benefit Building Society, 4 Eq. 479 ; s. c, 36 L. J. Ch. 871 : 32 J. P. 3 343,370,380, 405 Doran v. McNally, 7 Leg. News. 360 ; s. c. 1 Montreal Supr. Ct. 21 38 Doubled;) v v. Muskett, 4 Moore &P. 750 115 Dougherty v. Hunter, 54 Pa. St. 380 03 Douglass v. Merchants' Iusur- ■ Co.,- 118 N.Y. 484; s. c. . . E. Rep. 803 ; 7 L. R. A. 822 ; 44 Hun, 629 ; 9 N. Y. St. p. 302 74,78 Downie v. White, 12 Wis. 176 ; s. c. 78 Am. Dec. 731 151 Downing v. Potts, 23 N. J. L. 66 163 I. . Mizner, 42 Mich. 332.. 94 99 Drake v. Hudson River R. R. Co., 7 Barb. 508 121, 126 schler v. Fulham, ( !olo., 52 I';.. Rep. 685 74 Dublin, etc., 1.'. If. Co. v. Black, s Exch. 181 38 Dudley v. ('oilier, 87 Ala. 431 ; s. c. 13 Am. St. Rep. •'.;,; 27 Am. A: Eng. Corp. ( as. I In ; 6 Rep. 304 79 ■ v. ( latawba, etc., < !o., 5 Ala. 82; s. c. 1 1 Am. Dec. Mil I )!in v. < !on ircial Hank', 1 1 Marl.. 580 163 I -•!!: -ui i v. A Ibrechl , 12 Sim. I 140 I tanker ion, In re, I Biss. J inn ton v. I mperial ' la lighl < ... 8 l;..n,. & A.I. L25 .... L23 PAGE Dupuy v. Eastern B. & L. Asso- ciation, 93 Va. 460 ; s. c. 25 S. E. Rep. 537 ; 35 L. R. A. 215 210,217 Durant Land Improvement Co. v. Thompson-Houston Elec. Co., 49 N. Y. Supr. St. Rep. 715; s. c. 21 N. Y. Supp. 764; 15 Daly, 337 60 Durfee v. Old Colony R. R. Co., 5 Allen, 230 25 Durham County Permanent Investment Land and Build- ing Societv, In re, L. R. 12 Eq. 516 ; s. c. 25 L. T. Rep. (N.S.) 83; 41 L. J. Ch. 124.. 246, 413, 414, 451 Durham, etc., Working Men's Building Societv v. Davidson, 61 E. J. Q. B. 473 ; s. c. 67 E. J. 269 ; 56 J. P. 660 ; 8 T. L. R. 428 371, 384 Durkee v. Stringham, 8 Wis. 1, 157 Dutchess Cotton Manf. v. Davies, 14 John. 238 ; s. c. 7 Am. Dec. 459 34 Dutton v. Marsh, L. R. 6 Q. B. 361 67 Eagle, etc., Mf. Co. v. Brown, 58 Ga.240 _ 79 Eakins v. American White Bronze Co., 75 Mich. 568 ; s. c. 42 N. W. Rep. 982 117 Earkright v. Logansport, etc., R. R. Co.,13Ind. 404 21 Early's Appeal, 89 Pa. St. 411 , s. c. 7N. W. Cas. 184.... 171. 172 178 204 East Birmingham Land Co. v. Dennis, 85 Ala. 565 ; s. c. Ii So. Rep. 317 ; 2 L. R. A. 836 , 28 Cent. L. J. 402 i66 Easl Norway, etc-., Lutheran ( Jhurch v. Froislie, 37 Minn. 447 ; s. c. 35 N. W. Rep. 26C 32 Eastern Plank Road Co. v. Vauhn, 14 N. Y. 546 27 Eaton v. American Building and Loan Association, 47 Minn. 236 ; s. c. 49 N. W. Rep. sir, 200 Eaton v. Walker, 76Mich.579- s. e. 43 X. W. Rep. 638... .33 34 Economy Building Association \. Eungerbuehler, 93 Ma. St. 258 : s. c. in W. N. Cas. II I 38 Leg. int. :;:;:; 173, 1 77 f78 •.'ill ::a; Edelyn v. Pasco. 22 (Matt. 321 831 'j:, I. 391, 434, 439. W4 Eden v. Ridsdales My. Maud, TABLE OF CASES. XXXI PACK etc., Co., Q. R. 2:5 L. B. Div. 368 105 Edgerly v. Emerson, 23 N. H. 555 ; s. c. 55 Am. Dec 207. .93, 95 Edinburgh Life Assurance Co. v. Graham, 19 U. C. Q. B. 581 281 Ehrenzeller v. Union Canal Co., 1 Rawle, 181 72 Eidmen v. Bowman, 58111. 444 ; s. c. 11 Am. Rep. 90 24 Elkins v. Camden, etc., R. R. Co., 36 N. J. Eq. 467 88 Elizabeth City Academy v. Lindsey, 6 Ired. L. 476 ; s. c. 45 Am. Dec. 500 31 Elliot v. Abbott, 12 N. H. 549 ; s. c. 37 Am. Dec. 227 52 Ellis v. Ward, 137 111. 509 ; s. c. 25 N. E. Rep. 530 ; 33 Am. & Eng. Corp. Cas. 200. .... .71, 114 Ellis v. Pulsifer, 4 Allen, 165. . 68 Elpaso Building and Loan As- sociation v. Lane, 81 Tex. 369 ; s. c. 17 S. W. Rep. 77. . 258 264 Ellsworth Woollen Mf. Co. v. Faunce, 79 Me. 440; s. c. 10 Atl. Rep. 250 ; 4 New Eng. Rep. 679 54, 65, 89 Elton's Estate, 1 Pa. Dist. Rep. 458 ; s . c. 30 W. N. Cas. 275 ; 49 Leg. Int. 268 192, 445 Engelhardt v. Fifth Ward Permanent Dime Saving and Loan Association, 148 N. Y. 281 : S.C.42N. E. Rep. 710; reversing 5 Misc. Rep. 518; 58 X. Y. St. Rep. 92 ; 25 N. Y. Supp. 833.. 130, 326, 330, 332 i. 336, 337, 344 Ensey v. Cleveland R. R., 10 Ind. 178 34 Episcopal Church v. Varian,28 Barb. 644 08 Equitable, etc.. Ass'n v. Hoff- man; s. c. 27 S. E. Rep. 692. . 35 287 Equitable B. & L. Ass'n v. Vance, 49 S. C. 402 ; 27 S. E. Rep. 274 174, 257 Ervin v. Oregon R. Co., 22 Hun (N. Y.),566 48 Essex Building Society v. Bee- man, 19 U. C. Q. B. 509. .454, 509 Estate of National Association, 9 W. N. C. 79 243 Eureka Iron, etc., Works v. Bashnahan, 60 Mich. 332.... 102 European, etc.. R. R. Co. v. Poor, 59 Mo. 277 106, 107 PAGE Evansv. Brandon, 53 Tex. 56.. 114 Evans v. Lee, 11 Nev. 191 72 Evansville, etc., I'. K'. Co. v. Possey, 12 Ind. 363 150 Everham v. Oriental Savings and Loan Association. 47 Pa. St. 352 188, 200, 222 Everman v. Schmitt, 24 W. L. Bull. 56; reversed in pari on another point (Ohio) . 1 1 N. E. Rep. 139.. 200, 820, 322, 380, 382 402 Everett v. Smith, 22 Minn. 53 53 Everson v. Ellingson, 07 Wis. 634 32 Ewing a*. Robeson, 15 Ind. 26. . 34 Excelsior Fire Insurance Co., In re, 16 Abb. Pr. 8 56 Eyre v. Building Association, 17 Leg. Int. 148 130, 326 Fagan v. People's Saving and Loan Association, 55 Minn. 437 ; s. c. 57 N. W. Rep. 142. . 252 274, 278 Falconer v. Campbell, 2 Mc- Lean 195 ; s. c. 10 Myer Fed. Dec. Sec. 10 21 Farmer v. Smith, 4 H. & N. 196 ; s. c. 28 L. J. Exch. 220 ; 5 Jur. (N. S.) 5:53, note 200, 279, 318, 363 Farmers', etc.. Bank v. Down- ey, 53 Cal. 400 ; s. c. 31 Am. Rep. 02 106 Farmers' Bank v. MeKee.2Pa. St. 318 63 Farmers'., etc., Bank v.Wasson, 48 la. 339 134, 158 Farmers & Mechanics' Build- ing Society v. Langstaff, 9U. C. Q. B. 183 81,454 Faulkner's Appeal, 11 W. N. Cas. 4* 421, 451, 461 Faust v. Twenty-third, etc., As- sociation, 84 Md. 186 ; s. c. 35 Atl. Rep. 890 427 Faviell V. Eastern Counties R. R. Co.. 2 Exch. 344 ; s. c. 17 L. J. Exch. 297 84 Fawcett v. New Haven Organ Co., 47 Conn. 224 73 Female Orphan Asylum v. Johnson, 43 Me. 180 100 Ferguson v. Miners', etc.. Bank, 3 Sneed 009 22 Field v. Field. 9 Wend. 305.... 53 Fifth Baptist Church v. Balti- more, etc.. R. R. Co., 4Mac- kev 43, 23 Fifth Na1 ional Bank v. Navassa XXX 11 TABLE OF CASES. PAGE Phosphate Co., 119 N. Y. 256 ; s. c. 23 N. E. Rep. 77 66 Fine v. Hornsly, 2 Mo. App. 61 140 Finley, etc., Co. v. Kurtz, 34 Mich. 89 103 Filon v. Miller Brewing Co., 15 X. Y. Supp. 57; s. c. 38 N. Y. St. Rep. 602 94 First National Bank v. Ben- nett, 33 Mich. 520 62 First National Bank v. Chris- topher, 40 N. J. L. 435 ; s. c. 29 Anier. Rep. 262 93 First National Bank v. Drake, 35 Kan. 564 ; s. c. 11 N. W. Rep. 443 ; 57 Am. Rep. 193 93 First National Bank v. Gifford, 47 la. 575 61 First National Bank v. Hogan, 47 Mo. 472 73 First National Bank v. Kim- berlands, 16 W. Va. 555. . . .63, 65 First National Bank v. Lucas, 21 Neb. 280 66 First National Bank v. Reed, [ich. 263 62, 70 Fisher v. Patton, 33 S. W. Rep. 1 134 Mo. 32; s. o. 34 S. W. Rep. 1090 237 Fisher v. Patton, 134 Mo. i s. c. 33 S. W. Rep. 451 ; S. \V. Rep. 10'.):; 189, 284 Fitch v. Cunningham, 42 Hun, 590 ; s. c. 10 N. Y. St. R 17 68 Fitzgerald v. IlermepinCounty, ation (In Min . 56 .Mi:i '•. 57 . Y. Rep. 1056 231, 23!! jerald v. Equitable Reserve Fund Life Association, 3 N. V. Supp. 214 124 W I . s. . •-. 117 ud 106; s. c. ■ W. Rep. L08 05 . v. ! tan, 304 1' 1 • v. Bank of United . . .100, 103 dng v. Self, 3 DeG. M. & I !-. J. Ch. 29; 21 I-. T. '). S. nil : :; \V. I,'. 89 : I Jur. (N. s. ( 25; 8 Eq. Rep. 11: PAGE Flint v. Pierce, 99 Mass. 68 ; s. c. 96 Am. Dec. 691 122 Flounders v. Hawley, 78 Pa. St. 45: s. c. 1 W. N. (as. 74 ; 2 Del. (Pa.) 219 237, 259 Flynn v. Equitable Saving Fund, 37 Leg. Int. 333 ..177, 237 Folger v. Chase, 18 Pick. 63.. . . 68 Foot v. Prowse, 1 Str. 625 87 Forbes v. San Rapal Turnpike Co., 50 Cal. 340 102 Forest City, etc., Association v. Gallagher, 25 Ohio St. 208.. .. 30 133. 213. 214. 218, 231, 302 Foster v. Essex Bank, 16 Mass. 244 34, 83 Foster v. Mullanphy Planing Mills Co., 92 Mo/ 79; s. c. 4 S. W. Rep. 260 98, 260 Foster v. White, 86 Ala. 467 ; s. c. 6 So. Rep. 88 ; 26 Am. & Eng. Corp. Cas. 127 ; 6 Rail. &Corp. L. J. 88 46, 47 Fox*s Appeal, 112 Pa. St. 337. . 140 Fox v. Cottage Building Fund Association, 81 Ya. 677 317 Frank. Ex Parte. 57 Cal. 606. . 128 Frankfort Bank v. Johnson. 24 Me. 490 103 Franklin Bridge Co. v. Wood, 14 (4a. 80 ....20, 25 Franklin Building Association v. Marsh. 29 N. J. L. 225. ... 251 Franklin Building Association v. Mather, 4 Abb. Pr. °74... 187, 293, 295. 311, 316 Franklin Tire Insurance Co. v. Hart, 81 Md. 59 118 Franco-Texan Land Co. v. Laigle, 59 Tex. 339 50 Freehold P Building and Saving Society v. Ch< Irant Ch. 412 261, 295 Freehold Loan and Saving So- . Farrell,31 U. C. C. P. 282, 291 Freeman v. Machias, etc., Co., 38 Me. 345 50 Freeman v. Mutual Building and Loan Association, 90 Ga. 190 : s. c. 15 S. E l: •[>• 758.. 76 n v. Ottawa Building Homestead & Saving Asso- ciation, 111 [11. 182 ; s. c. 28 N. E. Rep. 611.. .25, 171. 188, 201 241, 252, 287 ■ . Fidelil v. etc., Union, 66 !!!. Ann. 152 ; affirmed, 46 X. E. Rep. 784 ; s. c. 166 HI. 35, 252 i . Fidelity, etc., Union, TABLE OP OASES. XXX1U PAGE 166 111. 128 ; s. c. 46 N. E. Rep. 784 ; affirming 66 111. App. 152 287 Friedlander v. Slaughter House Co., 31 La. Ann. 523 168 Friel v. GUberton Saving Asso- ciation, 1 Leg. Rec. (Pa.) 217 345,377 Frost Mf. Co. v. Foster. 76 la. 535 ; s. c. 41 N. W. Rep. 212. 115 Frye v. Tucker. 24 111. 1 HO 73 Fryeburg Canal v. Frye, 5 Me. 38 101 Fuller v. Salem and Danvers Loan and Fund Association, 10 Gray, 04 325 Fulton v. American Building and Loan Association, 46 Minn. 190 ; s. c. 48 N. W. Rep. 781 144, 200 Fulton Bank v. New York, etc., Co., 4 Paige, 127 67, 92 Furey v. Knights of Pythias Building ami Loan Associa- tion (N. J. Ch.), 34Atl. Rep. 380 299 Gadd v. S., etc., Bk., 17 N. Y. Misc. 320; s. c. 40 N. Y. Supp. 358 224 Gallery v. National Exchange Bank, 41 Mich. 169 ; s. c. 32 Amer. Rep. 149 62, 64 Galveston R. R. Co. v. Cow- drey, 11 Wall, 459 50 Gardner v. Butler, 30 N. J. Eq. 702 117 Gardner v. Hope Insurance Co., 9R. I. 194; s. c. 11 Am. Rep. 238 23 Garrett v. Dillsburgh, etc., R. R., 78 Pa. St. 465 22 Gaskell v. Chambers, 28 Beav. 368.. 104 Gasparo v. Same, 40 AY. N. C. 551 ......336, 345 Gass v. Citizens' Building and Loan Association, 95 Pa. St. 101 74 Geiger v. Eighth German Building Association, 58 Md. 569 247, 267 Gemmell v. Davis, 75 Md. 546 ; s. c. 32 Am. Rep. 412 158 German - American Building Association v. Droge, 14 Ind. App. 691 ; s. c. 43 N. E. 475.. 151 German- American Seminary v. Kiefer, 43 Mich. 105 105 German Evangelical Congre- gation v. Pressler, 14 La. Ann. 799 52, 102 PACK German Fair Hill Building As- sociation v. Metzger. 3 W. N. C. 204 199, 223, 224, 279 (ieinian Mining Co., In re, 4 De Gex M. & G. 19 ; s. c. 27 E. L. & Eq. L58 106, 421 German Union, etc., Associa- tion v. Senchmeyer, 50 Pa. St. 67 46, 166 ( rermania Building Association v. Neill, 93 Pa. St. 322.. .171, 319 Giblin v. McMullen, 17 W. R. 445; 21 L.T. Rep.(N. S.)214; 2 P. C. 315 ; 38 L. J. P. C. 35.. 83 Gibson v. Goldthwaite, 7 Ala. 281 ; s. c. 42 Am. Dec. 592. . . 66 Gibson v. Safetv, etc., Associa- tion, 69 111. App. 485 150 Gibson v. Safetv. etc., Associa- tion, 170 111. 4*4 ; 48 N. E. Rep. 580 150. 350, 398 Gilford v. New Jersey R. R. Co., 10 N. J. Eq. 171 24 Gill v. Balis. 72 Mo. 424 103 Gillis v. Bailey, 21 N. H. 149. . 100 Gillett v. Moody, 3 N. Y. 479. . 114 Gillett v. Phillips, 13 N. Y. 114 114 Gilman, etc., R. R. Co. v. Kel- ly, 77 III. 436 106 Gilmore v. Pope, 5 yiass. 491. . 98 Glamorganshire Banking Co., Re., 28 Ch. Div. 620 48 Glamorganshire Iron Co. v. Ir- vine, 4F. &F. 947.. 153 Glass v. Hope, 16 Grant Ch. 420 ; affirming 14 Grant Ch. 484 42, 140 Glen's Falls Paper Co. v. White., 18 Hun, 214 98 Globe Works v. Wright, 106 Mass. 207 65 Glynn v. Howe Building Asso- ciation, 22 Kan. 746 248 Godbold v. Bank of Mobile, 11 Ala. 191 ; s. c. 46 Am. Dec. 211 107 Goddard v. Merchants' Ex- change. 9 Mo. App. 290 ; s. c. 78 Mo. 699 128 Goldsmith, In re, L. R. 10 Ch. App. 41 ; s. c. 44 L. J. Bank 1 : 23 W. R. 39 ; 31 L. T. (N. S.) 366 279 Good Hope Building Associa- tion v. Steel, 11 W. N. Cas. 204 ; s. c. 39 Leg. Int. 70. .39, 40 Goodman v. Durant Building and Loan Association, 71 Miss. 310; s. c. 14 So. Rep. 146 209, 210, 231 Goodrich v. Atlanta National xxxiv TABLE OF CASES. Building and Loan Associa- tion, 96 Ga. 803 ; 22 S. E. Rep. 585 254, 585 Goodrich v. City Loan, etc., Association, 54 Ga. 98 443 Goodwin v. Union Screw Co., 34 N. H. 378 94 Gorder v. Plattsmouth Can- ning Co., 36 Neb. 548 ; s. c. .;. W. Rep. 830 106 Gordon v. Preston, 1 Watts, 5; s. c.26 Am. Dec. 75.. 98, 99 Gordon v. Winchester Build- ing Accumulating Fund As- sociation, 12 Bush, 110.. 127. 231 257, 289, 439 Gormerly v. Port Richmond Building and Loan Asssocia- tion, 3 W. N. Cas. 11. . . .431, 433 Gosling v. Veley, 7 Ad. & El. (X. S.) 406; s. c. 19 L.J. Q. B. 135 122 Gouckenour v. Sullivan Build- ing and Loan Association, 119 Ind. 441 ; s. c. 21 N. E. Rep. 1088 124, 213, 220 Goulding v. Clark, 34 N. H. 148 51 Gowen's Appeal, 10 W. N. Cas. 85 90 Granby Mining, etc., Co. v. Richards, 93 Mo. 106 25, 30 Grangers' Life, etc., Co. v. Kamper, 73 Ala. 325 156 Grand Lodge Ancient Order of United Woodmen v. Sa- fer, 44 Mo. App. 445 129 Grand Rapids Bridge Co. v. Prange, 35 Mich. 400; 24 Am. Rep. 585 34 Granger v. Original Empire, etc., Co.. 59 Cal. 678; s. c. 9 p. Cas. 27 53, 97 Granite State President Assc- cial ion v. .Monk (N. J. Ch.), 30 Atl. Rep. 872 251, 286 Granite state Provident Asso- ciation v. Sonderman, 48 111. App. 433; affirmed, 1 15 111. App. 624 : s.c. 31 X. E. Rep. 1 I:: 353 Gratz v. Redd, I B. Mon. 178.. 116 ( oaves v. Mono Lake 1 1.\ 'Iran- lie Mining < !o., 81 < !al. 303 ; B.C. 22 Pac. Rep. 665 106 Gray v. Bartford Fire Insur- ance Co., i Blatchf.280 135 Portland Bank, :: •i ■ . 864 ; s. <•. 8 Am. I tec. L56 129, 157 1 . . 'I'm apike Co., •! Rand. PAGE 578 ; Ala. 787 ; s. c. 89 Am. Dec. 344 31 Great Falls, etc., Insurance Co. v. Harvey, 45 X. H. 292 127 Greely v. Smith, 3 Story, 657. . 34 Green v. Dennis, 6 Conn. 293 ; s. c. 16 Am. Dec. 58 31 Green v. Graves, 1 Doug. (Mich.) 351 32 Green v. Hamilton Provident L. Co., 31 U. C. C. P. 574. . . 275 282 Greenfield's Estate, 1 Chest. (Pa.) 356 173. 177. 281 Greenleaf v. Ludington, 15 Wis. 558 ; s. c. 82 Am. Dec. 698 167 Greensboro, etc.. Turnpike Co. v. Stratton, 120 Ind. 294 ; s. c. 22 N. E. Rep. 247 118 Greenville, etc., R. R. Co. v. Johnson, 64 Tenn. 332 25 Gregory v. Lamb, 16 Xeb. 205 73 Griffin v. Kentucky Insurance Co., 3 Bush, 592. 24 Griffins v. Land Co., 3 Phila. 447 63 Griffiths v. Victorian Perma- nent, etc., Societv, L. R. 6 Vict. (Australia) 259 40 Grimes v. Harrison, 28 L. J. Ch. 823: s. c. 33 L. T. Rep. 113; 5 Jur. (X. S.) 528; 26 Beav. 435 ; 23 J. P. 421. . .80, 113 119,450, 460 Grocers' National Bank v. Clark, 48 Barb. 26 114 Grohmann v. Brown, 68 Mo. 37 App. 030 38, 44, 314, 421 Grommes v. Sullivan, 81 Fed. Rep. 45 421 Guardian Permanent Benefit Building Society, In re, L. R. 23 Ch. Div. 4 10 : s. c. 52 L. J. Ch. 857 ; 48 L. T. 134 ; 32 W. R. 173.. 113, 146, 328, 410, 411 420 Guilford v. Western Union Tel. Co., 43 Minn. 131 ; s. c 40 N. W. Rep. 70 166 Hager v. Cleveland. 36 Md. 470 151 152 FEagermarj v. Ohio Building, etc., Ass'n,25 Ohio St. 18633, 27 49, 125, 138, 190, 199. 200, 203 206, 213, 214,215, 217, 218, 222 270, 271, 282, 294, 317, 318, 436 Hagerstown Turnpike v. Co. Creeger,5 Earr.&John. 122; s. c. Am. Dee. 105 31 TABLE OF CASES. XXXV PAGE Hague v. Dandeson, 2 Exch. ; in 158 Haigh v. United States Build- in--, etc., Association, lit \V. V;t. 792 261, 206, 336 Haile v. Pierce, 32 Md. 327; s. c. Am. Rep. L39 67 Haines v. Arner. Popular In- surance Co., 3 Jones & S. P. 266 61 Hall v. Auburn Turnpike Co., 27 Cal. 255; s. c. Am. Dec. T.-i 62, 65 Hall v. Carey. 5 Ga. 239 92 Hall v. Norwalk Fire Insurance Co., 57 Conn. 105 ; s. c. 17 Atl. Rep. 356 84 Hallam v. Indianola Hotel Co., 56 la. 178; s. c. 9 N. W.Rep. Ill 105, 106 Hallett v. Halloner, 33 Barb. 537 28 Halstead v. Dodge, 51 N. Y. Supr. 169 93 Hamilton Building Associa- tion v. Reynolds, 5 Duer, 671 221 Hamilton v. Keith, 5 Bush, 158 23 Hammerslough v. Kansas City Building, Loan, etc., Associa- tion, TO Mo. so 75, '260, 264 Ha instead Building Associa- tion v. King, 58 Md. 279 440 Handley v. Fanner, 29 Bav. 362 203 319, 363 Handley v. Stutz, 139 U. S. 417 89 Hanna v. International Petro- leum Co., 23 Ohio St. 622. ... 26 Hanner v. Greensboro Building and Loan Association, 78 N. C. 188 256 Hannerty v. Standard Theatre Co., 109 Mo. 297 ; s. c. 19 S. W. Rep. 82 107 Hanney v. Enterprise Saving Fund and Building Associa- tion, 16 W. N. Cas. 450. .344, 345 374, 378 Hansbury v. Pfeiffer, 35 Leg. Int. 395 259 Hanson v. Dexter, 36 Me. 316 97 Harbison v. First Presbyterian Society, 46 Conn. 529 ; s. c. 33 Am. Rep. 34 103 Hardenburg v. Farmers, etc., Bank, 3 N. J. Eq. 68 53 Harmony v. Goldbeck, 13 W. N. Cas. 24 80 Harmony Building Association v. Berger, 41 Leg. Int. 280 ; s. c. 17Phila. 314 454 Harmony Building Association v. Goldbeck, 13 W. X. Cas. 24; s. c. 40 Leg. Int. L72 ; 30 Pitts. L. Jr. 457 125 I la i'n v. Woodward (1ml.). 50 N. E. Rep. 33 430 Harper v. Calhoun, 7 How. (.Miss.) 203 94 Harriman v. Southana, 16 Ind. 190 34 Harrington v. District Town- ship. 47 la. 11 52, 93 Harrington v. Workingmen's Benevolent Association, ~>> Ga. 340 L22, 135 Harris' Appeal, 18 W. N. Cas. 11 L63, 307 Harris B. & L. Ass'n v. Sim- mons. 19 Pa. C. C 110 : s. c. 6 Pa. Dist.Rep. 204. .207.213, 215 Harrod v. Hamer, 32 Wis. 162 30 Hartford Bridge Co. v. Grang- er, 4 Conn. 142 94 Hartford v. Co-operation Mut- ual Homestead Co., 128 Mass. 494 324, 336, 338 Hartford Bank v. Hart, 3 Day (Com.), 491 ; s. c. 3 Am. Dec. 274 94 Hartridge v. Rockwell, R. M. Charlt. 260 103 Hartt v. Harvey, 32 Barb. 55 ; s. c. 10 Abb. Pr. 330 ; 19 How. Pr. 245 90 Hatch v. Barr, 1 Ohio, 390 68 Hatcher, Ex Parte, 12 Ch. Div. 240 40 Hatfield v. Huntington City Building, Loan and Savings Association, 132 Ind. 149 ; s. c. 31 N. E. Rep. 532. .201, 312, 313 Haven v. N. H. Asylum, 13 N. H. 532 ; s. c. 38 Am. Dec 512 125 Haverson v. Cole, 6 W. R, 17 . . 73 197 Harvey v. Municipal Perma- nent Investment B. Society (In England), L. R. 26 Ch. Div. 273 ; 53 L. J. Ch. Div. 1126: 51 L. T. (N. S.)408: 32 W. 557 ; affirming in pari 52 L. J. Ch. Div. 349': . . .74, 234, 238 321, 371 Harvey v. O'Shaughnessey. 6 Leg. News, 369; 5 Lei;'. News. 429 446 Harvie v. McGregor, 29 Cal. 124 28 Hawes v. Gas Consumers Ben- efit Co., 9 N. Y. Supp. 490. . . 165 Ilawkeye Benefit and Loan XXXVI TABLE OF CASES. Association v. Blackburn (In Iowa), -48 la. 385 ; s. c. 6 Cent. L. Jr. 466 200. 231, 260 Hawkins v. American Building and Loan Association, 96 Ga. 206 ; s. c. 22 S. E. Rep. 711 254 312 Hawley v. Northside, etc., Assn, (Colo.), 52 Pac. Rep. 408 284, 330. 335, 338, 342, 406 Hax v. Davis Mill Co., 39 Mo. App. 453 95, 96 Haxtun v. Bishop, 3 Wend. 13 457 Haynesv. Cape May, 50 N. J. L. 55 ; 13 Atl. Rep. 231 134 Haynes v. People's Building Loan and Savings Associa- tion, 2 Ohio N. P. 181 ; s. c. 3 Ohio Dec. 228 299 Hays v. Crutcher, 54 Ind. 260. 67 Havs v. Kenyon, 7 R. I. 136. . 70 114 Hazel Loan & Building Asso- ciation v. Greenwood, 41 Leg. Int. 16 ; s. c. 17 Phila. 242 221 Hazel Loan & Building Asso- ciation v. Groesbeck 41 Leg. Int. 16; s. c. 17 Phila, 242... 174 222, 299 Hazelet v. Bntler University, 84 Ind. 230.... *. 37 Heading v. Bexar, etc., Associa- tion (Tex. Civ. App.), 26 N. W. Rep. 468 , 461 Heady v. Bexar Building, etc., Association (Tex. Civ. App.); s. c 26 S. \V. Rep. 468. . . .233, 258 452 Heald v. Owen, 79 la. 23 32 Heath v. Erie R. R. Co., 8 Blatch.347 103 I loath v. N. Y. (I old Exchange, 7 Abb. I'r. N. Y. 251 ; s. c. 38 I low. I'r. L68 136 Heckman v. Building Associa- tion, 11 l.an. Bar. no 259 Hedges v. Paquett, :; Ore. 77.. 104 Heggie v. Building ami Loan ociation, 107 X. < '. 581 ; s. e. \-! S. E. Rep.275. .246,376,416 Heinbokel v. National Saving Loan and Building Associa- tion, ■'.'.» Minn. 340; s. c. 59 N. \V. Rep. 1050 333 I feintzelman v. Druids Relief \ ocial ion. 88 .Minn. L88 : 36 N. W. Rep. LOO 133 Heiring \ . Vdams ,ete., Ml'. < !o., 1 Ky. 800 27 J I' kelnkaemper v. < terman PAGE Building Association, 22 Kan. 549 16, 19, 29, 130, 248, 268 313, 314 Hemperly v. Tyson, 170 Pa. St. 385 ; s. c. 37 W. N. Cas. 301 ; 32 Atl. Rep. 1081 319 Heminway v. Herninway, 58 Con. 443 ; s. c. 19 Atl. Rep. 766 72 Hempstead Building Associa- tion v. King, 58 Md. 279 320 Henderson v. Bank, L. R. 40 Ch. Div. 170 ; s. c. 8 Rail & Corp. L. J. 213 89 Henderson Building and Loan Association v. Johnson. 88 Ky. 191 ; s. c. 3 L. R. A. 289 ; 10 S. W. Rep. 7s7. .257, 28S Henderson v. Railroad Co., 17 Tex 560 ; s. c, 67 Am. Dec. 675 153 Hennighaiasen v. Tisher, 50 Md. 583. . . .174, 316. 275, 338, 344. 395 404,444 Henry v. Jackson, 37Vt. 441 108 109 Hensel v. International Build- ing and Loan Association, Tex. 20 S. W. Rep. 116 180 Herbert v. Kenton Building & Savings Association of Cov- ington, 11 Bush, 296. .22. 127. 210 231, 257,289 Herbert v. Mechanics' Building and Loan Association, IT N. J. Eq. 497 302, 308 Hibernia Building Association v. McGrath. 32 W. N. Cas. 233; s. c. 154 Pa. St. 296 ; 26 Atl. Rep. 377 83 Hi hernia Fire Engine Co. v. Com., 93 Pa. St. 264 124 Hicks v. Borough of Lanceston, 1 Rolle Abr. 514, pi. 6 89 Hide v. Holmes, 2 Moll. 372. . . 47 Higgins v. Power, I Montreal Sup. Ct. 268; s. c. 8 Leg. News, 197 188 Higgins v. McCrea, 116 TJ. S. 671 124 Hildyard v. South Sea Co., 2 P. \\ ins. 76 168 Hill's Case, L. R. 20 Eq. 585.. 403 Eilles v. Parish, 11 N. J. Eq. 380 50 1 1 ills ci- v.( hernial), etc., Co., 6 Nev. 51 99 lliiiiman v. Ryan, 3 Ohio C. C. 529 .198, 437, 440, 441 llinton v. First Birmingham Perfect Thrift Building So- . cicty TABLE OF CASES. xxxvu PAGE Hirsch v. Grand Lodge, etc., 56 Mo. App. 101 123, 125 Hoblyn v. Rex, 2 Bro. P. C. 329 213 Hoboken Building Association v. Martin, 13 N. J. Eq. 428. . 33 86, 87, 197,20::. 251, 266 295, 376,437, 453 Hodge v. First National Bank, 22 Gratl; 51 62, 63, 65 Hodges v. N. E. Screw Co., 1 R I. 312 ; s. c. 53 Am. Dec. 624 107 Hodges v. Planters' Bank,7 Gill & J. 306 159 Hodges v. Rutland, etc., R. R. _ Co., 29 Vt. 220 117, 118 Hodgins v. Ontario Loan and Debenture Co., 7 Ontario App. 202 124, 295 Hodgson v. Duluth, etc., R. R. Co., 46 Minn. 454 ; s. c. 49 N. W. Rep. 197 89 Hoffman Steam Coal Co. v. Cumberland, etc., Co., 16 Md. 456; s. c. 77 Am. Dec. 811.. 105 Hohenshell v. Home Savings, etc., Association, 1-10 Mo. 566 ; 41 S. W. Rep. 948 144 145, 850,398, 447 Holbrook v. Fanquier, etc., Turnpike Co., 3Cranch C. C. 425 63 Holden v. Hoyte, 134 Mass. 181 81 Holden v. Upton. 134 Mass.177 81 Holder v. Lafavette, etc.R. R. Co,, 71111. 106; s. c. 22 Am. Rep. 89 117, 118 Holgate v. Shutt, L. R. 28 Ch. Div. Ill ; s. c. 54 L. J. Ch. 436 ; 51 L. T. 673 ; 49 J. P. 228 82 314 Hollowell v. The Southern Building and Loan Associa- tion, 120 N. C. 286 : 26 S. E. Rep. 781 210. 231, 256 Holmes, Ex Parte, 5 Con. 435. . 54 Holmes v. Board of Trade, 81 Mo. 137 95 Holmes v. Smyth, 100 111. 413, 82 124, 251 Holmes v. Turner's Falls Lum- ber Co., 150 Mass. 535 ; s. c. 23 N. E. Rep. 305 69 Holmes v. Willard, 125 N. Y. 75 ; s. c. 25 N. E. Rep. 183 ; 11 L. R. A. 170 80 Holt v. Winfield Bank, 25 Fed. Rep. 812 70 Holyoke Building and Loan Association v. Lewis. 1 Colo. PAGE App. 127 ; s. c. 27 Pac. Rep. 872 130, 326 Home Building Association v. Boning, 7 Wkly. L. Bull. 174 ; s. c. 10 Amer. Rec. 626.. 236, 260 284, 299 Home Mutual Building Asso- ciation v. Thursby, 58 Md. 284 247 Home Building and Loan Asso- ciation v. Van Pelt, ( J4 Ga. 615 ; s. c. 21 S. E. Rep. 606. . 436 438 Homestead Association v. Keith (111.), 89 N. E. Rep. 1072 429 Hope v. Glass. 23 U.( '. Q.B. 86 292 Hopkins v. Baker, 3 P. & H. Va. 110 86 Hoppin v. Buffum, 9 R. I. 513 : s. c. 11 Am. Rep. 291 54 Hopson v. j3±]tna Axle and Spring Co., 50 Conn. 597 106 Horbury v. Bridge Coal Co., In re, 11 Ch. Div. 109 ; 48 L. J. Ch. 341; 40 L. T. 353; 47 W. R. 433 57 Horn Silver Mining Co. v. E van, 42 Minn. 196 ; 44 N. W. Rep. 56 108, 114 Horton v. Columbian Building and Loan Association, 6 Wkly. L. Bull. 141 313 Horton v. Wilder. 48 Kan. 222 ; s. c. 29 Pac. Rep. 566 90 Horton Ice Cream Co. v. Mer- ritt, 63 Hun, 628 ; s. c. 17 N. Y. Supp. 718 63, 64 Hoskins v. Mechanics' Building and Loan Association, 84 N. C. 838 256 Hoskingv. Smith, L. R. 13 App. Cas. 582 ; s. c. 58 L. J. Ch. 367; 59 L. T. 565: 37 W. R. 257 293 Houghton, v. First National Bank, 26 Wis. 663 ; s. c. 7 Am. 107 68 Houlette's Estate, 2 Chester 511 188. 222. 223, 308 Houser v. Hermann Building Association, 41 Pa. St. 478.. . 259 Howard Mutual Loan and Fund Association v. Mcln- tire, 3 Allen, 571 45, 313 Howard v. Marine Industrial School, 78 Me. 230 96 Howard v. Savannah, T. U. P. Charlt. 173 124 Howe v. Barney, 45 Fed. Rep. 668 114 xxx vm TABLE OF CASES. PAGE Howland v. Meyer, 3 N. Y. 290 64 Howley Building Association t. Toylor, 39 Leg. Int. 412... 216 Hows' Appeal, 18 W. N. Cas. 14 177 Hovle v. Plattsburgh, etc., R. R.Co., 54 N. Y. 314 ; s. c. 13 Am. Rep. 595 107 Hovt v. American Ex. Bank, 1 Duer, N. Y. 652 ■ 48 Hovt v. Bridgewater Mfg. Co., 6N. J. Eq. 253 99 Hovt v. Inter-Ocean Building Association. 58 Minn. 345; s. c. 60 N. W. Rep. 678. . . .330, 337 Hovt v. Sheldon, 3 Bosw. 207. . 138 Hoyt v. Thompson, 5 N. Y. 320 66, 96, 138 Hubbard v. Weare, 79 la. 678 ; s. c. 41 N. W. Rep. 915. . . .69, 115 Hudson City Savings Institute v. Mc Arthur, 8 N. Y. Wkly. Dig. 63 281 Hughes' Appeal, 30 Pa. St. 471 171, 259, 305 Hughes v. Antietam Mfg. Co., 34 Md. 316 27 Hughes v. Canada Permanent Loan and Saving Society, 39 U. C. Q. B. 221 453 Hughes v. D'Eynecourt, 3 N. R. 420 ; 116 El. & Eq. 819. . . 202 460 Hughes v. Farmers', etc., Asso- ciation (Tenn.), 46 S. W. Rep. 372. . . .203, 213, 232, 233. 236 242. 249 Hughes v. La Compagnie 16 ; affirming 69 How. Pr. l'.'<; L08 PAGE Hunt v. Hewitt, 7 Ex. 236 ... . 48 Hunt v. School District, 14 Vt. 300 ; s. c. 39 Am. Dec. 225. . 52 Hunter v. Sun Mutual Insur- ance Co., 26 La. Ann. 13. . . . 87 Huntington, etc., Association v. Melsheimer, 14 W. N. Cas. 344 296, 430 Huntsville v. Phelps, 27 Ala. 55 137 Hurlburt v. Britain, 2 Doug. (Mich.) 291 .. 32 Hurlbut v. Marshall, 62 Wis. 590 : s. c. 22 N. W. Rep. 852. 87 Hurt v. Salisbury, 55 Mo. 310. . 29 Huse v. Arnes, 104 Mo. 91 458 Hussey v. Gallagher, 61 Ga. 86 137 Huston v. Reutlinger, 91 Ky. 333 ; s. c. 15 S. W. 867.. .127, 128 Hutchison v. Green, 91 Mo. 374 458 Hyatt v. McMahon, 25 Barb. 457 24 Hyde v. Larkin, 35 Mo. App. 365 66 Illinois B. & L. Association v. People, 173 111. 638 ; s. c. 50 N. E. Rep. 1007 434 Illinois B. & L. Ass'n v. Walk- er (Tenn.), 48 S. W. Rep. 191 33 323 Illinois Central R. R. Co. v. Wliittemore. 43111. 420 134 Imperial Gas Co. v. Clarke, 7 Bing. 95. 48 Indianapolis, etc.. Mining Co. v. Herkimer, 46 Ind. 142. .27, 29 Indianapolis, etc., R. R. Co. v. Hvde, 122 Ind. 188 ; s. c. 23 N. E. Rep. 706 71 Indianapolis Rolling Mill Co. v.St. Louis, etc., R.R. Co., 26 Fed. Rep. 140 61, 66 Inglehart, In re, 29 Grant. Ch. 418 453 Ingoldby v. Riley, 28 L. T. (N. S.)55. 220 Internationa] Building and Loan Association v. AMmi l , 85 Tex. 220; s. c. 20 S. W. Rep. 1 is : in A Bier, and Eng. Corp. ('as. 371 258 International Building and I .(tan Association V. Forlas- sain (Tex. Civ, App.), 23 S. W. Rep. 496 453 International Building and I loan Assn. v, Mayers (Tex. Civ. App.) : •.'.-» S. W. Rep. 1132 173, 258, 267 TABLE OF CASES. XXXIX PAGE International Building; and Loan Association v. Biering, 86 Tex. 470 ; s. c. 25 S. W. Rep. 622 258, 268, 342 International Building and Loan Association v. Biering (Tex. Civ. App.), 23 S. W. Rep. 1025 340 International Building and Loan Association v. Biering, (Tex. Civ. App.). 23 S. W. Rep. 621 263, 268 International Building and Loan Association v. Braden (Tex. Civ. App.), 32 S. W. Rep. 704 258, 315 Interstate, etc., Assn. v. Cairns, 16 Wash. 215 ; 47 Pac. Rep. 509 175, 194 Iron Clay Brick Mf. Co., In re, 19 Ont. Rep. 113 : s. c. 33 Am. & Eng. Corp. Cas. 277 107 Iron Railroad Co. v. Fink, 41 Ohio St. 321 ; s. c. 51 Am. Rep. 84 164 Irwin v. Bailey, 8 Biss. 523. . . 64 Irwin v. Granite State, etc., Association, 38 Atl. Rep. 680 456 Jackson v. Campbell, 5 Wend. 572 81 Jackson v. Cassidy, 68 Tex. 282 ; s. c. 4 S. W. Rep. 541 257 Jackson v. Myers, 43 Md. 452. . 418 James v. Cincinnati, etc., R.R. Co., 2 Disney, 261 162 James D. Howley Building As- sociation v. Taylor, 39 Leg. Int. 412 216 Jarrett v. Cope 68 Pa. St. 67 209 233,259, 455 Jarvis v. Manhattan Beach Co., 53 Hun, 362 ; s. c. 25 N. Y. St. Rep. 1 ; 6 N. Y. Supp. 703 ; 6 Rail. & Corp. L. Jr. 325 162 Jennery v. Olmstead, 105 N. Y. 654 119 Jennings v. Bank of California, 79 Cal. 323 ; s. c. 21 Pac. Rep. 852; 12 Am. St. Rep. 145: Cent. L. Jr. 150 158, 169 Jesup v. Illinois, etc., R. R. Co., 43 F. Rep. 483 104 John v. Farmers' Bank. 2 Blackf. 367 ; s. c. 20 Am. Dec. 119 31 Johns v. Johns, 1 Ohio St. 359 140 Johnson v. Albany, etc., R. R. Co., 40 How. Pr. 193 162 PAGE Johnson v. Cra\vfordsville,etc, R. R. Co., 11 Ind. 280 27 Jolinson v. Elizabeth Building and Loan Association, 104 Pa. St. 394; s. c. 41 Leg. Int. 233 ; 14 W. N. Cas. 244; 32 Pitts. Lep. 460...:;:;. 74, 263, 281, 282 201. 310. 320, 294 Johnson v. Jones, 23 X. J. Eq. 216 90 Johnson v. Potomac Building Association, 2 Quart. L. Jr. 347 ; s. c. 14 Leg. Int. 393. . . . 259 Johnson v. Underbill 52 N. Y. 203 164 Joliet Electric Light Power Co., v. Ingalls, 23 111. App. 45 65 Jones v. Bank of Tennessee, 8 B. Mon. 122 34 Jones v. Building Association, 94 Pa. St. 215 420 Jones v. Cincinnati Type Foun- dry Co., 14 Ind. 89 33 Jones v. Milton Turnpike Co., 7 Ind. 547 52 Jones v. Morrison, 31 Minn. 140 71, 119, 157 Jones v. National Building As- sociation, 94 Pa. St. 215. .74. 418 Jordoin v. Dubois, 3 Lower C. Jur. 325 00 Judahv. American, etc., Insur- ance Co. , 4 Ind. 333 52 Junction R. R. Co. v. Reeve, 15 Ind. 236 93, 96 Jungkuntz v. AVest Liberty Building Association. Wklv. L. Bull. 428.... 2G1, 338, 340, 345 Juniata Building and Loan As- sociation v. Hertzel, 103 Pa. St. 507 ; s. c. 41 Leg. Int. 155 ; 12 W. N. Cas. 431 ; 31 Pitts. L. Jr. 473 283, 292, 311 Juniata Building Association v. Mixell, 84 Pa. St. 313 ; s. c. 34 Leg. Int. 266. . . .39. 221, 281, 291 Kadish v. Garden City, etc. Association, 151 111. 531 ; s. c. 38 N. E. Rep. 230 ; 20 Ch. Leg. News, 528 ; affirm- ing 47 111. App. 602 43, 280 282, 314 Kaiser v. Savings Bank, 56 la. 104 29 Kansas City Hotel Co. v. Hunt, 57 Mo. 126 156 Kearnev v. Andrews, 10 N. J. Eq.70 88, 127 Kehlenbeck v. Lodgeman, lO Daly. 447 134 Kelly v. Accommodation Sav- xl TABLE OF CASES. PAGE ing Fund and Loan Associa- tion, 2 Phila. 237 ; s. c. 14 Leg. Int. 49 259, 308 Kelly v. Mobile, etc., Associa- tion, 64 Ala. 501 123, 251 Kelly v. Perseverance Build- ing Association, 39 Pa. St. 148 187, 259 Kelsall v. Tyler, 25 L. J. Exch. 153 : s. c. 30 J. P. 150; 11 Exch. 513; 26 L. T. Rep. 206 42 Kemp v. Wright (on appeal) , 7 Rep. 631 ;s. c. (1895) 1 Ch. 121 ; 64 L. J. Ch. 59 ; 71 L. T. 650 ; 43 W. R. 213 ; 59 J. P. 133 131, 448 Kemp v. Wright. (1894) 2 Ch. 472 : s. c. 71 L. T. Rep. 650 ; 47 W. R. 213; 48 J. P. 588; 1 Manson, 308 130, 448 Kenedy v. Cotton. 28 Barb. .59, 60 Kennebec, etc.. R. R. Co. v. Kendall.:!! Me. 470 129 Kent v. Quick Silver Mining Co.. 7s N. Y. 159. . . .127. 144, 162 Kent Benefit Building Society. In re, 1 D. R. & Sm. 417 ; s. c. 4T. L. Rep.(N. S.) 610 ; 30 L. J. Ch. 785 ; 7 Jur. (N. S.) 1045 : 25 J. P. 805; 9 W. R. 686 80,450, 460 Kenton Insurance Co. v. Bow- man, 84 Ky.430;s. c. 1 S.W. Rep. 717 61, 63 Keyserv. Ilitz. 133 U. S. 138.. 163 Kilpatrick v. Home Building and Loan A.ssociation,119Pa. St. 30; s. c. Ail. Rep. 754... 85 Kilpatrick v. Penrose, etc., ( 'o., 49 Pa. St. 118; s. c. 88 Am. Dec. 497 117 Kimball v. Davis. 52 Mo. A pp. 194 37. 38, 44 Kimball v. I rnion Water < '<>.. II Cal. L73; s. c. 13 Am. Rep. 157 '. 165 King v. Davis, 16 N. Y. Supp. 127 : 61 Kim. 127; II N. Y. St. Rep. 898 69 King \. International, etc., Union, 170 111. 135; is N. E. R >p. 677 : reversing 68 111. 640 38, 150 King-Sessing Building Associ cial ion v. Roan, '» W. X. Kas. 15 171, :;n; Kinkier v. Junica, 84 Tex. 1 16 ; Ifl s. \v. Rep. 859 115 Kirk v. Nowill. l T. It. lis.... 136 213 PAGE Kisch v. Central Railroad, 34 L. J. Ch. 545 153 Kisterbock's Appeal, 51 Pa. St. 483 Ill, 191, 406, 444 Kisterbock's Appeal, 127 Pa. St. 601 ; s. c. 14 Am. St. Rep. 868 168 Knell v. Green Street Building Association, 34 Md. 67.. .. 308 Knoblauck v. Blum Building and Loan Association, 25 Pitts. L. Jr. 39 346, 378, 390 Knowlton v. Congress Spring Co., 14 Blatchf. 364 156 Knoxv. Shepherd, 2 L. T. Rep. (N. S.) 351 42 Knutson v. Northwestern, etc., Association. 67 Minn. 201 : s. c. 69 N. W. Rep. 889. .446. 447 Kohler v. Black, etc., River R. R. Co.. 2 Black. 215 104 Kolff v. St. Paul Fund Ex- change, 48 Minn. 215: s. c. 30 N. W. Rep. 1036. .'. 127, 189 Kortright v. Buffalo Commer- cial Bank. 20 Wend. 91 ; s. c. 34 Am. Dec. 317 163 Krakowski v. North N. Y. Building and Loan Associa- tion, 27 N. Y. Supp. 314 ;s. c. 7 Misc. Rep. 188 24 Kreamer v. Springville Saving Fund and Loan Association, 1 Chest, (Pa.) 353; s. c. 6 W.N. Cas. 267.... 171, 173, 177, 307 Krutz v. Paola Town Co.. 20 Kan. 397 32, 34 Kupfer v. South Parish, 12 Mass. 185 94 Kuppert v. Guttenburg Bld'g Assn., 30 Pa. 465. .<>. ill. 242, 259 204, 305 Kynaston v. Mayor of Shrews- bury, 2 Str. 1051 52 La Compagnie de Villas v. Hughes, 11 Can. Sup. Ct.537 ■ s. c. 1 Low. < 'an. Jur. 264 ; affirm ng 3 I >orion, 175 ; s. c. 4 Leg. News, 361 452 Lafterty's Estate, In re, 2 Pa. Dist. Rep. 216 91 La funds v. Deems, SI S. W. 507 : reversing I A1>1>. N. C. 318 ;s. c. 52 Bow. P. 11.. 135, 137 Laine v. Brainard, 30 Com. 56 96 Laing v. R 1. L. R. 5 Ch. \pp. I : s. c. 39 L. .). Ch. 1 : 21 L. T. Rep. (N. S.) 773 ; 18 \V. R. 76; 31 .1. P. 13 1... 409, 421 TABLE OF CASES. Xli PAGE Lake v. Security Loan Associ- ation, 72 Ala. 207 73 Lambert v. Addison, 46 L. T. (N. S.),20 137 Lancaster Co. v. Cheraw, etc., R. R. Co.. 28 S. C. 135 61, 63 Lane v. Hank. 9 Heisk, 419 50 Langelier v. Laroche, L. R. 3 Quebec, 239 47, 49 Langsdale v. Bonton, 12 Ind. 467 123 Larivee v. La Societe Canadi- enne-Francaise, 6 Montreal Q. B. 464 437 La Societe Canadienne-Fran- caise de Construction de Montreal v. Daveluy, 20 Can. Sup. Ct. Rep. 449 ; reversing Montreal Law Rep. 7 Q. B. 117 160, 172 La Societi Canadienne v. La- pointe. 5 Montreal Sup. Ct. 59 33 La Societe Permanente District v. Rossil t. i-Leg. News, 269 421 Latchford Succession. 42 La. Ann. 539 ; s. c. 7 So. Reg. 628 250 Latham v. Washington Build- in 'j; and Loan Association, 177 X. C. IP, 256, 266 Latimer v. Equitable Loan, etc., Co., 81 Fed. Rep. 776. . . 142 150, 397, 456 Laurel Run Building Associa- tion v. Bayley, 1 Kulp, 215. . 171 178 Laurel Run Building Associa- tion v. Sperring, 106 Pa. St. 334 : s. c. 15 W. N. Cas. 340 ; 3 Kulp, 67 ; 32 Pitts. L. J. R. 394 371) 826, 337,346, 436 Leathby v. Webster, Saver. 252. 136 Leavitt v. Beers. H. & B. Supp. 221 71 Lebanon, etc.. Gravel Road Co. v. Adair. 85 Ind. 244 92 Lechmere Bank v. Boynton, 11 Cush. 369 21, 54 Lee v. Rvan (Tex. Civil App.), 31 S. W. Rep. 1098 268 Leeds Banking Co., In re, L. R. 1 Ch. App. 561 ; 12 Jur. (N. S.) 655; 14 L. T. (N. S.) 747 100 Leggett v. New Jersey Manu- facturing Co.. 1 N. J. Eq. 541 ; s. c. 23 Am. Dec. 728. . 65 Lehigh Iron Co. 's Estate, 12 Pa. Co. Ct. Rep. 257 457 Le Lievre v. Gould, 4 Rep. 274 ; PAGE s. c. (1895) 1 Q. B. 491; 62 L. J. Q. B. 353 ; 58 L. T. 626 ; 41 W. R. 468; 57 J. P. 484 86 Lepore v. Twin Cities, etc., As- sociation, 5 Pa. Supr. Ct. 276 ; s. c. 40 W. N. C. 548 336, 344 Lewis v. Graham, 4 Abb. Pr. 106 168 Lexington v. Headley, 5 Bush, 508 97 Lexington, etc., R. R. Co., v. Bridges, 7 B. Mon. 566; s. c. 46 Am. Dec. 428 116 Liberator Permanent Benefit Building Society, In re, 71 L. T. Rep. 106 (1895) 84 Licking County Saving Loan and Building Association v. Bebout, 29 Ohio St. 252. .184, 273 Life, etc., Insurance Co. v. Mechanics' Fire Insurance Co., 7 Wend. 31 66 Lime City Building Loan and Saving Association v. Black, 136 Ind. 544; s. c. 35 N. E. Rep. 829 45, 188, 201, 440 Lime City Building, Saving and Loan Association v. Wagner, 122 Ind. 78 ; s. c. 23 N. E. Rep. 689 ; 17 Amer. St. Rep. 342 268. 294, 296 Lincoln Building and Savings Association v. Benjamin. 8 Neb. 181 -.23, 209, 255 Lincoln Building and Savings Association v. Graham. 7 Neb. 173 23, 35, 209, 255 Lincoln Building and Saving Association v. Haas. 10 Neb. 581 ; s. c. 7 N. W. Rep. 327. See 269 291 Lindon Mill Co. v. Lindon Lit- erary Institute, 63 Vt. 581; s. c 25 Amer. St. Pup. 783; 22 Atl. Rep. 675 61. 64, 65 Link v. Germantown Building Association, 89 Pa. St. 15. . . 171 204, 209, 259, 264, 265, 306, 455 Lister v. Lou,- Cabin, etc., Asso- ciation, 38 Md. 115. .144, 192. 246 301,434, 435.4 15 Little v. Merrill, 10 Pick. 543. . 52 Little Rock, etc., R. R. Co. v. Page, 35 Ark. 304 106 Little Rock. etc.. R. R. Co. v. Little Rock, etc., R. R. Co., 36 Ark. 663 21 Liverpool, etc.. Building So- ciety, In re, 15 So. Jr. 177... 410 Livingston v. Lynch, 4 Johns. Ch. 273 " 23 xlii TABLE OF CASES. PAGE Livingston Loan and Building Association v. Drummond, 41) Neb. 200 ; s. c. 68 N. W. Rep. 753 220,256 Lloyd v. Scott, 4 Pet, 205 264 Loan Association v. Stonemetz, 29 Pa. St. 534 117 Loan Corn pan}- v. Conover, 5 Phila. 18 421 Loan and Protection Ass'n v. Holland, 63 111. App. 58. . .79, 150 Locknane v. U. S. I. &L. Co., 44 S. TV. Rep. 977 287 Lockwood v. Mechanics' Na- tional Bank. 9 R. I. 308 ; s. c, 11 Am. Rep. 253 99, 123, 125 Lockwood v. Robbins, Clev. Rep. 101 45,151 Lockwood v. Thunder Bay River Boom Co., 42 Mich. 536 94 Lomb v. Pioneers' Savings and Loan Co. (Ala.) 17 So. Rep. 670 30 London City v. Yanacker, Carth. 480 126 London, etc., R. R. Co. v. Mc- Michael, 5 Exch. 114 38 London & County, etc.. So. v. Angell, 65 L. J. Q. B. 194... 74 London India Rubber Co.,L.C. 5 Eq. 519 145 London Provident Building Society v. Morgan, 5 Rep. 510; s. c (1893) 2 < t >. P.. 266; 62 L.J. g. B. 511 ; 69 L. T. 595: 57 J. P. 696; 46 Amer.&Eng. Corp. Cas. 512: 9 T. L. R. 576 304,392,404, 448 London Tobacco Pipe Makers Co. v. Woodrooffe, 7 B. & C. 136 I. mii- v. ( 'it izens' Bank, 8 Utah, lot ; s. c. .".) Pac. Rep. 878... 69 Long Island Ferry Co. v. Ter- bell, \S X. Y. 427 78 I ."i ! la N I I'. R. Co., In re, 19 Wend. ■•', ; s. <•. 3:2 Am. I).-.-. 429 56, L36 Longmonl Supply Ditch < !o. v. ( loffman, 1 1 ( !olo. 551 ; s. c. 19 Pac. Rep. 508 96 Looker v. Wlngley, I- R. 9 Q. B. DLv. 397 : 8. c. 16 .1. P. IT.'. 114,422 Lord v. Essex Building Asso- ciation, :;r Md. 820 27, 33 Loubal v. Leroy, 15 Abb. N. < '. II; 8. c. 65 Bow. I'r 56, 96 187, 388 Lovejoy v. Mulkarn, l<> L. J. Ch. 630; s. c. 37 L. T. 77... 213 215, 218 Lovett v. German Reform Church, 12 Barb. 67 90 Low Street Building Associa- tion v. Zucker, 48 Md. 448. . . 229 374, 402 Luard'sCase, 1 De Gex, F. & J. 533 39 Lucas v. Greenville Building and Savings Association, 22 Ohio St. 329 33. 261, 287 Luse v. Isthmus Transit R. R. Co., 6 Ore. 125 ; s. c, 25 Am. Rep. 500 66 Luzerne Building Association v. McDermott, 2 Kulp, 203. . . 40 Lycas v. San Francisco, 7 Cal. 463 125 Lyndon Mill Co. v. Lyndon Literary, etc., Institute, 63 Vt. 581 ; s. c. 25 Am. St. Rep. 783 ; 22 Atl. Rep. 575 61 64, 65 Lynn v, Freemensburg Build- ing and Loan Association, 177 Pa. St. 1 ; s. c. 35 Pitts. Leg. Jr. 208: 20 W. N. C. 185; 44 Leg. Int. 462; 19 Amer. & Eng. Corp. Cas. 68 : 11 Atl. Rep. 537 210, 213, 214 218, 223 Lyon v. American Screw Co., 16 R. 1. 462: s. c. 17 Atl. Rep. 61 46 Lyons v. Orange, etc., R. R. Co., 33 Md. 18 23 Lyster's Case, L. R. 4 Eq. 233 96 McAllen v. Woodcock, 60 Mo. 174 107 McAllister v. Kuhn, 96 U. S. 87 165 i McAvitv v. Lincoln Pulp, etc., Co., 82 Me. 504: s. c 20 Atl. Rep. 82 71 McCahan v. Columbian Build- ing Association, 40 M.I. 226 201 269, 279, -'in;. 318, 319 McCall v. Bviam Ml'g. Co., 6 Conn. 428. 50, 99 McCallion v. Hibernian etc., Sooietv, 70 Cal. 163; s. c. 12 Pac. Pep. Ill 26 Mc< 'auley v. Workingmen's B. .V- S. Ass'n, 97 Tenn. 421 ; s. «■. 97 S. W. Pep. L'I2; 35 P. R. A. •ill 234. 237 Mi< Jomb v. Barcelone Apart- menl Association, 31 X.Y.St. Rep. 325; s.c. mi X. Y.Supp. 546 37 McComb v. Belknap, 30 Abb. TABLE OF CASES. xliii N. C. 119;s.c.24N.Y.Supp. 935 452, 461 McComb v. Cordona Apart- incut Association, 31 N.Y. St. Rep. 334 ;s. c. 10 N. Y. Supp. 552 37 McCortle v. Bates, 29 Ohio St. 419 ; s. c. 23 Am. Rep. 758. . 93 McCullough v. Moss, 5 Denio, 567 06 McCullough v. Talladge Insur- ance Co., 46 Ala. 376 34 McDaniels v. Flower Brook Mf . Co., 22 Vt. 274 97 McDermott v. Board of Police, 5 Abb. Pr. 422 122 McDonald v. Chisholm, 131 111. 273 ; s. c. 23 N. E. Rep. 596 ; affirming s. c. 30 111. App. 176 65,67 McDonough v. Hennepin Coun- ty Catholic Building and Loan Assn., 62 Minn. 122 ; s. c 64 N. W. Rep. 106 125 McGannon v. Central, etc., As- sociation, 19 W. Va. 726 191 214 McGowan v. Savannah, etc., Association, 80 Ga. 515 ; s. c. 5 So. Rep. 775 427, 429 McGrath v. Hamilton Savings and Loan Association, 44 Pa. St. 383 200, 304, 374, 377, 390 McHenry v. Jerett, 26 Hun, 453 54 McKenney v. Diamond State Loan Association, 8 Houst. 557 ; s. c. 18 Atl. Rep. 905. . 132 326, 327, 346, 326, 338 McKeown v. Irish Building As- sociation, 5 Wkly. L. Bull. 52 23 132. 377, 381 McLaughlin v. Citizens' Build- ing Loan and Savings Asso- ciation, 62 Ind. 264 25, 33, 260 287 McMurrtry v. Montgomery Ma- sonic Temple Co., 86 Ky. 206 ; s. c. 5 S. \V. Rep. 570 106 McNab v. Southern Ass'n, 50 s. c. 89 : 27 S. E. Rep. 543. . . 336 McNaughton v. Osgood, 41 Hun, 109; s. c. 3 N.Y. St. Rep. 795 119 McNeely v. Woodruff, 13 N. J. L. 352 54 McNeil v. Boston Chamber of Commerce, 154 Mass. 277 ; s. c. 28 N. E. Rep. 245 101 McNeil v. Tenth National Bank, 55 Barb. 59 168 PAGE Machell v. Nevinson, 2 Ld. Raym. 1355 53 Madison Insurance Co. v. Grif- fin, 3 Ind. 277 66 Magdalena Steam Navigation Co. v. .Martin. 2 El. & El. 94.. 38 Magill v. Kauffman, 4 S. & R. 317; s. c. S Am. Dec 713.... 66 Mahone v. Manchester, etc., R. R. Co.. Ill Mass. 72; s. c. 15 Am. Rep. 9 63, 65 Maine Guarantee Co. v. Cox (Ind.) 42N.E. Rep. 915, 323 Maisch v. Saving Fund, 5 Phil. 30 116 Malley v. People's Building, etc., Association. 35 N. Y. Supp. 14 280 Mallory v. Mallory Wheeler Co., 61 Conn. 131 : s. c. 23 Atl. Rep. 708 117 Maloney v. Leal Estate, etc., Association, 57 Mo. App. 384 142 207. 334, 338, 344 Manahan v. Varnum, 11 (Lav. 405 300. 301, 458 Manufacturers and Mechanics' Saving and Loan Ass'n, v. Conover, 5 Phila. 18 ; 19 Leg. Int. 116. See 275 291, 438 Marble Building Association v. Hooker, Phil. 494; s. c. 16 Leg. Int. 356 259 Marine Bank v. Clements, 3 Bosw. 600 63 Markey v. Mutual Benefit In- surance Co., 102 Mass. 78; 65 Markley v. Rhodes, 59 la. 57. . 70 Marks v. Monroe Co., etc.. As- sociation 52 N. Y. St. Rep. 451 181, 191, 229 Marlatt v. Levee Steam Cotton Press Co., 10 La. 583 ; s. c. 29 Amer. Dec. 468 61, 63 Marlborough Mfg. Co. v. Smith. 2 Conn. 579 103 Marseilles R. R. Co., In re, L. R, 7Ch. 161 93 Marshall v. Farmers', etc.. Bank 85 Va. 676: s. c. 17 Am. St. Rep. 84 ; 8 S. E. Rep. 586. 108, 115 Martin v. Nashville Building Association, 2 Cold, lis 22 49. 126, 127. 231, 248,439 Martin v. Niagara Falls Paper Manufacturing Co., 44 Hun, 130 67 Martin v. W. J. Johnson Co., 62 Hun. 557 ; s. c. 42 N. Y. St, Rep. 409: 17 X. Y. Supp. 133 : 11 Rail.& Corp. L.J. 122. 47 xliv TABLE OF CASES. PAGE Martindale v. Wilson-Cass Co., 134 Pa. St. 348 ; 26 W. N. Gas. 48 : 19 Atl. Rep. 680 ; 19 Am. St. Rep. 706 71, 117 Massey v. Citizens Building, etc.. Association. 22 Kan. 624 26 33, 151, 178, 185, 198, 221. 248 267, 280, 281, 291. 317. 450 Master Stevedores' Association v. Walsh, 2 Daly, 1 136, 137 Mathews v. Associated Press, 61 Hun. 199 ; s. c. 15 N. Y. Supp. 887 133 Matter v. New York Cable R. R. Co., 109 N. Y. 32 29 Matterson v. Elderfield, L. R. 4 Ch. 207 : s. c. 17 W. R. 422 : 20 L. T. N. S. 503 ; 36 J. P. 326 180,209, 279 Mattu v. Primrose, 23 Md. 482 51 Maudlin v. American Savings & Loan Assn., 65 Minn. 358 ; s. c. 65 N. W. Rep. 645.. 6. 7, 119 207, 252 Maule v. Building Association, 5 Phila. 421 266 Maux Ferry Gravel Road Co. v. Branegan, 40 Ind. 361. . . . 117 Mayor of Oxford v. Wildgoose, 3 Lev. 294 125 Mearesv. Davis (N. C), 28 S. E. Rep. L88 440,447 : iics', etc. , Association v. Allen. 28 Conn. 97 260, 287 Mechanics and Farmers' Build- ing and Loan Association v. Dorsey, 15 S. C. 462 257 ihanics' Building Associa- tion v. Stevens, 5 Duel-. 676.. 33 313 shanics & Workingmen's Building & Loan Association v. Swartz, 2 Lack. Leg. N. 120; s. c. 5 Pa. Dist. R. 318 382 Mechanics' Banking Assn. v. MariposoCo., 3 Robt. 395.. . 163 Mechanics', etc., Association v. Meriden Agency Co., 2 1 ( '..nn. 159 43 shanics' Building Associa- i ion v. Minnich, 1 Kulp. Pa. 513 25,34 shanics', etc., Association v. People, 72 III. App. 160. ... 436 Mechanics', etc., Bank v. Smith, I!) Johns. 118 126 Mechanic -'. el c, A.ss'n v. Vier- ling,66 111. App. 621 122, 252, 296 Mechanics and Workingmen's PAGE Mutual Savings Bank & Building Association v. Wil- cox, 24 Conn. 147. . . .43. 227, 260 Mechanics' Bank v. New York, etc., R. R. Co., 13 N. Y. 599 156 162 Mechanics' Mutual Society v. Lefebvre, 12 Rev. Leg. 294 374 375, 378 Mechanics' Bank v. Merchants' Bank, 45 Mo. 513 ; s. c. 100 Am. Dec. 388 134 Mechanics" Building and Loan Association v. Conover, 14 N. J. Eq. 19. . ..91, 161, 169, 178, 180 251, 302 Medical Institution v. Patter- son, 1 Denio, 61 20 M e i k e 1 v. German Savings Fund Society, 69 Ind. 181.. . 34 Meiklejohn v. Glasgow Work- ingmen's Building Society, 13Rettie, 144 329 Melville v. American Benefit B. A., 33 Barb. 103 220. 232 252, 455 Memphis, etc., R. R. Co. v. Woods, 88 Ala. 630 ; s. c. 7 So. Rep. 108 ; 7 L. R. A. 605 ; 16 Am. St. Rep. 81 91 Mercer v. Ambler Building & Loan Association, 20 Phila. 351 : s. c. 48 Leg. Int. 277 ; 10 Pa. C. C. 51 6. 7, 142. 344 351, 353, 445 Merchantville B. & L. Associa- tion v. Zane, N. J. Ch. 38 Atl. Rep. 420 176. 293 Meroney v. Atlanta National Building and Loan Associa- tion, 116 N. C. 882; s. c. 21 S. E. Rep. 924 35, 179, 185 225. 230, 256, 267. 286 Merrick v. Bank, 8 (iill (Md.) 51) Merrick v. Reynolds, etc, Co., 101 Mass. 381 100 Merrick v. Trustees elc. S (iill Md. 50 103 Merrick v. Van Santvoord, 31 N. Y. 208 50 Mnrill v. Mclntire, 13 Gray, 157 249, 295, 155 Me. rilt v. Fairis, 22 111. 303... 52 Met ropolitan Bank v. I feiron, L. R. 5 Exch. Div. 319 ; s. c. 31 Moak. 717 104 Metropolitan Loan Ass*n v. Esche, 75 Cal.513 77 Mel ropolitan Permanenl Build- ing and Emprovement So- TABLE OF CASES. xlv PAGE city, In re, L. R. 7 Vict. Eq. 3 (Australia) 86 450, 452 ^Metropolitan Safety Fund As- sociation v. Windcver, 137 111.417; s. c. 27 N. E. Rep. 538; affirming 37.111. App. 170 133 Michigan Building and Saving Association v. McDevitt, 77 Mich. 1 ; s. c. 43 N. W. Rep. 760; 30 Am. & Eng. Corp. Cas. 665 175, 179, 255 Mickles v. Rochester City Bank, 11 Paige, 118 ; s. c. 42 Am. Dec. 103 107, 431 Mickles v. Rochester City Bank, 11 Paige, 118 ; s. c. 42 Am. Dec. 103 90 Middlesborough Building So- ciety, In re, 54 L. J. Chanc. Div. 592 ; s. c. 51 L. T. (N. S.) 743 ; 49 J. P. 278. . . .209, 214 216, 220 Middleborough, etc., Society, In re, 58 L. J. Ch. 771; s. c. 5 T. L. Rep. 516 386 Middlesborough Building So- ciety, 53 L. T. (N. S.) 203. . . 330 343, 385 Middlesborough, Redcar, etc., Building Society, In re, 58 L. J. Ch. 771 ; 5*T. L. R. 516 315 376, 396 Middle States, etc., Co. v. Ha- gerstown, etc., Co., 32 Md. 506 ; s. c. 33 Atl. Rep. 886. . . 175 242. 270, 271). 302, 455 Middleditch v. Ellis, 2 Exch. 623 ; s. c. 17 L. J. Exch. 365 319 Middleton's Case, Dyer, 333 a. . 136 Middlesex Turnpike Corpora- tion v. Swan, 10 Mass. 384 ; s. c. 6 Am. Dec. 139 24 Milford, etc., Turnpike Co. v. Beach, 10 Ohio, 111 ; s. c. 36 Am. Dec. 79 24 Miller v. Coal Co., 31 W. Va. 836 ; s. c. 8 S. E. Rep. 600. . 34 Miller v. Cohen, 27 Ohio L. J. 353 82 Miller's Estate, 2 Pears. (Pa.) 248 203, 450, 461 Miller v. Ewer, 27 Me. 509 ; s. c. 46 Am. Dec. 619 50 Miller v. Jefferson Building Association, 50 Pa. St. 32. . . 189 326, 376, 381, 440 Miller v. Ratterman. 47 Ohio St. 141 ; s. c. 23 Ch. L. Jr. 416 ; 24 N. E. Rep. 496 145 PAGE Miller v. Wild Cat Gravel Road Co., 52Ind. 58 37 Mills v. Salisbury, B. & L. Ass'n, 75 N. C. 292. .6, 7, 19, 127 256, 266 Miner v. Belle Isle Ice Co., '.):; Mich. 97 ; s. c. 53 N. W. Rep. 218; 17 L. R. A. 412 98, 117 Miner's Bank v. United States, 1 Greene (la.), 553 23 Mitchell v. Rubber Reclaiming Co. (N. J.). 24 Atl. Hep. 407 46 Mobile Mutual Insurance Co. v. Cullom, 4!i Ala. 558 158 Mobile Building, etc., Associa- tion v. Robertson, 65 Ala. 389 251 Mobrav v. Antrim, 123 Ind. 24 ; s. c.'23N. E. Rep. 858 73 Monitor Building Association v. Eggen, 5 Wklv. L. Bull. 752 273 Mokelunne, Hill, etc.. Co. v. Woodbury, 14 Cal. 424. . . .27, 32 Monevpenny v. Hartland, 1 Cas" & P. 353 ; s. c. 2 Ibid. 378 86 Montgomery Building and Loan Association v. Robin- son, 69 Ala. 413; s. c. 1 Amer. & Eng. Corp. Cas. 403 23 41, 43, 142, 231, 296, 298,312 Monumental Building Associa- tion v. Herman, 33 Md. 128.. 38 Monumental Permanent Build- ing and Land Society v. Lewin, 38 Md. 445 213 Moore v. Marshalltown, etc., Co., 81 la. 45; 46 N. W. Rep. 750 163 Moors v. Marriott, L. R. 7 Ch. Div. 543; s. c. 47 L. J. Ch. 331 ; 26 W. R. 626 112 Morgan v. Boyer, 9 U. C. Q. B. 318 454 Moran v. Grav (N. J. Eq.). 38 Atl. Rep. 668 446, 447 Morgan v. Merchants' Bank, 13 Lea, 234 64 Morris, etc., R. R. Co. v. Ayers, 29 N. J. L. 393 ; 80 Am. Dec. 215 I'M Morrison, Ex Parte, 11 Jur. 719 96 Morrison v. Dorsey, 48 Md. 461 151, 169, 198, 199 Morrison v. Glover, 19 L. J. Ex. 20, 25 ; 4 Exch. 430 ; 14 L. T. (O. S.) 204; 14 L. P. 84 57, 190 Morrow v. James, 4 Mack ey D. C. 59 73, 197 xlvi TABLE OF CASES. PAGE Morton Gravel Road Co. v. Wysong, 51 Ind. 4 49, 126 Morton v. Preston, 18 Mich. 6U; s. c. 100 Am. Dec. 146 165 166 Moses v. Ocoll Bank. 1 Lea. 498 109 Moses v. Scott, 84 Ala. 608 ; s. c. 4 So. Rep. 742 90 Moses v. Tompkins, 84 Ala. 613 ; s. c. 4 So. Rep. 763 ; 4 Rail. & Corp. L. J. 268 ; Am. & Eng. Corp. Cas. 634 88 Mosliannon Land & Lumber Co. t. Sloan. 109 Pa. St. 532 ; s. c. 7 Atl. Rep. 102 73 Mosier v. Kreigh, 49 111. 425. . 63 Mosley v. Baker, 6 Hare, 87 : s. c. 12 Jut. 551 ; 17 L. J. Ch. 25 : affirmed on appeal, 1 Hall. & T. 301 : s. c. 13 Jur. 817 ; 18 L. J. Ch. 457 ; 3 DeG. Mac. & G. 1082 200, 279, 357 Mount Sterling, etc., Turnpike Road Co. v. Loonev, 1 Met. 55D : s. c. 71 Am. Dec. 491. . 63 Movius v. Lee. 30 Fed. Rep. sub nom. 141 U. S. 132 : 24Blatch. 291 109, 114 Mowbray v. Antrim, 123 Ind. 24; 23 N. E. Rep. 858 83 Mower v.Staples, 32 Minn. 284 24 Mowrey v. Indianapolis, etc., R. R. Co.. 4 Biss. 78. . . .23, 24, 97 Moxon v. Berkeley, etc., So- ciety. 59 L. Jr. Ch. 524. .302, 308 Move v. Sparrow, 22 L. T. Rep. 154; s. c. 18 W. R. 400; 5 W. N. 33 414 Mozley v. Alston, 1 Phil. Ch. r90. 90 Mueller v. Cohen, 27 Ohio L. •I. 353 197 Mueller v. Madison, etc., Ass'n, 75 X. W. Rep. 277.... 284 Muir v. Newark Savings Insti- tution. L6 N. .1. Eq. 537 266 Mulford v. Weisberger, 3 Luz. Reg. 99 178 Mullanphy Sa\ Lngs Bank v. Schott, 135 III. 635 : s. c. N. E. Rep. ; 25 Am. St. Rep. 401 106, 115 Mullock \. Jenkins, II Beav. : s. c. 21 L..J. Ch. 65 451 460 Mulloy v. Tli.' Fifth Ward Building Associal ion, 2 Mc- Arthur fit. C.) •">'•» I 208, '-'51 Mulrey v. Shawmul .Mutual in'- I n ura uce Co., I \ Men, lit;: s. e. 81 Am. Dec. 689... 12:; PAGE Mumford v. Hawkins, 5 Denio, 355 84 Munhall v. Boedecker. 44 III. App. 131 143, 300, 406,444 Municipality No. 2 v. Orleans Cotton Press, 18 La. 122 ; 36 Am. Dec. 624 85 Murdock v. Blesdell, 106 Mass. 370 101 Murphy v. Goodland, etc., Assn. , 2 App. Kan. 330 ; s. c. 43 Pac. Rep. 863. . . .171. 224, 312 Murray v. Scott, L. R. 9 App. Cas. 519 ; s. c. 53 L. J. Ch. 745 ; 51 L. T. 462 ; 33 W. R. 173. . . .57. 190, 300. 326, 328, 385 404, 410, 411, 414, 420. 422 423, 444 Murray v. Vanderbilt, 39 Barb. 140 70 Musgrave v. Nevinson, 1 Str. 584; s. c. 2 Ld. Raym. 1358. 52 Muth v. Dolfield, 43 Md. 466.. . 418 Mutter v. Eastern, etc.,R. R. Co., L. R. 38 Ch. Div. 92 : s. c. 36 W. R. 401 ; 57 L. J. Ch. 615 ; 59 L. T. (N. S.) 117. ..46, 47 Mutual B. & L. A.'s Appeal, 33 Pitts. L. Jr. 324 (1886) 443 Mutual Aid Building Society, In re. 30 Ch. Div. 434 ; s. c. 55 L. J. Ch. Ill ; 53 L. T. 802 : 34 W. R. 143 422, 423, 444 Mutual Aid Permanent Benefit Building Society, In re, 29 Ch. Div. 182 ; s. c. 54 L. J. Ch. 493 ; 52 L. T. 406 ; 33 W. R. 575 43 Mutual Societv, In re, L. R. 24 Ch. Div. 425" 346, 385 Mutual and Permanent Benefit Society, In re, 48 J. P. 54... 77 Mutual Building and Loan As- sociation v. Hamel, 43 N. J. L. 71 197 Mutual Savings & L. Ass"n v. Owings (Ky.). 43 S. W. Rep. 122 193, 257 Mutual Building and Loan As- sociation v. Tascott (111.). 28 N. E. Rep. 801 ; 25 Ch.' L. News. 92 : 10 Amer. A: Eng. ( lorp. ( 'as. 301 ; affirming 37 111. App. 2; I 234, 311, 312 Mut ual Building and Loan As- social ion \ . Tascott . 111! 111. 305: s. s, 32 N. E. Rep. 376; M» Am. & Eng. Corp. Cas. 861 172 Myers v. Alpena, etc., Ass'n ( Mich.), 75 N. W. Rep. 944.. 255 TABLE OF CASES. xlvii PAGE Myers v. Schoyer, 20 D. C. 254 ; s. c. 20 Wash L. Rep. 505 . . . 25 I 320, 321 Nashua Fire Insurance Co. v. Moore, 55 N. H. 4S 89 Nassau Phosphate Co., In re, 2Ch. Div. 610 38 Natchez Buildingand Loan As- sociation v. Shields, 71 Miss. 630; s. c. 15 So. Rep. 793 229 255, 266 National Nank v. Elliot, 55 la. 104 ; s. c. 39 Am. Rep. 107. . . 119 National Bank v. Norton, 1 Hill, 573 94 National Bank v. Texas Invest- ment Co., 74 Tex. 421 : s. c. 12 s. W. Rep. 101 116 National Building Association v. Hottenstein, 10 Pitts. L. J. (N. S. ) 225 338 National Building Association v. Mangan, 2 Kulp, 19 179 National Exchange Bank v. Peters, 44 Fed. Rep. 13 ; s. c. 4 Bank L. J. 48 115 National Investment Co. v. Na- tional Savings. Loan and B. Ass'n, 49 Minn. 517 ; s. o. 52 N. W. Rep. 138 282 National Loan, etc., Co. v. Stone. 46 S. W. Rep. 67 287 National Mutual Building and Loan Association v. Ash- worth, HI Va. 706; s. c. 22 S. E. Rep. 521 286 National Park Bank v. Nichols, 2 Biss. 146.., 152 National Permanent Benefit Building Society. In re. L. R. 5 Ch. App. 309'; s. c. 18 W. R. 388 ; 34 J. P. 341 : 22 L. T. Be]). 284 410, 433, 440 National Saving, Loan and Building Association. In re, 9 W. N. Cas. 79 ; s. c. 37 Leg. Int. 299 38, 344, 374, 432, 455 National Security Bank v. Cushman. 121 Mass. 490 94 Neath, etc.. Society v. Luce,L. R. 43 Ch. Div. 158 ; s. c. 59 L.J. Ch. 3 ; 61 L. T. Ill ; 38 W. R. 122 412,413, 415 Neifer v. Bank of Knoxville, 1 Head, 162 67 Neiler v. Keilev, 69 Pa. St. 403 IOC Nelligan v. Campbell, 20 N. Y. Supp. 234 ; 47 N. Y. St. Rep. 576 68 Neuman v. Association, 78 N. Y. Rep. 896 230 PAGE Neuman v. N. Y., etc., Ass*n. 1 1 N, Y. Supp. 896 ;s. c. 17 App. Div. 72 152. 153, 315 New Albany, etc. R, R. Co. \. Haskell, 11 Ind. 301 50 Newbury v. Detroit, etc., R. R. Co., 17 Mich. 141 164 Newcomb, In re, 18 N. Y. Supp. 16; s. c. 42 N. Y. St. Rep. 442 89 Newcomb v. Reed, 12 Allen, ;!62 93 New England Insurance Co. v. De Wolf, 8 Pick. 56 73 New England Iron Co. v. New York Co., 55 How. Pr. (N, Y.) 351 48 New Haven Wire Co. Cases. 57 Conn. 352 ; s. c. 16 Atl. Rep. 393 : 5 L. R. A. 300 32 New Jersev. etc.. v. Bachelor, 54 N. J. Eq. 600; s. c. 35 Atl. Rep. 745 229, 236, 298 New London, etc., Bank v. Brocklebank, L. R. 21 Ch. Div. 302 158 New York Cable Co. v. Mayor, 104 N. Y. 1 26 New York R. R. Co. v. Miller, 10 Barb. 260 24 New York. etc.. R. R. Co. v. Schuyler, 34 N. Y. 30 162 New York, etc., Assn. v. Slaughter, 17 Pa. C. C. 66. .19 35 286, 323 New York Protective Associa- tion v. McGrath. 5 N. Y. Supp. 8 128 New York, etc.. Ass'n v. Cannon (Tenn.). 41 S. W. Hep. 1054. . 35 New York National, etc., Asso- ciation v. Cannon (Tenn.), 41 S. W. Rep. 1054 323 New York, etc., R. R. Co. v. Ketchum, 27 Conn. 170. .117, 118 Newman v. Ligonier Building, Loan and Savings Associa- tion, 97 Ind. 295 312 Newry, etc., R. R. Co. v. Coombe, 3 Exch. 505 38 Newton v. Fay, 10 Allen. 505.. 169 Nicely's Estate, 3 Kulp (Pa.), 47 284, 312 Nicholas v. People's Building Loan and Savings A.ssocia- tion, 93 Ya. 3-0 ; s. c. 25 S. E. Rep. 8 205 Nickels v. People's Building, Loan and Savings Associa- tion (Va.), 25S. E. Rep. 522 175 Nolloth \. Simplified Building xlviii TABLE OF CASES. PAGE Society, 53 L. T. 859 ; s. c. 34 W. Ii/73 ; 2 T. L. Rep. 97, 40, 164 Norton v. State Bank, 102 Ala. 420 456 Northampton Bank v. Pepoon, 11 Mass. 288 100 North American Building As- sociation v. Sutten. 35 Pa. St. 463 ; s. c. 78 Am. Dec. 349. . 6 45, 165, 166, 170. 172, 185, 187 201, 204, 205, 305, 318 North Hudson Mutual Building and Loan Association v. First National Bank, 79 Wis. 31 ; s. c. 47 N. W. Rep. 300 ; 11 L. R. A. 845; 35 Amer. & Eng. Corp. Cas. 231.... 103, 300 420, 434 North Shore Ferry Co., In re, 63 Barb. 556 54 Northwestern Central Building Association v. Henderson, 3 Wkly. L. Bull. 386 191 Norwich and Norfolk Building Society, In re, Smith Case, 1 L. R. 1 Ch. Div. 481 ; s. c. 45 L. J. Ch. 143 ; 24 W. R. 103, 131 284, 386, 399 Norwich and Norfolk Building Society, In re, 45 L. J. Ch. 785 331 Novak v. Vypomocny, etc., Ass'n, 68 III. App. 582... 66, 74 175 Oak Cottage Building Associa- tion v. Eastman, 31 Md. 556 231 269 Oakes v. Turquand, L. R. 2 H. L. 325 152 Oakland Bank v. Wilcox, 60 Cal. 126 70 Oar River Navigation Co. v. Neal, 3 Eawks, 520 31 O'Brien v. Cummings, 13 Mo. App. L97 26 Occidental Building and I loan m iation v. Sullivan. 62 Cal. 391 201, 212 Ocmulge Building, etc., Asso- i-ial ion v. Thomson, 52 < ia. l/i L86, 206,207, 208, 276, 318 Ocmulgee Building ami Loan iat ion v. Thomson, 52 Ga. 127; - c. .V- Ga. 350. ... S14 Odd Fellows' Building Asso- ciation v. Bogan, 28 Ark. 261 30 O'Donahoe' E bate, I.. I:. L0 [r. Eq. 221 2; 1. 279 I n \ . Kip. 6 Johnson < 'li. L60 90 Ohio Building Association v. Leyden, 1 Wkly. L. Bull. 126 ; s. c. 4 Amer. L. Rec. 765. ... 190 274, 280, 300 Ohio Insurance Co. v. Nunne- macher, 15 Ind. 294 157 Ohio, etc., R. R. Co. v. McPher- son, 35 Mo. 13 ; s. c. 86 Am. Dec. 128 92, 93, 99 Ohio Valley, etc., Association v. Cobell County, 42 W. Va. 818 ; s. c. 26 S. E. 203 428 Olcott v. Tioga R. R. Co., 40 Barb. 179 67,68 Olery v. Brown, 51 How. Pr. 92". 137, 173,174,307 Olney v. Chadsey, 7 R. I. 224. . 66 O'Malley v. People, etc., Am., 92 Hun, 572 ; s. c. 72 N. Y. St. Rep. 289 ; 36 N. Y. Supp. 1016 124, 193, 294, 296 O'Malley v. People's, etc., As- sociation, 35 N. Y. Supp. 14 ; s. c. 13 Misc. Rep. 638 124 Onderkirk v. Central National Bank, 119 N. Y. 263 ; s. c. 23 N. E. Rep. 875 ; 29 N. Y. St. Rep. 573 108 Orangeville Mutual Saving Fund and Loan Association, 9 W. N. Cas. 251 ; s. c. 37 Leg. Int. 475 127. 255, 314 Oregonian Ry. Co. v. Oregon Rv. Co., 23 Fed. Rep. 233. ... 35 O'Reilly v. Heydon, 14 N. S. Wales, 283 187 O'Reiley v. Kankakee Valley Draining Co. , 32 Ind. 1 09 .... 28 O'Rourke v. West Pennsylvania Loan and Building Associa- tion, 93 Pa. St. 308; s. c. 14 Phila. 145; 37 Leg. Int. 27; 8 W. N. Cas. 176 337, 352, 434 Orr Water Ditch Co. v. Reno Water Co., 17 Nev. 166 92 Osborne v. Farmers and Me- chanics" Building Societv, 5 Grant Ch. 326 453 Osceola Tribe v. Rost, 15 Md. 295 124 Ottawa Union Building Society v. Scott, 24 U. C. Q. B. 341. . 220 22 1. 22:. Outerson v. Fonda Lake Paper Co., 49 N. Y. St. Rep. 556; s. c. 20 N. Y. Supp. 980... .71, 78 ( (verity v. FavH1e\ ille Build- ing and Loan Association. Hi N. ('. 56. ...171, 185, 256, 435, 444 Overend and Gurney Co. v. Oiltl., L. It. 5 11. L. 494 108 TABLE OF CASES. xlix PAGE Owen v. Roberts, 57 L. T. 81 . . . 413 Owen v. Whitaker, 20 N. J. Eq. 122 90 Pabst v. Building Association, 1 McArthur, 385 254 Pacific National Bank v. Eaton, 141 U. S. 227 ; s. c. 11 Sup. Ct. Rep. 984 ; 10 Ry. &Corp. L. Jr. 132 162 Pacific R. R. Co. v. Renshaw, 18 Mo. 260 25 Paffert v. Blum Building and Loan Association, 25 Pitts. L. Jr. 40 346, 378, 390 Palmer v. Gates, 3 Sandf. 137 101 Palmer v. Lawrence, 5 Sandf. 161 26 Palmer v. Nassau Bank, 78111. 380 64 Pangborn v. Citizens, etc., As- sociation, 35 N. J. Eq. 341.. 295 Parker v. Butcher, 3 L. R. Eq. 762 ; s. c. 36 L. J. Ch. 552. . . 209 215, 220 Parker v. Fulton, etc.. Ass'n, 46 Ga. 166 157, 253, 265, 266 Parker v. Putnam Loan and Building Association, 46 Ga. 166 127 Parker v. Receiver, 49 N. J. L. 465 65 Parker v. United States, etc., Association, 19 W. Va. 744. . 36 45, 132, 218, 231, 261, 267 Parsons v. Martin, 11 Gray, 111 166 Patterson v. Workingmen's Building and Loan Associa- tion, 14 Lea, 677; s. c. 10 Amer.& Eng.Corp. Cas. 420. 248 Pattison v. Albany, etc., Asso- ciation, 63 Ga. 3*93..22, 32,34, 254 266, 441 Pawlick v. Homestead Loan Association, 15 N. Y. Misc. Rep. 427 ; s. c. 37 N. Y. Supp. 164 284, 827, 330 Payette v. Free Home Build- ing, etc., 27 111. App. 307 33 Payne v. Elliot, 54 Cal. 339. .. . 165 Payne v. Freer, 25 Hun, 124 ; affirmed 91 N. Y. 43 232, 253 Pavnterv. Clogg, 3 Phil. 480. . 90 Parson v. Stoever, 2 Dill. 428 156 Payson v. Withers, 5 Biss. 269 24 Peabody Building and Loan Association v. Houdman, 89 Pa. St. 261 84 Pearsons v. Wheeler, 55 N. H. 41 93 Pease v. Jackson, L. R. 3 Ch. 576 293 PAGE Peck v. Gurney, L. R. 6 H. L. 377 153 Pendergast v. Bank of Stock- ton, 2 Sawy. 108 184, 158 Pennsylvania R. R. Co. Appeal, 86 Pa. St. HO 168 Penobscot Boom Corporation v. Lamson, 16 Me. 224 . . .21, 22 Pentz v. Stanton, 10 Wend. 271 ; s. o. 25 Am. Dec. 558. . . 67 People v. Albany, etc., R. R. Co.,57N. Y. 161 90 People v. Albany, etc., R. R. Co., 55 Barb. 84*] : s. c. 7 Abb. Pr. (N. S.) 265 ; 38 How. Pr. 228 89, 90 People v. Albany Hospital, 61 Barb. 697 88 People v. Bachelor, 22 N. Y. 128 52 People v. Ballard, 3 N. Y. St. Rep. 845 109 People v. Beach, 19 Hun, 259 28 People v. Board of Trade, 80 111. 134 137 People v. Bowen, 30 Barb. 24. . 26 People v. Cheeseman, 7 Col. 376 27 People v. Crockett, 9 Cal. 112 129 134 People v. Crossley, 69 111. 195 188 People v. Crowley, 69 111. 195 55 People v. Cummings. 72 N. Y. 433 88 People v. Eadie, 133 N. Y. 573 ; s. c. 30 N. E. Rep. 1147: af- firming 18 N. Y. Supp. 53 ; s. c. 53 N. Y. St. Rep. 649 47 People v. Empire, etc., Co., 17 N. Y. Misc. Rep. 221 ; s. c. N. Y. Supp. 235 447 People v. Empire, etc.. Co., 13 N. Y. Misc. Rep. 221 ; s. c. 34 N. Y. Supp. 235 432 People v. Empire, etc., Co., 44 N. Y. Supp. 308 ; s. c. 15 App. Div. 69 433 People v. Fire Department. 31 Mich. 458 124, 129 People v. Fleming, 59 Hun, 518; s. c. 37 N. Y. St. Rep. 157 ; 13 N. Y. Supp. 715 87 People v. Grand, etc.. Plank Road Co., 10 Mich. 400 , 24 People v. Hills, 1 Lans. 202. . . 92 People v. Kip, 4 Cow. 382 56 People v. Loomis, 8 Wend. 396 56 People v. Lowe, 117 N. Y. 175 ; s. c. 22 N. E. Rep. 1016 ; 31 Amer. & Eng. Corp. Cas. 249 ; TABLE OF CASES. reversing 47 Hun, 577. . .103, 400 436, 446 People v. Maynard, 15 Mich. 463 90 People v. Medical Society. 24 Barb. 574 126, 128 People v. National Home B. & L. Assn., 7 Chicago L. Jr. 193 135, 432, 439 People v. Oakland Co. Bank, 1 Don ) 282 50 People v. Pacific Mail Steam- ship Co.. 50 Barb. 280 ; s. c. 34 How. Pr. 193 ; 3 Abb. Pr. (X. S. 364 46, 47 People v. Peck, 11 Wend. 604 ; s. c. 27 Amer. Dec. 104. . .56, 90 People v. Preston. 140 N. Y. 549 ; s. c. 35 X. E. Rep. 979 ; 46 Amer. & Eng. Corp. Cas. 494 ; 24 L. R. A. 57. . .27, 143, 149 444 People v. Robinson, 64 Cal. 373 54 People v. Runkle. 9 Johns. 147, 87 People v. St. George's Society, 28 .Mich. 261 137 People v. Seaman, 5 Denio, 409 56 People v. Selfridge, 52 Cal. 331 26, 28 People v. Sterling Mfg. Co.. 82 111. 457... 126, 165 People v. Throop. 12 Wend. 138 121 People v. Tibbetts, 4 Cow. 358 56 People v. Trustees, 5 Wend. 211 50 People v. Twaddell, 18 Hun. 127 55, 138 People v. Walker, 9 Mich. 328 47, 48 Peopl.- v. Walker, 2 Abb. Pr. 125 : s. c. 2:! Barb. 304 95 People v. Young Men's, etc., Society, 65 Barb. 357 51 People v, Xoung Men's, etc., Society, ll Mich. 67 128 People's Building, Loan ami Savings Association v. Ash- woi-ili. 91 Va. 706; s. c. 22 S. E. Rep. 522 205 People's Building ami Loan \ ociation v. Billing, ml Mich. 1st; : s.c.62N. W. Rep. 378 172. 171, 233, 238, 281 People's Building ami Loan ciation v. Furey, IT N. .1. I'..,. IK); s. e. 20 All. Rep. 171. 171. 2:'.::. 335, 341 People' Buildi ngand I ."an As- i ocial ion v - MoElxoy, 72 .Miss. PAGE 434 ; s. c. 17 So. Rep. 348. .229, 231 255 People, etc.. Association v. Reynolds, 17 Ind. App. 453 ; s. c. 45 N. E. Rep. 522 193 People's Building, etc., As- sociation v. Rising (Tex. Civ. App.). 34 S. W. Rep. 147. . . 258 People's Building and Loan As- sociation v. Wroth, 4:; X. J. L. 70 82, 83, 197 People's Savings Bank, etc., Association v. Collins. 27 Conn. 145 33 People's S. & L. Ass*n v. Roberts, 5 Ohio N. P. 86. . . . 234 261 People's Saving and Loan As- sociation v. Stevens. 3 Wkly. L. Bull. 113 237 People's Mutual Insurance Co. v. Westcott. 14 Gray, 440. . . 53 Pepe v. City and Suburb Build- ing Societv. 3 Report 471 ; s. c. 1893, 2'Ch. 311 : 62 L. J. Ch. 501: 68 L. T. 846; 41 W. R. 548 130, 330, 336, 399 Pepper v. Chambei's, 7 Ex. 226 48 Percy v. Millaudon, 3 La. 568 104 Percy v. Millaudon, 8 Mart. (N. S.) 68 108 Percy v. Millaudon, 8 La. 568 103 Perpetual Insurance Co. v. Goodfellow, 9 Mo. 149 126 Perratt v. London Scottish Per- manent Benefit (B. S.), 59 L. T. 31 342, 343 Perry v. Tuscaloosa Cotton Seed Oil Mill Co.. 93 Ala, 364 ; s. c. 9 So. Rep. 217 91 Peters v. Association, 12 Pa. C. C. 192 142, 353 Peters Building Association v. Jaeeksdi. 51 Md. 198 202 I'et srsborough R. R. Co. v. Wood, 61 N. H. 418 78 Peto v. Hammond, 30 Beav. 195; s. c. 8 Jur. (X. S.) 550 : 31 L.J. Ch. 354 ... 451 Pew v. First National Hank. 130 Mas.. 391 117 Pfaff v. Kensington Building Association, 6 W. X. ('as. 3l!t 55. 437, 445 Pfeiffer'v. Lansburg Brake Co., I I Mo. A pp. 59 79 Pfeister v. Wheeling Building Assn., 19 W. Virg. 676. ...7, 214 227, 261, 291 I'lislerv. (ierwi-, 122 1ml. 567; TAI5LE OP CASES. li PAGE s. c. 23 N. E. Rep. 1041. .122, 129 134 Phelps v. Lvle, 2 Per. & T). 314 ; s. c. 10 Ad. & El. L13 ; 3Jur. 479 91 Philadelphia Mercantile Loan Association v. Moore. 47 Pa. St. 233 175, 170 Philanthropic Building Asso- ciation v. McKnight, 35 Pa. St. 470 ...171, 259, 265 Phillips v. Columbia City, etc., Association, 53 la. 719; s. c. 6 N. W. Rep. 121.. . .231, 2G0, 263 264 Phillips v. Wickham, 1 Paige, 590 55, 138 Phillipsburg Mutual L. & B. Ass'n v. Hawk, 27 N. J. Eq. 355 302 Pickering's Claim, L. R. 6 Ch. 525 115 Pickering v. Templeton, 2 Mo. App. 425 151 Pickett v. School District, 25 Wis. 551 ; s. c. 3 Am. Rep. 105 105 Pierce v. Canada Permanent Loan and Savings Co., 24 Ontario, 426 299 Pierce v. New Orleans Building Co. , 9 La. 397 ; s. c. 29 Am. Dec. 448 52 Pierson v. Bank, 3 Cranch Ct. 363 165 Pierson v. Cronk, 26 Abb. N. Cas. 25 109 Pierson v. Tower, 55 N. H. 215 80 Pike Co. v. Rolland, 94 Pa. St. 238 99 Pilkington v. Baker, W. N. 1877 209, 210, 215 Piper v. Chappell, 14 Mees. & Wels. 624 137 Pioneer's Paper Co., In re, 36 How. Pr. Ill 54 Pioneer Savings and Loan Co. v. Cannon, 96 Tenn. 599 ; s. c. 36 S. W. Rep. 386 204, 286 Pioneer Savings & Loan Co. v. Everhart (Tex.), 44 S. W. Rep. 885 171,173, 258 Pioneer Savings & L. Co. v. Kaspar (Kan.), 52 Pac. Rep. 623 173, 248 Pioneer Savings and Loan Co. v. Oxford (Tex. 4 Civ. App.), 35 S. W. Rep. 1078. .199, 203, 440 Pioneer Savings & L. Associa- tion v. Pancoast (Tex. Civ. App.), 43 S. W. Rep. 280. .. . 447 PAGE Planet Benefit Building and Investment Sociel y, h L. R. 1 1 Eq. ill ; s. c. 27 L. T. (N. S.) 638; 20 W. J.. 41 L. J. Ch. 7:J.s 433 Plymouth Building Associal v. Mangan, 2 Kulp,210. .173, 177 181, 3 i3, 445 Plymouth Building A - ociation ! »od, 2 Kulp, 246... . Pneumatic Gas Co. v. B 113 U. S. 323 L05 Pollock v. Caroline, i (S. C.),29S. E. Rep. ?7..35, 266, Pollock v. National Bank, 7 X. Y. 274: s. c. 57 An I 76 Poole v. West Point Bi Association, 30 Fed. 513. .78, 156 Port v. Russell, 36 Ind. 60 ; s. c. 10 Am. Rep. 5 106 Port Edwards, etc., R. R. Co. Arpin. 80 Wis. 214 ; s. c. 49 N. W. Rep. 828 156 Port Melbourne v. Permanent Savings Building Society, L. R. 20 Vict. (Australia).. .508 292 Portsea Island Building Soci- ety v. Barclay. 8 R, 389 ; s.c. (1894) 3 Ch. 86 ; 63 L. J. Ch. 837; 10 T. L. R. 526; 71 L. T. Rep. 82 ; 1 Mansom, 339 ; on appeal affirmed, 12 Rep. 324 ; s. c. (1895) 2 Ch. 298 ; 64 L. J. Ch. 579 ; 72 L. J. 744 ; 43 W. R. 586 ; 11 T. L. R. 424. . . 293 413 Post v. Mechanics' B. & L. Ass'n, 97 Tenn. 408; s. c. 37 S. W. Rep. 216 ; 34 L. R. A. 201 175.447, 448 Potts v. Wallace, 146 U. S. 689 66, 458 Pottsville National Saving Fund Association v. Com- monwealth, 2 Chest. (Pa.) 189 427 Poulter's Co. v. Phillips, 6 Bing. N. C. 714 124 Powell v. Abbott, 9 W. N. Cas. 231 455 Powers v. Blue Brass B. & L. Association, 86 Fed. Rep. 705 457 Prairie State, etc., Ass'n v. Gorrie, 167 111. 414 ; s. c. 47 N. E. Rep. 739 158, 338 Prairie State Loan and Build- ing Association v. Gorrie, 64 111. App. 325 ; affirmed, 154 111. 240 ; 48 N. E. Rep. 1016. . 74 lii TABLE OF CASES. Prairie State Loan and Build- ing Association v. Nubling, 64 111. App. 329 ; s. c. 48 N. E. Rep. 1016 75, 329, 336 Pratt v. Boston, etc., R. R. Co., 126 Mass. 443 167 Pratt v. Meriden Cutlery Co., 35 Conn. 36 48 Pratt v. Goswell, 9 C. B. (N. S.) 706. . 48 Pratt v. Hutchison, 15 East, 511 3 Pratt v. Taunton Copper Co. , 123 Mass. 110 ; s. c. 25 Am. Rep. 37 76, 167 Premier Permanent Building, etc.. Association, In re, L. R. 16 Vict. (Australian) 20 439 Premier Permanent Building Society, In re, L. R. 16 Vict. (Australia) 643 451 Premier Permanent Building Association, In re, 11 Aus- tralia L. T. 139 439 Premium Fund Association's Appeal, 39 Pa. St. 156. . .189, 237 259 Presbyterian, etc., Fund v. Al- len.' 106 Ind. 593; s. c. 7 N. E. Rep. 317 123, 127 Price v. Grand Rapids, etc., R. R. Co., 13 Ind. 58 97 Priestly v. Hopgood, 10 L. T. (N.S.) 646; 4 N. R. 239; 28 J. P. 268 ; 12 W. R. 1031 381 Priest v. White, 89 Mo. 609... . 115 Prilliman v. Mendenhall, 120 Ind. 279 ; s. c. 22 N. E. Rep. 247 118 Printing House v. Trustees, 104 U.S. 711 24 Printers' Building and Loan A ssociation v. Paxton (Tex. Civ. App,), 33 S. K. Rep. 389 333 Professional, Commercial and [ndustrial Benefit B. S., In re, L. R.6 Ch.856; s. c. 25 L. T. | 1ST. S.)397 : 19W. R. 1153.. 410 Progressive Investment and Building Society, In re, 54 L. T. 45 ....346, 378, 423 ]'n>\ i< I • -1 1 1 Building Society v. Greenhill, L. R. n Ch. Div. 122; s.c. 88 L. T. Rep. (N. S.) I 10; 17 W. R. 110.... 220, 221, 222 224 Pro\ indial Building Society, In re, 80 N. B. 628 875, 878 I'pa o t v. Societe < lanadienne Francaise, etc., 2 Leg. News. 412..'. 132 153 Pryse v. People B. L. S. Ass'n, (Ky. ) , 41 S. W. Rep. 574 35 257, 287 Puker v. Steele, 43 N. Y. Supp. 346 48 Pullman v. Upton, 96 U. S. 329 24 Pulsford v. Richards, 22 L. J. Ch. 569 ; s. c. 17 Jur. 865 ; 19 E. C. L. &Eq. 387 Quakertown B ui 1 d i n g and Loan Association v. Sorver, 33 Leg. Int. 359 310 Quein v. Smith, 108 Pa. St. 325 ; s. c. 42 Leg. Int. 386 300, 375 420 Queen v. Second Ave. Ry. Co., 14 How. Pr. 281 ; 3 J. & S. 154 101 Queen's Benefit Building Soci- ety, In re, L. R. 6 Ch. Div. 915 ; 19 W. R, 597. 762 ; 40 L. J. Ch. 381 ; 24 L. T. (N. S.) 346 433 Rabbitt v. Wilcoxen. 103 la. 35 ; s. c. 72 N. W. Rep. 306. . 351 Racine, etc., R. R. Co. v. Far- mers' Loan and Trust Co., 49 111.331 50 Railway Co. v. Allerton, 18 Wall. 233. ...24, 103, 127, 155, 156 Railroad v. Harris, 12 Wall. 65 50 Railroad Co. v. Hecht, 95 U. S. 168; s.c. 29 Ark. 661 24 Railroad Co. v. Vanderbilt, 5 Hun ; s. c. 8 Mart. (La. N. S.) 68; Erie, 123 104 Raleigh v. Fitzpatrick, 43 N. J. Eq. 501 107 Randall v. National Building, Loan and Protective Union. 43 Neb. 876 ; s. c. 62 N. W. Rep. 252 172,173,255 Randall v. National Building. Loan, Protective Union . 42 Neb. 809 ; s. c. 60 N. W. Kep. 1019 173, 174,204,255 Ranger v. Champion Cotton Press Co., 51 Fed. Rep. 61 . . 46 Rayner v. Alnusen, 15 Jur. 1060 48 Read v. Bank, 6 Paige, 337 55 Read v. Buffman, 79 Cal. 77; s. c. 21 Pac. Rep. 555 ; 12 Am. St. Rep. 131.... 73 Reaper's Hank v. Willard, 24 111. 433 24 Red Bank Mutual Building and Loan Association v. Patter- son, 27 N. J. Eq. 223. .251, 267,302 Redliell'er v. House and Home Building and Loan Associa- TABLE OF CASES. liii PAGE tion, 2 Mo. A pp. Repr. 911 ; s. c. 64 Mo. App. 96 312, 317 Redmond v. Dickei'son, 9 N. J. Eq. 507 Ill Red wine v. Gate City Loan and Building Association, 54 Ga. 474 25 Reed v. Bank of Newburgh, 6 Paige, 377 70 Reeve v. Lai lies' Building As- sociation, 56 Ark. 335 ; s. c. 19 S. W. Rep. 917 ; 18 L. R. A. 129 171, 250 Reeves v. White, 17 Q. B. 995 ; s. c. 16 Jur. 637 ; 21 L. J. Ch. 169 ; 16 J. P. 116. See 283. . 283 311 Regina v. Arnaud, 9 Ad. & El. (N. S.)806; s.c. 11 Jur. 279; 16 L. J. L. B. 50 38 Regina v. D'Eyncourt, 4 B. & S. 8S0 ; 9 L. T. 712 ; 33 L. J. M. C. 89; 10 Jur. (N. S.) 513 ; 116 E. C. L. 820 202,450, 460 Regina v. Grand Canal Co., 1 Ir. L. Rep. 337 47, 58 Regina v. London & St. Kath- erin's Dock's Co., 44 L. J. (Q, R.) 4 48 Regina v. Priest, 15 Jur. 554 ; s. c. 20 L. J. Q. B (N.S.) 17; 1 Eng. L. & Eq. 250 84 Regina v. Wilts, etc., Canal Co., 3 Ad. & El. 477 47 Reid v. EatontonMf. Co., 40 Ga. 98 129 Reilly v. Mayer, 12 Beas.(N. J.) Eq. 55 304, 309 Reily v. Oglebay, 25 W. Va. 36 51 Reiser v. William Tell Saving Fund Association, 39 Pa. St. 137 237, 259 Reliance Permanent Benefit Building Society. In re, 61 L. J. Ch. 453 ; s. c. 66 L. T. (N. S.) 823 ; 8 T. L. R. 525 343 393, 398, 444, 525 Relief Saving Fund Associa- tion v. Longshore, 8 Luz. Leg. Reg. 199 221, 281, 291 Remington v. King, 11 Abb. Pr. 278 316,447 Reno Water Co. v. Leete, 17 Nev. 203 64 Rex. v. Carmarthen, 1 Maule &S. 696 53 Rex v. Cutbust, 4 Burr, 2204. ... 127 213 Rex v. Devonshire, 1 B. & C. 609 96 PAGE Rex v. Hill, 4 B. & C. 441. . . . 52 Rex v. Lucas, 10 East, 235 47 Rex v. May, 5 Burr. 2681 52 Rex v. Merchants', etc., Co., 2 B. & Ad. 115 47, 48 Rex. v. Varlo, Cowp. 248 96 Rex. v. Westvvood, 2 Dow. & CI. 21 , 125, 126 Reynolds v. Georgia State, etc., Ass'n (Ga.), 29 S. E. Rep. 187 43, 45, 254, 313 Reynolds v. New York Build- ing Loan Banking Co., 89 Hun, 609 ; s. c. 35 N. Y. Supp. 80 ; 69 N. Y. St. Rep. 259 328, 329 Rhoadsv. Hoernerstown Build- ing and Savings Association, 82 Pa. St. l.so : s. c. 33 Leg. Int. 417. .209.233. 259. 439, 450, 461 Rhodes v. Missouri, etc., Co., 64 111. App. 77. . . .35, 189, 252, 323 353 Richard v. Southwestern B. & L. Association, 49 La Ann. 481; s.c. 21 So. Rep. 643. .241 250 Richards v. Bib)) County Asso- ciation, 24 Ga. 198 316,318 Richardson v. Green, 133 U. S. 30 106 Richardson v. Rogers, 45 Mich. 591 458 Richardson v. Williamson, L. R. 6 Q. B. 276 ; 40 L. J. Q. B. 145 113,115,416 Richmond, etc., R. R. Co. v. Snead. 19 Gratt. 354 ; s. c. 100 Am. Dec. 670 63, 04, 166 Ricker v. Larkin, 27 Bradw. 625 30 Ricks v. Durant Building and Loan Association (Miss.), 18 So. Rep. 359 221, 320 Ridgeway v. Farmers' Bank. 12 S. & R. 256; 14 Am. Dec. 681 100, 103 Riley v. Oberly, 26 W. Va. 36 99 Rio Grande Cattle Co. v. Burns. 82 Tex. 50 ; s. c. 17 S. W. Rep. 1043 162, 165 Risk v. Delphos Building and Savings Association, 31 Ohio St. 517 200,231,317 Roberts v. American B. & L. Ass'n, 62 Ark. 572 : s.c. 36 S. W. Rep. 1080. . . .185, 207, 210, 215 Robertson v. American Home- stead Association, 10 Md. 397 ; 69 Amer. Dec. 145 200 222, 246, 247, 269, 295. 312, 318 Robillard v. Society, 4 Leg. News, 133 133 liv TABLE OF CASES. Robinson v. Mayor, 1 Hump. 156 ; s. c. 34 Am. Dec. 625. . 121 Robinson v. Pittsburg, etc.. Co., 32 Pa. St. 334 ; s. c. 72 Am. Dec. 792 150, 152 Robinson v. Smith, 3 Paige, 222; s. o. 24 Am. Dec. 212 104 Robinson v. Trevor, L. R. 12 Q. B. Div. 423 ; s. c. 53 L. J. Q. B. 85 ; 50 L. T. (N. S.) 190 ; 32 W. R. 374 293, 321 Rochester Savings Bank v. Whitmore, 49 N. Y. Supp. 862 446,447 Rockford, etc., R. R. Co. v. Sage, 65 111. 328 ; s. c. 16 Am. Rep. 587 118 Rockville, etc.. Turnpike Road v. Van Ness, 2 Cranch, C. C. 449 92, 93 Rodgers v. Southwestern, etc., Association, 7 W. N. Cas. 95 129 228, 330 Rodney v. South R. R. Ass'n, 3 N. Y. St. Rep. 564 ; s. c. 14 Daly, 70 78 Rogers v. Danby Universalist Society, 19 Vt. 187 105 Rogers v. Hargo, 92 Tenn. 35 ; s. c. 20 S. W. Rep. 430. . . .173, 230 Rogers v. Hastings, etc., R. R. Co., 22 Minn. 25 118 Rogers v. Jones, 1 Wend. 237 137 Rogers v. Raines (Ky.),38 S. W. Rep. 483 175, U7 Rogers v. Southwestern Mutual Saving Fund and Building Ass'n, 7 W. N. Cas. 95 128 Rolph v. Upper Canada Build- ing Society, 11 Grant Ch. 275 112 Root v. Olcott, 42 Hun. 536. . . 84 Rosenback v. Salt Springs Nat. Bank. 53 Barb. 495 137 Rosenberg v. Northumberland Building Society, 22 Q. B. Div. at p. 380; s. c. 60 L .T. 558; 37 W. R. 368; 5 T. L. R. 205 122, 131, 398, 399, 403 Ross v. i 'rockd 1 , 14 La. Ann. 823 93 Ro v. Victorian Permanent Society, L. R. Eq. 8 Vict. ( Australia), 254 75 Routh v. Webster, lo Beav. 561; ll Jur. 701 116 land's Estate, 1 Del. (Pa.) 98 259 Rowland v. Loan Associal i<>n, 116 N. C. .N77 ; 8. c. 22 S. E. Rep. 8 280 PAGE Rowland v. Old Dominion Building and Loan Associa- tion (N. C.) ; 24 S. E.Rep. 366 175 Rowland v. Old Dominion Building and Loan Associa- tion, 115 N. C. 825 ; s. c. 18 N. E. Rep. 965 175 Rowland v. Old Dominion Building and Loan Associa- tion, 116 N. C. 877 ; s. c. 22 S. E. Rep. 8 175 Rowland v. Old Dominion Building and Loan Associa- tion, 118 N. C. 173 ; s. c. 24 S. E. Rep. 366 ; on second ap- peal, 116 N. C. 877 ; s. c. 22 S. E. Rep. 8 ; on first appeal, 115 N. C. 825 ; s. c. 18 S. E. Rep. 965 175, 225 Rowland v. Old Dominion, etc.. Association (N. C.),22S. E. Rep. 8 185 Rowland v. Old Dominion, etc., Association, 115 N. C. 825 ; s. c. 18 S. E. Rep. 965 185 Rowland v. VVorkingmen"s Building and Loan Associa- tion, 1 Lack* L. Rec. 456 197 Rudge v. Riehens, L. R. 8 C. P. 358; s. c. 42 L. J. C. P. 127 ; 28 L. T. 537 319 Ryan v. Leavenworth, etc., R. R. Co., 21 Kan. 365 114 Sabin v. Senate of the National Union, — Mich. — ; s. c. 51 N. W. Rep. 202 129 Sacks v. Duckworth, etc., Ass'n, 6 Ohio Dec. 354 ; s. c. 4 Ohio N. P. 214 36, 60, 198 Sadler's Case, Id. 26...., 40 Sagory v. Dubois, 3 Sandf. Ch. 466. 37 Saint John Building Society, In re, 28 N. B. 597 ; s. c. 374 Occ. N. 348.. 132, 348,377, 379, 397 Salem Bank v. Gloucester Bank, 17 Mass. 1 ; s. c. 9 Am. Dec. Ill 102, 126 Salmon v. Richardson, 30 Conn. 360; s. c. 79 Am. Dec. 255... 116 Sailer Building Association v. Rice, 8 W. N. Cas. 12 ; s. c. 37 Leg. Int. 146 39 Sail marsh v. Spaulding, 147 Mass. 224 ; s. c. 17 N. E. Rep. 316 107 Sampson v. Bowdoinham, etc., Corporation, 36 Me. 78 52 Samuel v. Eolladay, 1 Woodw. 400 ............. 97 San Buenaventura Mini ng, TABLE OF CASES. lv PAGE etc., Co. v. Vassault, 50 Cal. 534 89 Sanders v. Page, 11 Colo. 518 ; s. c. 19 Pac. Rep. 468 a 70 Sandford v. McArthur, 18 B. Mon. 411 115 Sandhurst Benefit Building & Improvement Society v. De- laney, L. R. 3 Vict. L. (Aus- tralia) 234 135 Sangster v. Cochrane, L. R. 28 Ch. Div. 298 ; s. c. 54 L. J. Ch. 301 ; 51 L. T. (N. S.) 889 ; 33 W. R. 221 ; 40 J. P. 327. . . 321 San Jose Savings Bank v. Sierra Lumber Co., 63 Cal. 179 92 Santa Clara Mining Association v. Meredith, 49 Md. 389 ; s. c. 33 Am. Rep. 264 118 Sargeant, Ex Parte, 17 Vt. 425 63 Sargeant v. Franklin Insurance Co., 8 Pick. 90 ; s. c. 19 Am. Dec. 206 134, 164, 165 Sargeant v. Essex Corporation, 9 Pick. 202 134 Sargeant v. Webster, 13 Met. 187 ; s. c. 46 Am. Dec. 743. . . 97 98, 457 Satterlee v. San Francisco, 23 Cal. 314 96 Savage v. Rix, 9 N. H. 265. ... 67 Savannah Cotton Exchange v. State, 54 Ga. 668 137 Savings Bank v. Davis, 8 Conn. 191 53, 99 Savings Bank, etc., v. Benton, 2 Met. (Ky.) 240 84 Savings Bank v. Caperton, 87 Ky. 306 ; s. c. 8 S. W. Rep. 885 ; 12 Am. St. Rep. 488. . . 108 Savings Fund v. Murray, 14 Leg. Int. 133 171, 237, 259 Sawtell v. N. & S. L. & B. Co., 48 Pac. Rep. 211 177 Sawyer v. Menominee Loan and Building Association, 103 Mich. 228 ; s. c. 61 N. W. Rep. 521 255' 521 Scadding v. Lorent, 3 H. L. Cas. 418 53 Scanlan v. Snow, 2 App. D. C. 137 133 Schaeffer v, Missouri Insur- ance Co., 46 Mo. 248 37 Schenectadv, etc., R. R. Co. v. Thacher, "ll N. Y. 102 25 Schlesinger's Estate, 1 Law Times (N. S.),15 158 Schmidt v. Hennepin County PAGE Barrel Co., 35 Minn. 511 ; s. c. 29 N. W. Rep. 200 158 Schober v. Accommodation Saving and Loan Associa- tion, 35 Pa. St. 223 175, 228 Schoff v. Bloom^eld, 8 Vt. 472 53 Schofield v. Union Bank, 2 Cranch. C. C. 115 54 Schout v. Conkey Ave., etc., Asso., 87 Hun, 568; s. c. 32 N. Y. Supp. 713 ; 11 Misc. Rep. 454 ; 66 N. Y. St. Rep. 66 192, 332 Schrick v. St. Louis Mutual Housebuilding Co., 34 Mo. 423 126 Schutte v. California Building and Loan Association, 146 Pa. St. 324 ; s. c. 23 Atl. Rep. 336 197 Scott v. Baker, 3 W. Va. 285. . 67 Scott v. Depeyster, 1 Edw. Ch. 513 108. 109 Scott v. Llovd, 9 Pet. 418 ; re- versing 4 Cranch, C. C. 206. . 264 Scottish Property Investment Building Society v. Boyd, 4 Rettie, 127 448 Scottish Property Investment Company Building Society v. Stewart. 12 Rettie. 925 ; s. c. 22 Scot. L. R. 619 329, 342 Scovill v. Tliayer, 105 U. S. 148 156 Seagrave v. Pope, 1 De G. M. & G. 783 : s. c. 16 Jur. 1099 ; 22 L. J. Ch. 258 ; 15 E. L. & Eq. 477 ; 20 L. J. Rep. 158. . . .242, 246 277, 291, 357, 358 Sears v. 111. & Wesleyan Uni- versity, 28 111. 183 73 Sears v. King's County Ele- vated R. R. Co., 152 Mass. 151; s. c. 25 N. E. Rep. 98... 79 Second Avenue R. R. Co. v. Colman, 24 Barb. 300 80 Second Edinburgh and Leith Building Society v. Aitken, 19 Rettie, 603 ; s. c. 29 Scot. L. R. 456 40 Second German -American Building Ass'n of Baltimore v. Newman, 50 Md. 62 265 Second Manhattan B. Ass'n. v. Hayes, 4 Abb. App. Dec. 183 ; s. c. 2 Keyes, 192 314 Second National Loan and Homestead Association v. Hublev. 34 Leg. Int. 6 ; s. c. 24 Pitts. L. Jr. 50 331 Second New York Building As- sociation v. Gallier lvi TABLE OF CASES. Security Loan Association v. Lake, 69 Ala. 456; s. c. 1 Amer. & Eng. Corp. Cas. 418; s. c. 72 Ala. 307.. 251, 324 339, 445 Seibel v. Victoria Building As- sociation, 43 Ohio St. 371 ; s. c. 1 West, 340 ; 10 Amer & Eng. Corp. Cas. 463 ; 13 Wkly. L. Bull. 242, 265; 2 N. E. Rep. 371.. 171. 172. 184, 193 145. 204, 230, 261, 321, 339, 395 Seiznouret v. Home Insurance Co., 24 Fed. Rep. 332 156 Seldon v. Reliable Savings and Building Association, 32 P. F. Smith, 336 ; s. c. 2. W. N. Cas. 481 6. 171,203, 231, 263 Selma Building and Loan As- sociation v. Morgan, 57 Ala. 33 429 Selma,' etc". ,' R. R. ' Co. v. Tip- ton, 5 Ala. 787 ; s. c. 39 Am. Dec. 344 31 Seneca County Bank v. Lamb, 26 Barb. 595 102, 128 Setliff v. North, etc., Ass'n (Tenn. Ch.), 39 S. W. Rep. 546. .33, 43, 198, 216, 217, 222, 248 S 'wull v. Boston Water Power Co., 4 Allen. 27 7: s. c. 81 Am. Dec. 701.... 76, 167 Seward v. Rising Sun, 79 Ind. 351 140 Shackelford v. New Orleans, etc., R. R. Co.. 37 Miss. 202. . 94 Sliakopee Mining Co., In re, 37 Minn. 91 ; s. c. 33 N. W. Rep. 219 30 Shannon v. Dunn, 43 N. H. 194 251 Shannon v. Howard Building Association, 36 Md. 383 L33 196, 206, 207, 212, 216 219, 221, 246, 294 Shattuck v. Oakland Smelting, !., Co., 58 Gal. 550 117 Shaw \. Port Phillips, etc., L. R. 13 Q. B. Div. 107 168 Slu-llield Building Associal ion, In re Watson, Ex Parte,21 Q. B. Div. 301 ; s. c. 57 L.J. Q. B. 609; 59 L. T. 401 ; 36 W. R. 829; 52 .). P. i 12 415 Sheffield Permanent Building Sociel \\ In re, 5 L. T. Rep. 211 824, 327, 328 Sheffield, etc., Building So- fi.'tv. In iv, I,. I!.. .".' |{. I'.. Div. 17 1 : s. c. 58 L. .1. Q. B. 865; 60 L. T. L86; 53 J. P. PAGE 375 ; 5 T. L. R. 192 346, 380 385, 396 Sheffield and South Yorkshire Permanent Building Society v. Aizlewood, L. R. 44 Ch. Div. 412 ; s. c. 59 L. J. Ch. 34 ; 62 L. T. 678 ; 6 T. L. R. 25. . . .110, 291, 292, 293, 452, 461 Shelby County v. Shelby R. R. Co., 5 Bush. 225 23 Shelby v. Mobile, 30 Ala. 540 ; s. c. 68 Am. Dec. 143 137 Sheridan Electric Light Co. v. Chatham National Bank, 127 N. Y. 517 ; s. c. 28 N. E. Rep. 4G7 : 40 N. Y. St. Rep. 311. . 101 Sheriff v. Glenton, 28 L. T. (N. S.) 65 319 Sherman Building Association v. Rock, 9 Phila. 75 ; s. c. 29 Leg. Int. 140 238 Sherman Center Town Co. v. Swigart, 43 Kan. 292 ; s. c. 19 Am. St. Rep. 137 67 Shultz v. Christman, 6 Mo. App. 338 114 Shinn v. Commonwealth, 73 Va. 899 34, 77 Shockley v. Fisher, 75 Mo. 498 457 Shoe & Leather Asso. v. Bailey, 17 Jones & Sp. (N. Y.) 385" . 48 Shropshire v. Behrens. 77 Tex. 275 458 Siborg v. Security, etc., Asso- ciation (Minn.). 75 N. W. Rep. 1116 439 Sibun v. Pearce, 44 Ch. Div. at p. 370 ; 63 L. T. 123 ; 38 W. R. 658 ; 6 T. L. R. 262. . . .315, 330 335, 337 Siede v. Joshua Hendv Ma- chine Works. 86 Cal. 390. .61, 63 Sills v. North & Son tli B. L. Ass'n, Chicago Daily Law Bull., January 16,1896 398 Silver v. Barnes, (i Bing. N. C. 180; 8 Scott, 300;3rE. C.L. 335 243, 245 Silver Hook Road v. Green. 12 R. I. 164 ; s. c. 7 Rep. 187. . . 100 Simons v. Vulcan ( )il and Min- ing Co., 61 Pa. St. 202 ; s. c. 100 Am. Dec. C28 104, 114 Simpson v. Building and Sav- ing Association, 38 Ohio St. 349 190 Simpson v. Kentucky Citizens' Asso. (Kv.), II S. W. Rep. 570; s. c. 42 S. W. \lv V . 834 23 Sistare v. Best, 16 Hun, 611.. .. 64 TABLE OF CASES. lvii PAGE Skinner's Estate, 4 Phila. 189 ; s. c. 17 Leg. Int. 381 259 Skinner v. Smith, 134 N. Y. 249 ; s. c. 31 N. E. Rep. 911 ; af- firming 10 N. Y. St. Rep. 81 ; s. c. 56 Hun, 437 106 Slee v. Bloom, 19 Johns. 466 ; s. c. 10 Am. Dec. 273 135 Small v. Smith, L. R. 10 App. Cas. 119 293, 414 Smith's Case, L. R. 1 Ch. Div. 481 403 Smith, Ex Parte, 39 Ch. Div. 546: s. c. L. J. Ch. 134; 60 L. T. 97 : 4 T. L. R. 466, 712 100 Smith v. Crescent City, etc., Slaughter House Co., 30 Ala. Ann. 1378 168 Smith v. Dorn, 96Cal. 73 ; s. c. 30Pac. Rep. 1024 99 Smith v. Erb, 4 Gill (Md.),457 88 Smith v. Hurd, 12 Met. 371 ; s. c. 46 Am. Dec. 690 114 Smith v. Law, 21 N. Y. 296 53 Smith v. Loni;- Island R. R. Co. , 102 N. Y. 190 ; reversing 32 Hun, 38 78 Smith v. Los Angeles, etc., As- sociation, 78 Cal. 289 65, 96 Smith v. Mechanics' Building and Loan Association, 73 N. C. 372 256. 287, 294 Smith v. Nashville, etc.. R. R. Co., 91 Tenn. 221 : s. c. IS S. W. Rep. 546 157 Smith v. Natchez Steamboat Co., 1 How. (Miss.) 479. .. . 72 Smith v. Old Dominion B. & S. Ass'n, 119 N. C. 257; 21 S. E. Rep. 40 256 Smith v. Old Dominion, etc., Ass n, 26 S. E. Rep. 40 ; s. c. 119 N. C. 257 78 Smith v. Pilkington, 30 L. T. Rep. 196; s. c. 4 Jur. (N.S.) 58; 22 J. P. 5 ; on appeal, 1 De Cex F. & J. 120 ; 29 L. J. Ch. 227 ; 24 J. P. 227. . . .192, 279 361, 362 Smith v. Putman. 61 N. H. 632 119 Smith v. Reese River Co., L. R. 2Eq. 264; s. c. L. R. 4H. L. 64 116, 152 Smith v. Skearv, 47 Conn. 47 105 Smith v. Smith^ 62 111. 493. .63 71 Smith v. Smith, 3 Desau, 557. . 55 Smith v. Wolf, 55 la. 555 86 Smoot v. People's, etc., Ass'n (Va.), 29 S. E. Rep. 746. .288, 289 Smyth v. Darley, 2 H. L. Cas. 789 52 PAGE Snarr v. Toronto Permanent Building and Saving Society, 29 U. C. Q. B. 317 421 Snider's Estate, 34 Leg. Int. 49 42 Snyder v. Studebaker, 19 Ind. 462 32 Societe de Construction v. Banque, 1 Q. B. (Can.) Rep. 7:5 421 Societe Canadienne-Francaise v. Daveluy, 20 Cas. S. C. 449 200 Solomon v. Penoyar, 89 Mich. 11 ; s. c. 50 N. \V. Rep. 644. . 115 Somerset County Building and Loan Association v. Cam- man, 11 >;. J. Eq. 382. . . .186, 382 South Bav Meadow Dam Co. v. Gray, 30 Me. 547 72 South Covington, etc., R. R. Co. v. Gest, 34 Fed. Rep. 628 116 Southgate v. Atlantic, etc., R. P. Co.. 61 -Mo. 89 84 South London Fish Market Co., In re, 39 Ch. Div. 324 ; s. c. 60 L. T. 68; 37 W. R. 3 42 Southern Bank v. Williams, 25 Ga. 534 34 Southern B. & L. Ass'n v. An- niston Trust Co., 101 Ala. 582 ; s. c. 15 Southern Rep. 123 : 29 L. R. A. 120 174, 202 251 Southern Building and Loan Association v. Harris, 98 Kv. 41 ; 31 L. R. A. 41 : 32 S. W. Rep. 261 35, 257, 328, 428 Sparks v. Dispatch Transfer Co., 104 Mo. 531; s. c. 24 Am. St. Rep. 351 ; 12 L. R. A. 714 : 15 S. W. Rep. 417 ; 34 Am. & Eng. Corp. Cas. 373 63,64, 67 Sparrow v. Farmer, 26 Be; 1 , v. 511; 28 L. J. Ch. 537 : 5 Jur. (N. S.) 530: 33 L. T. (O. S.) 216 ; 23 J. P. 500. . . .200, 318, 363 Spear v. Crawford, 14 Wend. 20 ; s. c. 28 Am. Dec. 513 . . . 37 Spear v. Ladd. 11 Mass. 94. . . . 100 Spears v. Ward. 48 Ind. 541 . . . 135 Spengler v. Butterfield. 6 Colo. 356 67 Sperring's Appeal, 71 Pa. St. 11 ; s. c. 10 Am. Rep. 684... 108 Sperry v. Dransfield, 2 N. Z. L. Rep. 319 77 Spining v. Home Building and Savings Association, 26 Ohio St. 483 27 Spriggs v. Western Union Tel. Co., 46 Md. 67 24 lviii TABLE OF CASES. PAGE Springfield Building Associa- tion v. Raber, 24 Pitts. L. Jr. 23 ; s. c. 33 Leg. Int. 329 ; 11 Phila. 546 307 Spring Garden Association v. Tradesman's Loan Associa- tion, 46 Pa. St. 493 ; s. c. 11 Phil. 546 ; 33 Leg. Int. 329. . 170 172, 173, 177, 305, 404 Spring Valley Water Co., Ex Parte, 17 Cal. 176 27 Springville Building Associa- tion v. Raber, 33 Leg. Int. 329 ; s. c. 24 Pitts. L. Jr. 23. . 171 172 Spurlock v. Pacific R. R. Co., 61 Mo. 319 134 Spyker v. Spence, 8 Ala. 333.. 61, 65 Squires v. Brown, 22 How. Pr. 35 93 St. John Building Society, In re, 28 N. B. 597 ; s. c. 9 Occ. N. 348 375 St. John v. Erie R. R. Co., 22 Wall. 136 ; s. c. 10 Blatchf. 271 145 St. Joseph, etc.. Building As- sociation v. Thompson, 19 Kan. 321 283 St. Lawrence Steamboat Co., In re, 44 N. J. L. 529 56 St. Louis Colonization Associa- tion v. Hennessy, 11 Mo. App. 555 95 St. Louis Domicile, etc., As- sociation v. Augustin, 2 Mo. App. 123 101, 454 St. Louis Gas Light Co. v. City of St. Louis, 84 Mo. 202 ; affirming 11 Mo. App. 55 .... 34 St. Louis Institute, In re, 27 Mo. Apo. <•>:;:; 25 St. Louis v. Withaus, '■><> Mo. 646; s. <■. 15 Mo. App. '.'17... 53 St. Louis Perpetual Insurance , v. Goodfellow, 9 Mo. 149 15s Si. Louis v.Weber, 44 Mo. ;,i; , 133, 134 St. Louis. <•!<•.. Co. v. Y.-mtis, 72 111. App. 597; s. c. 17:! 111. :!■_»! ; s. r. :,() N. I-]. Ilcp. .SOI.. 35:5 339 St. Louis. etc., Co. v. Vantis, 72 III. \pp. 597 338 St. Luke's Church v. Matthews, 1 Desau, 578 ; s. c. 6 Am. Dec. 619 133 St . Nicholas [nsurance ( '<». v. Bowe, 3 Bosw. 150 62 Bt. Paul, etc., i:. R.Co., In re, 86 Minn. 85 50 PAGE Stacy v. Bank of Illinois, 5 111. 91 118 Stanwood v. Stanwood, 17 Mass. 57 140 Star Savings & L. Ass'n v. Woods (Tenn.), 42 S. W. Rep. 872 263 Starks v. Burke, 9 La. Ann. 341 103 State v. Accommodation Bank, 26 La. Ann. 288 23 State v. Adams, 44 Mo. 570 103 State v. American Savings and Loan Association, 64 Minn. 349 ; s. c. 67 N. W. Rep. 1. .. 35 State v. Armstrong. 3 Sneed, 634 : Ex Parte, Chad well. 59 Tenn. 98 25 State v. Bailey, 19 Ind. 452. ... 32 State v. Bienville Oil Works Co., 28 La. Ann. 204 47 State v. Bonnell, 35 Ohio St. 10 53, 99 State v. Central Ohio, etc., As- sociation, 29 Ohio St. 399. ... 28 State v. Chute, 34 Minn. 135: s. c. 24 N. W. Rep. 253. . . .54, 56 State v. City of Cincinnati, 23 Ohio St. 445 128 State v. Conklin, 34 Wis. 1. . . . 124 State v. Creveling, 39 N. J. L. 465 ; affirmed, 40 N. J. L. 192 426, 427 State v. Curtis. 9 Nev. 325. .. . 127 State v. Ferguson, 31 N. J. L. 107 99 State v. Ferguson, 33 N. H. 424 126 State v. Ferris, 42 Conn. 560. . 54 State v. Flitcraft (Mo.), 36 S. W. Rep. 675 434 State v. Granville, etc., So- ciety, 11 Ohio. 1 23 State v. Greenville Building Association. 29 Ohio St. 92. . 128 190, 235, 283 State v. Hornbacker, 42 N. J. L. 035 ; affirming s. c. 42 N. J. L. 519 170. 242, 251, 426 State v. How. 1 Mich. 512 32 State v. Mayor, 33 N. J. L. 57. . 126 State v. McGrath, 95 Mo. 193; s. c. 8 S. W. Rep. 425 ; 22 Aiucr. & Eng. Corp. ('as. 620 429 Slate v. Mclver, 2S. C. 25 163 State v. Merchants' Exchange, Mo. App. 96 136 State v. Merchants', 37 Ohio St. 251 56 State v. Oberlin Building and TABLE OF CASES. lix PAGE Loan Association, 35 Ohio St. 258 128, 189, 234, 235, 236 273, 376, 416, 438, 445 State v. Ohio, etc., K. R. Co., 6 Ohio C. C. 414 96 State v. Overton, 24 N. J. L. 433; s.c. 61 Am. Dec. 671. .121, 133 State v. People's Building & Loan Ass'n, 43 N. J. L. 389 . . 165 State v. People's Mutual Ben- efit Association 42 Ohio St. 579 117 State v. Pettineli, 10 Nev. 141 88 State v. Redwood Falls Build- ing & Loan Ass'n, 45 Minn. 154 ; s. c. 47 N. W. Rep. 540 ; 10 L. R. A. 752 ; 35 Araev. & Eng. Corp. Cas. 244.. 142, 301, 345 426, 429 State v. Rohliffe (N. J. L.), 19 Atl. Rep. 1099 57, 91 State v. Sibley, 25 Minn. 387 . . 21 State v. St. Louis, etc., R. R. Co., 29 Mo. App. 301 46. 47 State v. Smith, 15 Ore. 98 ; s. c. 14 Pac. Rep. 814 60, 91 State v. Smith, 48 Vt. 286. .99, 157 State v. Sportsmen's, etc. , As- sociation, 29 Mo. App. 326 . . 46 State v. Thompson, 27 Mo. 365 56 State v. Tudor, 5 Dav, 329 ; s. c. 5 Amer. Dec. 162. . ..V,. 56, 138 State v. Wilmington. 3 Harr. (Del.) 294 54 State v. Wright, 10 Nev. 167. . 88 State Bank v. Andrews, 18 N. Y. St. Rep. 167 116 State Bank v. Bell, 5 Blackf. 127 84 State Bank v. Fox, 3 Blackf. 431 68 State Bank v. United States Pottery Co. , 34 Vt. 144 81 State Saving and Loan Asso- ciation v. Carroll. 15 Pa. C. C. 522 ; s. c. 4 Pa. Dist. Rep. 6 375 391. 441, 445, 446 State Saving Association v. Nixon- Jones Printing Co., 25 Mo. App. 642 159 State Savings Association v. Kellogg, 63 Mo. 540 375 Steamboat Co. McCutcheon, 13 Pa. St. 13 63, 64 Steamboat New World v. King, 16 Howe. 469 108 Steam Engine Co. v. Hubbard, 101 U. S. 188 93 Stein v. Indianapolis Building Loan Fund and Savings, 18 Ind. 237 264, 458 PAGE Steinberger v. Independent L. & S. Ass'n, 84 Md. 625 ; s. c. 36 Atl. Rep. 439 433 Stepbens v. Overstolz, 43 Fed. Rep. 771 109, 114 Stettaner v. New York, etc., Co., 42 N. J. Eq. 46; s. c. 24 Cent. L. S. 365 48 Stevens v. Carp River Iron Co., 57 Mich. 427 ; s. c. 24 N. W. Rep. 160 81 Stevens v. Davidson, 18 Graft. 819 ; s. c. 98 Am. Dec. 692. . . 101 Stevens v. Hill, 29 Me. 133. .100, 457 Stevens v. Willard, 43 Vt, 092 104 Stewart v. Mahoney M. Co., 54 Cal. 149 90 Stewart v. St. Louis, etc., R. R. Co., 41 Fed. Rep. 736 106 Stewart v. Walla Printing Co., 1 Wash. 521 ; s. c. 20 Pac. Rep. 005 163 Stiles' Appeal, 92 Pa. St. 122 ; s. c. 9 W. N. Cas. 83 ; 37 Leg. Int. 366 128, 235, 416 Stohr v. San Francisco Musical Fund Society, 82 Cal. 557 ; s. c. 22 Pac Rep. 1125. ...120, 336 Stokes v. New Jersey Pottery Co., 46 N. J. L. 237 65 Stoops v. Greensburg, etc., Plank Road Co., 10 Ind. 47.. 21 Story v. Furman, 25 N. Y. 214 99 Stow v. Wyse, 7 Conn. 214 ; s. c. 18 Am'. Dec. 99 52, 99 Straus v. Carolina. Interstate Building and Loan Associa- tion, 117 N. C. 308; s. c, 23 S. E. Rep. 450 ; affirmed, 118 N. C. 556 ; s. c. 24 S. E. Rep. 116 314, 441 Strauss v. Carolina Intel-state Building and Loan Associa- tion, 118 N. C. 556 ; s. c. 23 S. E. Rep. 450 225, 448 Strohen v. Franklin Saving and Loan Association, 115 Pa. St. 273; s. c. 8 Atl. Rep. 843; 6 Cent. Rep. 779; 34 Pitts. L. J. 327 ; 44 Leg. Int. 103 ; 19 W. N. Cas. 200 387 Strong v. Wheaton, 38 Barb. 616 37 Sturdivant v. Hall, 59 Me. 172 ; s. c. 8 Am. Rep. 409 67 Sturges v. Stetson, 1 Biss. 246 140 Sturges v. Vanderbilt, 73 N. Y. 384 34 Stutz v. Hendley, 41 Fed. Rep. 531 ; s. c. 139 U.S. 417 156 Sullivan v. Jackson Building lx TABLE OF CASES. and Loan Association, 70 Miss. 94. ; s. c. 12 So. Rep. 590 : 46 Amer. & Eng. Corp. Cas. 494 29, 226, 229, 231, 255 Sullivan Savings Association v. Copeland, 71 la. 07 260, 264 Sullivan v. Stucky, 80 Fed. Rep. 491 * 447 Sullivan v. Triunfo Gold, etc., Co., 28Cal. 585 102 Sullivan v. Lewiston Institute of Savings, 56 Me. 507 69 Sumpter Building and Loan Association v. Winn, 45 S.C. 481 ; s. c. 23 S. E. Rep. 29. . . 257 313,314 Sunbury Savings Fund & Building Association v. Mor- ton, 1 Luz. Leg. Reg. 147. . . 259 Sunderland, etc., Society v. Rawlings, etc., Society. L. R. 24 Q. B. 394 ; 59 L. J. Q. B. 217 ; 62 L. T. 29:', ; 38 W. R. 509; 54 J. P. 613; 6 T. L. R.199 339. 340, 347. 378 Sunderland 36th Universal Building Society, In re, 8 R. at p. 590 348 Superior Savings and Loan So- ciety v. Lucas, 44 U. C. Q. B. 100.* 285 Supply Ditch Co. v. Elliot, 10 ('<»!<». 327 ; s. c. 3 Am. St. Rep. 587 104 Supreme Council v. Garrigus, 104 Ind. 133; s. c. 3 N. E. Rep. 818 135 Susquehanna Insurance Co. v. i'. rrine, 7 Watts & S. 348... 123 SutherL rid v. Olcott, 95 N. Y. 93; reversing 29 Hun, 161.. . 156 Suydam v. Moore, 8 Barb. 358 24 Swan v. North British Austra- lian Co., 2 Hurl. & Colt. 175 168 Swartwoul v. Michigan, etc., R. R. Co., 24 Mich. 389 31 Sweeney v. El Paso Building, etc., ion, 26 S. \V. Rep. 290 31, 173 Swift v. State, 7 Houst (Del.) 338; s. c. 6 AH. Rep. 856.... 48 Sword v. Wickersham,29 Kan. 746 31 Sykes's Case, in Beav. L62 . is, loi Sv n's < Ijiso, L. It. 5 CI,, '.-'.is :;s Tafl \. Presidio R. R. Co., 22 Pac. Rep. 485; IN Am. St. Rep. 166 I'll Tafl v. Ward, L06 Mas.. 58. ... 50 Tagi arl v. Perkins, 73 Mich. 303; . c. 11 i : ' PAGE Tanner's Appeal, 95 Pa. St. 118 39 104, 281, 291 Tannett v. Rocky Mountain National Bank, 1 Colo. 278 ; 9 Am. Rep. 156 67 Tarbell v. Page, 24 111. 46 32 Taylor v. Collins, 40 L. T. Rep. (N. S.) 168 197 Taylor v. Great India Peninsula R. R. Co., 4 DeGex & J. 559 168 Taylor v. Griswold. 14 N. J. L. 222 : s. c. 27 Amer. Dec. 33, 55 138 Taylor v. Van Buren Building and Loan Association. 56 Ark. 340; 19 S. W. Rep. 918 250 Taylor County Court v. Balti- more, etc.,R. R. Co., 35 Fed. Rep. 161 106 Telegraph Co. v. Davenport. 97 IT. S. 309 76, Kir, 108 Tennent v. City of Glasgow Bank. 4 App. Cas. 615 : s. c. 40 L. T. 094 ; 27 W. R. 649. . . 349 Tennessee, etc., R. R. Co. v. East Alabama R. R. Co., 73 Ala. 420 96 Terwilliger v. Great Western Telegraph Co., 59 111. 249. .. . 87 Texas Homestead Building and Loan Association v. Kerr (Tex.). 13 S. W. Rep. 1020. . 333 Thames Haven Dock, etc., Co. v. Hall, 3 Eng. Ry. Cas. 441 93 Thayer v. Duller, 141 U. S. 234 ; s. c. 11 Sup. Ct. Rep. 987. . . . 102 Thewv. Porcelain Manufactur- ing Co., 5 S. C. 415 65 Third Ave. R. R. Co. v. Ebling, 12 Daly, 99 01 Thirty-first Street Building and Loan Association v. Wether- ell, 43111. App. 509 200 Thomas v. Brownsville, etc., R. R. Co., 2 Fo4. Rep. 877 : s. c. 1 McCray, 392 106 Thomas v. Brownsville, etc., R. R. Co., 109 F. S. 522; revers- ing 2 Fed. Rep. 877 105 Thomasv. Sweet, 37 Kan. 183; s. c. 11 Pac. Rep. 545 70, 105 Thompson v. Gillison, 28S. C. 531 ; 6 S. E. Rep. 333: 22 Amor. & Eng. Corp. Cas. 615 257, 264 Thompson v. Hudson. L. R. 2 Ch. App. 255 209 Thompson v. McKee, 5 Dak. IP. 1 : s. c. 37 N. W. Rep. 367 66 Thompson v. North Carolina, . !,. Association, 120 \. TABLE OF CASES. lxi PAGE C. 420 ; s. c. 27 S. E. Rep. 118 447 456 Thompson v. People, 23 Wend. 537 27 Thompson v. Sullivan, 28 S. C. 534 ; s. c. 22 Amer. & Eng. Corp. Cas. 615 86 Thompson v. Williams, 75 Cal. 153; 18Pac. Rep. 153 ; 9 Am. St. Rep. 187 ..99, 100 Thomson v. Ocmulgee Build- ing, etc., Association, 56 Ga. 350 276 Thornburg v. New Castle, etc., R. R. Co., 14 Ind. 499 153 Thome v. Thome, 63 L. J. Ch. 58 ; s. c. 69 L. T. 378 ; 42 W. R. 283 ; (1893) 3 Ch. 196 ; 8 Rep. 282 42 Thorn v. Croft, L. R. 3 Eq. 193 : s. c. 36 L. J. Ch. 68 ; 31 J. P. 356; 15 L. T. Rep. (N. S.) 205; 15 W. R. 54 430 Three Towns British Mutual Deposit and Loan Society v. Doyle, 7 L. T. Rep. (N. S.) 276 ; s. c. 11 W. R. 22; 13 C. B. (N. S.) 290; 106 Eng. C. L. Rep. 289 211 Tierney, In re, 9 Ir. Rep. 11 ; s. c. 8 Ir. L. T. Rep. 29. . .125, 137 211, 213, 218 Tift v. Quaker City National Bank. 141 Pa. St. 550 ; s. c. 21 Atl. Rep. 660 ; 9 Rail. & Corp. L. Jr. 426 118 Tilley v. American Building and Loan Association, 52 Fed. Rep. 618 ; s. c. 40 Am. & Eng. Corp. Cas. 375. .171, 199, 250, 285 Tippets v. Walker, 4 Mass. 595 100 101, 140 Titus v. Cairo, etc., R. R. Co., 37 N. J. L. 98 63 Tobey v. Hakes, 54 Conn. 274 ; 1 Am. St. Rep. 114 165 Toledo, etc., R. R. Co. v. John- son, 49 Mich. 148.. 31 Tome v. Parkersburgh R. R. Co., 39 Md. 36; s. c. 17 Am. Rep. 540 162 Tomkinson v. Balkis, etc., Co., 2Q. B. 614 166 Topeka Mfg. Co. v. Hale, 39 Kan. 23 150 Topeka Primary Association v. Martin, 39 Kan. 750 ; s. c. 18 Pac. Rep. 941 61 63 Toponce v. Corinne Mill, etc., Co., 6 Utah, 439 ; s. c. 24 Pac. Rep. 534 71 PAGE Tosh v. North British Building Society, 11 App. Cas. 489 ; 35 W. R. 413; 14 Rettie(H. L.), 6 ; 24 Scot. L. R. 128. . . .370, 381 384, 8 Towle v. American, etc., Assn., 75 Fed. Rep. 938.... 150 "^r K 398 421, 432 Towne v. Rice, 122 Mass. 67. . . 07 Town of Searcy v. Yarnell, 47 Ark. 269 ; s. c. 1 S. W. Rep. 319 35 Tradesman's Building and Loan Association v. Thompson, 31 N. J. Eq. 536 ; s. c. 32 N. J. Eq. 133 85 Tradesmen's National Bank v. Manhattan Lumber Co., 18 N. Y. Supp. 920 62, 66 Treffeirson's Estate, 3 Knlp, 308 173, 307 Tregear v. Etiwanda Water Co., 76 Cal. 537 : s. c. 9 Am. St. Rep. 245 ; 18 Pac. Rep. 658 140, 165 Trip v. Northwestern Nat. Bank, 41 Minn. 400 457 Tripp v. Swanzev Paper Co., 13 Pick. 291..." 103 Trisconi v. Winship, 48 La. Ann. 45 ; s. c. 9 So. Rep. 29; 9 Rail. & Corp. L. J. 469. . . . 109 Trowbridge v. Hamilton, 52 Pac. Rep. 328. ..122, 128, 300, 456 Troy Turnpike Co. v. McChes- ney, 21 Wend. 296 85 Trustees v. Bosseiux, 3 Fed. Rep. 817; s. c. 4 Hughes, 387 108 Trustees v. Flint, 13 Met. 539. 129 Trustees v. Hill, 6 Cow. 23; s. c. 16 Am. Dec. 429 31 Trust Co. v. Floyd, 47 Ohio St. 525 ; s. c. 26 N. E. Rep. 110 ; 12 L. R. A. 346; 21 Am. St. Rep. 846 114 Trust Co. v. Weed, 14 Phila. 422 105 Tunis v. Hestonville, etc., R. R. Co., 149 Pa. St. 70 ; s. c. 24 Atl. Rep. 88 ; 15 L. R. A. 665 ; affirming 1 Pa. Dist. Rep. 135 90 91 Turner Bau-Verein v. Wood- burn, 27 Wkly. L. Bull. 409 44 171, 203 Turner v. Interstate, etc., Ass'n (S. C), 27 S. E. Rep. 947 35 257, 287 Turquand v. Marshall, L. R. 4 Ch. 376 108 lxii TABLE OF CASES. PAGE Tuttle v. Walton, 1 Ga. 43 159 Twelfth Street Market Co. v. Jackson, 102 Pa. St. 269 68 Twenty-First St. B. & L. Assn. v. Wetherell, 43 ILL App. 509 : affirmed, 153 111. 361 ; s. c. 39 N. E. Rep. 143 159 Twin Cities, etc., Association v. Lepore, 17 Pa. C. C. 426. . 446 447 Tyler v. Anglo-American, etc., Association, 52 N. Y. Supp. 7 7 452 Tyler v. Savage, 143 U. S. 79 ; s. c. 12 Sup. Ct. Rep. 340. .. . 69 Tyler v. The Old Post Associa- tion, 87 Ind. 323 76 Tyrell Loan & BuildingAssocia- tion v. Haley, 139 Pa. St. 476 ; s. c. 20 Atl. Rep. 1063; 48 Leg. Int. 345; reversing 27 W. N. Cas. 244.. 187, 193, 317, 320, 434 Tyrell Loan & Building Asso- ciation v. Haley, 163 Pa. St. 301 ; s. c. 35 W. N. Cas. 269 ; 30 Atl. Rep. 154 184, 193, 442 Ulster Permanent Building Society v. Glenton, L. R. 21 Ir. Ch. 124 300 See Rumney & Smith. Ulster R. R. Co. v. Banbridge R. R. Co., L. R. 2 Ir. Eq. 190 106 Underbill v. Santa Barbara, etc., Co., 93Cal. 300 ; s. c. 28 Pac. Rep. 1049 109 Underwood v. Waldron, 12 Mich. 73 50 Union Bank v. Laird, 2 Wheat. 390 159 Union Building Loan Associa- tion v. Masonic Hall, etc., Ass'n, 29 N. J. Eq. 389 43 157, 159, L69, 199, 223, 224 279, 280, 281, 291, 292, 303 Union Hotel Co. v. Hersee, 15 Hun, 371 150 Union Locks, etc., Co. v. Towna, 1 X. II. I I : s. c. 8 Am. Dec. 32 24 Union Manufacturing Co. v. Pitkin, 1 I Conn. 17 1 84 Union Mutual Fire Insurance Co. v. Keyser, 32 X. II. 313; s. c. M Am. Dec 375... .102, 124 Union Xat tonal Hank v. Hunt, 76 Mo. 139 ; reversing 7 Mo. A IM>. 42 152 Union Pacific R. R. Co. v. ( Jhicago. etc., I«'. !>'• Co., 51 Fed. Rep. 309 ; s. <•. 47 Fed. Rep. 15 loi PAGE Union Savings Association v. Seligman, 92 Mo. 635 ; s. c. 15 S. W. Rep. 630 55 Union Turnpike Co. v. Jenkins, 1 Qaines 381 102 Uniontown Building and Loan Association's Appeal, 92 Pa. St. 200 310 United States v. McKelden, MacArthur & Mackey (D. C), 162 53 United States Saving and Loan Co. v. Cade. 15 Wash. 38 ; s. c. 45 Pac. Rep. 656 296, 317 United States Express Co. v. Redbury, 34 111. 459 34 United States Building and Loan Association v. Silver- man, 85 Pa. St. 394 ; s. c. 4 W. N. Cas. 546 ; 35 Leg. Int. 51 333, 330. 336, 337, 338, 344 378 United States, etc., Co. v. Sullivan, 80 Fed. Rep. 762 . . 243 342 Upton v. Jackson, 1 Flipp, 413 156 Upton v. Tribilcock, 91 U. S. 50 153 Usher v. Sutton, 31 Kan. 286. . 66 Valk v. Crandall, 1 Sandf. Ch. 179 26, 64 Vanderpoel v. Gorman, 140 N. Y. 563 457 Van Hook v. Somerville Manf. Co., 5 N.J. Eq. 137 98 Van Pelt v. Home Building and Loan Association, 87 Ga. 370 ; s. c. Rep. 574 ; s. c. 79 Ga. 439 ; 4 S. E. Rep. 501 ; 19 Amer. & Eng. Corp. Cas. 66 254 436, 438 Vansands v. Middlesex County Bank, 26 Conn. 144, 158 Van Wagon v. Genesee Falls, Assn., 88 1 1 un. 43; s. c. 34 N. Y. Supp. 491, 68 N. Y. S. Rep. 498 74, 75 Vermont Loan and Trust Co. v. Whithed, 2 N. D. 82 ; s. c. 49 X. W. Rep. 318; 35 Amer. & Eng. Corp. Cas. 250... 231, 287 289 Vernon Society v. Hills, 6 Cow. 2:!; s.c. 16 Am. Dec. 429. .87, 89 Victoria Building Association v.Tlie Arbiter Bund. 6 Wkly I,. Bull. 823; S, C. 10 Anicr. L. Rec 485 122, L90, 280, 300 Victoria Permanent Benefit Building Investment and TABLE OF CASES. lxiii PAGE Freehold Land Society, In re, L. R. 9 Eq. 605 ; s. c. 39 L. J. Ch. 628; 18 W. R. 967; L. T. (N. S.) 777; 34 J. P. 532 ; 6 Mag. Cas. 174 44, 45 411, 422 Vincent v. Harrison B. & D. • Association, 5 Ohio N. P. Rep. 273 343, 379 Vinter's Co. v. Passey, 1 Burr, 235 124 Vorris v. Renshaw, 49 111, 425 63 Vos v. Cedar Grove Land and Building Association. 9 Wkly. L. Bull. 194 452, 461 Vreeland v. New Jersey Stone Co.. 29 N. J. Eq. 190 152 Wadlinger v. Washington Ger- man Building and Loan Ass'n, 153 P. St. 622 ; s. c. 26 Atl. Rep. 647.. .172, 175, 337, 345 Wait v. Nashua Armory Asso- ciation, 2:3 Atl. Rep. (N. H.) 77 ; 14 L. R. A. 356; 34 Cent. L. J. 119 63 Waite v. Windham, etc., Co., 36 Vt. 18 79, 94 Waite a-. Windham, etc., Co., 37 Vt. 608 79, 94 Walker v. British Guarantee Ass'n, 21 L. J. Q. B. 257 ; s. c. 16 Jur. 885 ; 16 J. P. 582; 19 L. T (O. S.) 87 83 Walker v. General, etc.. Build- ing Society, L. R. 36 Ch. Div. 777; 67 L.T. 574 336 Walker v. Giles, 6 C. B. 662 ; s. c. 13 L. T. Rep. 209 ; 13 Jur. 588 ; 18 L. J. C. P. 323 ; 60 E. C. L. 662 119, 430 Walker v. Granite Bank, 44 Barb. (N.Y.) 39 48 Wallace v. Lincoln Savings Bank, 89 Term. 630 ; s. c. 15 S. W. Rep. 448 ; 24 Am. St. Rep. 625 ; 4 Banking L. J. 249; 9 Rail. & Corp. L. J. 482 108 Walker v. Mobile, etc., R. R. Co., 34 Miss. 245 152 Walsh v. Sexton, 55 Barb. 472 164 Walters v. Anglo-American, etc., Co., 50 Fed. 316 66 Walters v. Texas Building & Loan Association (Tex. Civ. App.), 29 S. W. Rep. 51.... Walton v. Edge, 10 A.pp. Cas. 33 ; 54 L. J. Ch. 362 ; 52 L. T. 666; 33 W. R. 417; 49 J. P. 468 330,346, 349, 385 Walton v. Riley, 85 Ky. 413 ; s. c. 3S. W. Rep. 605 30 PAGE Walworth County Bank v. Farmers' Loan, etc., Co., 14 Wis. 325 63, 166 Walworth v. Brackett, 98 Mass. 98 51 Wangerien v. Aspell, 47 Ohio St. 250 ; s. c. 24 N. E. Rep. 405 ; 23 Wkly. Bull. 380.. 132, 189 190, 274, 346, 376 Ward v. Davidson, 89 Mo. 445 ; s. c. 1 S. W. Rep. 846 71, 104 117 Ward v. North Fairmont B. & S. Co., 5 Ohio N. P. 133 330 Ward v. Salem St. R. R. Co., 108 Mass. 332 106 Ware v. Banker's, etc., Co. (Va.), 29 S. E. Rep. 744 286 Wardell v. Railroad Co., 103 U. S. 651 104 Wardell v. Union Pacific R. R. Co., 4 Dill, 330 101 Warner v. McMullin, 131 Pa. St. 370 ; lb Atl. Rep. 1056. . . 70 Warner v. Mower, 11 Vt. 385.. 52 53, 99 Warren v. King, 108 U. S. 389 ; s. c. 2 Fed. Rep. 36 145 Washington B. & L. Ass'n v. Beaghen, 27 N. J. Eq. 99. . . . 302 310 Waterlow v. Sharp, L. R. 8 Eq. 501 ; s. c. 20 L. T. (N. S.) 902 421 Waterman v. Chicago, etc., R. R. Co., 139 111. 658; 32 Am. St. Rep. 228,- 29 N. E. Rep. 689: 34 Apps. 268 79 Watkins v. Workingmen's, etc., Ass'n, 97 Pa. St. 514; s. c. 38 Leg. Int. 337 ; 10 W. N. Cas. 414... 143, 171, 172, 179, 181 187, 200, 201, 204, 229, 285, 325 Watson v. Bendigo Permanent Loan and Building Society, L. R. Eq. 10 Vict. (Australia) 26 122. 123, 125 Watson v. Sidney F. Woody Printing Co., 56 Mo. App. 145 126 Watson v. Spratlev, 10 Exch. 222 .* 140 Watts Appeal, 78 Pa. St. 370. . 109 Watts v. National B. & L. Ass'n (Ky.). 48 S.W.Rep. 839 23 Waverly, etc., Association v. Buch, 64 Md. 338; s. c. 1 Cent. Rep. 4*4 ; 14 A. & E. Corp. Cas. 649 247, 267 Wayne International, etc., Ass'n v. Moats. 1 19 hid. 123; s. c. 18 N. E. Rep. 793 154 lxiv TABLE OF CASES. "Weatherly v. Medical, etc. , So- ciety, 76 Ala. 567 137 Weaver v. Barden, 49 N. Y. 286 76 Webb v. Ridglev, 38 Md. 365. . 55 Webster v. Upton, 91 U. S. 65 37 Weeks v. Propert, L. R. 8 C. P. 427 115 Weeks v. Silver Islet, etc., Min- ing Co., 55 N. Y. Supr. Ct. l;s. c. 8N. Y. St. Rep. 110.. 66 W T eidenfeld v. Sugar Run R. Co., 48 Fed. Rep. 615 101 Weiss's Appeal, 5 W. N. Cas. 423 170, 308 Weise v. San Francisco, etc., So., Id. 645 129 Welbach v. Lehigb Building Ass'n, 4 W. N. Cas. 157 ; s. c. 34 Leg. Int. 265 ; 84 Pa. St. 211 38, 221, 304 Welch v. Importers', etc., Na- tional Bank, 122 N. Y. 177 ; s. c. 25 N. E. Rep. 269: 33 N.Y. St. Rep. 452 ; 8 Rail. & Corp. L.J. 475 106 Welch v. AVodsworth, 30 Conn. 149 260, 287 Wells v. Gates, 18 Barb. 554. . 20 96 Wells v. Rahway, etc., Co., 19 X. J. Eq. 402 95 Wells v. Rodgers, 60 Mich. 525; s. c. 27 N. W. Rep. 671 97 Wells v. Smith, 7 Abb. Pr. 261 166 Wells v. Southern Minn. R. R. Co., 1 McGrary, 18 72 West v. Bullskin Prairie Ditch- ingCo., 32 Ina. 138 28 Wist Barrisburg Loan and Building Association v. Mor- iithal,2 Pears. 343 27 AWst London & General Pen- manent Benefit B. S., In re, h. 352; s. c. 63 L. .J. ('],. 506; 70 L.T. Rep. 796; 42 W. R. 535; LOT. I.. R. 280 ; 8 Rep. 764 L46, 394,404, 416 AWst Riding, etc., Society, In ,,. L. R. 13 Ch. Div. 407; s. c- .V.i L. J. Ch. 197: 62 L. T. 38 W. R. 376; 6 T. L. Rep. L60 391, 392 Wesl Riding of Yorkshire Per- manent Benefit Building So- ciety, In re, L. R. I r > Ch. Div. 463= s. c. 59 L.J. Ch. 823; 68 I, T. 153; 89 W. R. 74.. 122, 129 380. 381, 886, 414 AW t Branch Bank \. Arm- strong, 40 Pa. St. 278 159 Western Bank v. Gilstrap, 45 Mo. 419 West Winsted, etc., Associa- tion v. Ford, 27 Conn. 285. . . 84 260 453 Western Canada L. & S. S. v. Hodges, 22 Grant Ch. 566. . . 274 Westchester Fire Insurance Co. v. Earle, 33 Mich. 143 124 Westchester, etc., R. R. Co. v. Jachson, 77 Pa. St. 321 144 Westcott v. Atlantic Silk Co., 3 Met. 282 63 Westerfield v. Raddle, 7 Daly, 326 63 Western R. R. Co. v. Bayne, 11 Hun. 166 63, 65 Westervelt v. Damerest, 46 N. J. L. 37 ; s. c. 50 Am. Rep. 400 116 Weston's Case, L. R. 10 Ch. Div. 579 104, 106 Weston v. Bear River, etc., Co., 5 Cal. 186 ; s. c. 63 Am. Dec. 117 164 AVetherbee v. Fitch. 117 111. 67 64 Wetherell v. Thirty-first St. Building and Loan Associa- tion, 153 111. 361 ; s. c. 39 N. E. Rep. 143 134, 224, 342, 343 Wetterwulgh v. Knickerbocker Building Association, 2 Bosw. 381 325, 337. 344, 353 AVheeler, In re, 2 Abb. Pr. 361 56 Whilden v. Broomall, 1 Del. (Pa.) 142 173,177, 307 White's Case. Id. 157 40 White v. Mechanics' Building Association, 22 Gratt. 233. ... 136 254, 435, 444 AVhite v. New York Agricultu- ral Societv, 45 Hun, 580 ; s. c. 10 N. Y. St. Rep. 594 556 White v. State, 62 Ind. 273. ... 31 White v. AVestport Cotton Man- ufacturing Co., 1 Pick, 215 ; s. e. 11 Am. Dec. 168 65 Whitefoot v. National Frater- nity Building & Loan Asso- ciation, 18 Montana, 164 ; s. c. 44Pae. Rep. 514 334 AVhite Hall, etc., R. R. Co. v. Meyers, 19 Abb. Pr. (N. S.) 34 151 White Haven Loan Building Association v. Kelly, 1 Kulp, 9 ; s. e. Luz. Leg. Rep. 9 436 White Mountains I?. R. Co. v. Eastman, 34 N. II. 124 151 White River Bank, In re, 23 Vt. 478 22 TABLE OF CASES. lxv Wickersham v. Crittenden, 93 Cal. 17 ; s. c. 28 Pac. Rep. 788 95, 117, 119 Wier v. Granite State, etc., As- sociation, (N. J. Eq.), 38 Atl. Rep. 043 446, 447, 448 Wierman v. International, etc., Union, 67 111. App. 550. .128, 142 150, 397 Wiggin's Appeal, 100 Pa. 155; s. c. 12 W. N. Cas. 209 ; 39 Leg. Int. 588 "Wight v. Shelby, etc., R. R. Co., 16 B. M. Mon. 4 ; s. c. 63 Am. Dec. 522 150, 153 Wikes v. Clements, 9 U. C. Q. B. 339 81 Wilbur v. Lynde, 49 Cal. 290 ; s. c. 19 Am. St. Rep. 645. ... 105 Willcocks, Ex Parte, 7 Co. 402 ; s. c. 7 Amer. Dec. 525 . . 54, 56, 95 126 Wild v. Western Union Build- ing and Loan Association. 30 Mo. App. 200 46 Wilkinson v. Bauerle, 41 N. J. Eq. 635 ; s. c. 7 Atl. Rep. 514 107 Williams v. Chester, etc., R. R. Co., 5E. L. & Eq. 497... 73 Williams v. Halliard, 38 N. J. Eq. 363 114 Williams v. McDonald, 42 N. J. Eq. 392 109 Williams v. McCay, 46 N. J. Eq. 25; s. c. 18 Atl. Rep. 824 69, 101, 107, 109 Williams v. Prince of Wales, etc. , Co. , 33 Beav. 338 48 Williamson v. Kokomo, etc., Association, 89 Ind. 390. .29, 32 33, 314 Williar v. Baltimore Brother's Loan and Annuity Associa- tion, 45 Md. 546 246, 247 Wilson, Ex Parte, L. R. 8 Ch. 49 ; s. c. 42 L. J. Ch. 81 ; 27 L. T. (N. S.) 597 116 Wilson v. Altna Insurance Co., 27 Vt. 98 135 Wilson v. Kings County Ele- vated R. R. Co., 114 N. Y. 487; s. c. 21 N. E. Rep. 1015; 24 N. Y. St. Rep. 81 ; 6 Rail. & Corp. L. J. 324 ; 40 Alb. L. J. 346 93 Wilson v. Little, 2 N. Y. 443 ; s. c. 51 Am. Dec. 307 168 Wilson v. Miles Platting Build- ing Society, L. R. 22 Q. B. Div. 381, note 131, 327, 399 Wilson v. Upper Canada Build- PAGE ing Society, 12 Grant Ch. 206... 214, 224, 229, 262, 274, 375 3S7 Wilson v. Shoenlaub, 99 Mo. 96 ;s. c. 12 S. W. Rep.361..296, 299 Winchester v. Baltimore, etc., R. R. Co., 4 Md. 231 6y Winchester Building Associa- tion v. Gilbert, 23 Gratt. 787 186, 254, 295, 304 Windhorst v. Gerniania B. A., 7 Wkly. L. Bull. 29 236 Windisch v. Korman, 5 Wkly. L. Bull. 364 273, 274 Win dram v. French, 151 Mass. 547 ; s. c. 24 N. E. Rep. 914 ; 8L. R. A. 750 162 Windsor v. Bandel. 40 Md. 172 441 Winget v.Quincy Building and Homestead Association, 128 111. 67 ; s. c. 21 N. E. Rep. 12 ; 25 Amer. & Eng. Corp. Cas. 652 ; affirming 29 111. App. 173 25, 33, 287, 316, 320 Winsor, Ex Parte, 3 Story, 411 100 101 Winter v. Baker, 34 How. Pr. 183 ; s. c. 50 Barb. 432 115 Winter v. Muscogee R. R. Co., 11 Ga. 438 23 Winterer v. Building Associa- tion, 4 Leg. Int. 122 ; s. c. 10 Phila. 426 192 Winterer v. Fairmount Build- ing Association, 44 Leg. Int. 122 132, 232, 341 Winters v. Armstrong, 37 Fed. Rep. 508 156 Wisconsin, etc., Bank v. Filer, 84 Wisconsin, etc., Bank v. Fil- er, 84 Mich. 496; s. c. 88 Mich. 67 62, 65 Witney v. Union Trust Co., 65 N. Y. 576 100 Witters v. Sowles, 31 Fed. 1 ; s. c. 24 Blatch. 332 109 Witters v. Sowles, 38 Fed. Rep. 700 39 Wittman v. Concordia, etc., Association, 7 W. N. Cas. 80 ; s. c. 36 Leg. Int. 72 337, 338 378, 390, 391 Wohlford v. Citizens' Building & Loan Association, 140 Ind. 662 ; s. c. 40 N. E. Rep. 694 29 100, 103, 311, 374, 377, 400 Wolbach v. Lehigh Building Association, 4 W. N. Cas. 157 ; s. c. 34 Leg. Int. 265 ; 84 Pa. St. 211 39, 221, 304 W T olfe v. Conkey Avenue Sav- Ixvi TABLE OF CASES. I AGE ings Aid and L. Ass'n, 82 Hun, 201 ; s. c. 27 N. Y. Supp. 44 ; 58' N. Y. St. Rep. 656. . . 327 Wolfe v. Conkey Avenue Sav- ings, etc., Association, 75 Hun, 201 ; s. c. 27 N. Y. Supp. 44 ; 53 N. Y. St. Rep. 656. . . 129 330, 332, 334 Wolfe v. Asso., etc., 58 N. Y. Rep. 656 125 Wonson v. Fenno, 129 Mass. 405 164 Wood v. Boney(N. J.), 21 Atl. Rep. 574 99 Wood Hydraulic, etc., Co. v. King, 45 Ga. 34 99 Wood v. Lost Lake, etc., Co., 23 Ore. 20; s. c. 37 Am. St. Rep. 651 ; 23 Pac. Rep. 848. . 72 117 Wood v. Union Gospel Church, etc., Association, 69 Wis. 9. . 29 Woodruff v. Dubuque, etc., R. R. Co., 20 Fed. Rep. 91 . . .54, 55 Worcester Turnpike Co. v. Wil- lard, 5 Mass. 80 ; s. c. 4 Am. Dec. 39 98 Workingman's Building and Loan Association v. Cole- man, 89 Pa. St. 428 ; s. c. 36 Leg. Int. 346 ; 8 W. N. Cas. 17 22, 32, 439 Workingmen's Building and Loan Association v. Cole- man, 89 Pa. St. 428 ; s. c. 36 PAGE Leg. Int. 346 ; s. c. 6 W. N. Cas. 141 233, 430 Worth, Ex Parte, 4 Drew. 529 153 Wright v. Lee, 2 S. D. 596 458 Wright v. Quincy Building, etc., Association, 128 111. 67 ; s. c. 21 N. E. Rep. 12; 25 Amer. & Eng. Corp. Cas. 652 252 Wright v. Shelby R. R. Co., B. Mon. 4; s. c. 63 Am. Dec. 522 150 Whetstone v. Ottawa Univer- sity, 13 Kan. 320 28 Whittingham v. Murdy, 60 L. T. Rep. 956 39 Wirst Winsted Savings Bank, etc. v. Lord, 27 Conn. 282. . . 33 Wyman v. Hallowell, etc., Bank, 14 Mass. 58; s. c. 7 Am. Dec. 194 102 Wynne v. Moore, 1 Australian Jur. Rep. 156... 461 Yankton B. & L. Association v. Dowling (S. D.), 74 N. W. Rep. 438 228 Yannish v. Pioneer Fuel Co. (Minn.). 66 N. W. Rep. 198. . 458 York v. Passaic, etc., Co., 20 Fed. Rep. 471 164 York Trust, etc., Co. v. Gal- latin (Pa.), 40 Atl. Rep. 317 174 Zabriskie v. Hackensack, etc., R. R. Co., 18 N. J. Eq. 178; s. c. 90 Am. Dec. 617. .24, 25, 103 Zinn v. Mendel, 9 W. Va. 580. . 151 CHAPTER I. HISTORICAL REVIEW. Sec. 1. Chinese Building Associations. 2. Early English, Scottish and American Building Associations,, Sec. 1— Chinese Building Associations. The origin of building and loan societies cannot be de- termined with certainty. The earliest societies of which we have any knowledge, existed in China, and were called Lee Woee. They were first established by Pong Koong, a man of wealth, and were recognized institutions of that country as early as B. C. 200. Mr. John Henry Gray gives an account of these societies and speaks of them, as still in existence at the time his history was written — within the last generation. 1 " Sometimes persons," he says, " in need of money resort to money-lending companies. These are of two kinds, named Lee-woee, or interest-receiving societies, and Yee- woee, or non-interest-receiving societies. The societies called Lee-woee were instituted by a person named Pong Koong, an official of great wealth who flourished during the Hon dynasty. * * * The way in which such societies were formed was as follows : A person who is anxious to obtain a loan * * * calls upon his relatives and friends to form a society. The first rule is that a company shall consist of a definite number of members ; that each member shall contribute an equal sum to the fund ; that a meeting shall be held at the end of each quarter ; that 1 History of the Laws, Manners, and Customs of the People of China, by John Henry Gray, M. A., LL. D., Vol. 2, p. 84. 2 BUILDING AND LOAN ASSOCIATIONS. CH. I. at such meetings all members must attend ; * * * that due notice of the meeting shall be given ; that each meet- ing shall be held at the house of the President of the Club ; that the various sums contributed to the fund shall be carefully weighed and examined by him. * * * The second rule is to the effect that at each properly notified meeting the borrower shall pay back an instal- ment of the loan with interest at a rate per mensem previously agreed upon. The instalment to the fund shall be equal to the amount contributed by each individ- ual in the first instance, the interest to be divided equally amongst the members of the club. The third rule is that each member shall, at each of the meetings duly and prop- erly notified, contribute to the fund a sum equal to that which he contributed at the first meeting ; that in order to give each an opportunity of borrowing the collective amount thus formed, each shall deposit in a lottery-box placed on the table for that purpose, a tender, written in a legible hand, setting forth the rate of interest which he is disposed to pay on the amount in question ; that the ten- ders shall then be taken out of the lottery-box by the presi- dent of the club, and that he who is found to have made the highest offer shall be declared the receiver of the loan. * * * The fifth rule is that each member shall be pro- vided with a book in which the minutes of each meeting may be duly recorded, and that, should any member be unable to contribute to the general fund at any one of the meetings the amount required from him, three days' grace shall be- allowed him. At the expiration of that time, should he continue a defaulter, he shall be mulcted in the sum of two mace per diem until the sum due be paid up." It will be noted in this somewhat lengthy quotation that some of the principal features of the modern association are, and Tor two thousand years have been preserved in theLee- wt>ee associations ; e. g. (1) the formation of a society of limited number; (2) equal contribution and payment at st;it<) lines for failure to pay; (4) loans made upon eompctitive bids; (5) an equal share in the profits upon loans. SEC. II. HISTORICAL REVIEW. 6 Sec. 2— Early English, Scottish, and American Building Associations. The first English associations were contemporaneous with and may be regarded as an outgrowth of what is known in the history of economics as the " Factory System "—that remarkable movement of the last quarter of the eighteenth century, which disclosed to craftsmen and wage-workers of all classes, the immense possibilities of co-operation. It was in fact the discovery of a new source of power. It is not surprising, therefore, that associations known as " building clubs" should have existed at Birmingham, England, as early as 1795. * There is authority for the statement that such societies existed there as early as 1781, 2 and perhaps even at an earlier date. Our information concerning them, however, is vague and unsatisfactory. The first building association concerning which we have any definite informa- tion is the " Greenwich Union Building Association," estab- lished in 1809. 3 A society was organized in 1815, in Scotland, by the Earl of Selkirk, which has been regarded as the prototype of modern associations. During the decade between 1830 and 1840, building asso- ciations, both in England and America, had so far increased in numbers and importance, as to require legislative enact- ments for their management and control. 4 The first society in America was organized in 1831, at Frankfort (now a part of Philadelphia), Pennsylvania. It was called " The Oxford Provident Building Association," and was the result of a suggestion by gentlemen familiar with the operation of the English societies. 5 This example was followed in 1836 by the organization of the " Brooklyn Building and Mutual Loan Fund Association of Brooklyn, N. Y.," from which 1 Encyclopaedia Britannica, vol. 5 The names of the gentlemen 4, p. 513. forming this association were ; 2 Johnson's Universal Cyclopse- Samuel Pilling, Jeremiah Hor- dia, vol. 1, p. 821 ; Langford's Cen- racks, Dr. Henry Taylor, Isaac tury of Birmingham Life. Shallcross and James Y. Castor. 3 Pratt v. Hutchinson, 15 East, p. Bibb County Loan Assn. v. Rich- 511. ards, 21 Ga. 592. 4 Johnson's Universal Cyclopae- dia, vol. p. 821. BUILDING AND LOAN ASSOCIATIONS. CH. I. date the idea seems to have been accepted as a permanent feature of our institutions, and has found ready acceptance in all portions of the Union. They did not, however, meet with uniform favor or suc- cess. Between 1850 and 1860, many of the States enacted laws for their regulation. An act was passed in New York in 1851, and within five years they had made such consider- able increase in number that the Legislature deemed it necessary to appoint a commission to inquire into their con- dition and management. 1 Notwithstanding the conditions which, at certain times and in certain localities, may have impeded their growth, there has been an enormous increase in the number and in the volume of business transacted. 2 1 See Assembly Documents (N. Y.) 1856, vol. 3 ; The Report states : " The idea as well as the mode of management seems to have been borrowed from the system already in vogue in Great Britain. Ru- mors of its wonderful successes there, together with the assurance to the public that the evils which had been discovered in the English associations had all been avoided in the American, gave it an im- petus in the state of New York that amounted almost to insanity. The discovery of gold in the west had stimulated the spirit of risk and speculation to the degree that fail- ure of some of the associations was inevitable." Between the date of the passage of the Building & Loan Association act in 1851, and there- port of the committee in 1856, thirty-six out of seventy-two As- sociations, which had organized under that act had ceased to exist. See Ninth Annual Report of Com- missioner of Labor (1893), Building and Loan Associations, p. 29. 2 In 1893, the assets of Building and Loan Associations, national and local, amounted to $328, 852, 885, 00. In Ohio the investment in prepaid and paid-up stock alone amounted to $12,162,432,00. In Indiana, to $3,383,254,00; of all the other states Pennsylvania and Illinois alone exceeded $1,000,000. CHAPTER II. GENERAL DESCRIPTION OF BUILDING AND LOAN ASSOCIATIONS. Sec. 3. Definition. 4. Favorably received by the Courts. 5. General scope and methods of Association. 6. Benefits derived from the plan of Building and Loan Asso- ciations. 7. Terminating Plan. 8. Serial Plan. 9. Permanent Plan. 10. Paid up and prepaid stock. 11. Bowkett Societies. 12. Starr-Bowkett Societies. 12 a. Dayton or Ohio Plan. 13. Concerning Methods of Business. Sec. 3 — Definition. A building association may be defined as a society (gener- ally incorporated) organized for the purpose of creating a fund derived from periodical payments by persons upon stock subscribed for by them, as well as from fines, forfeit- ure and incidental fees ; and if the shareholder be also a borrower, by the payment of premiums and interest ; which fund is to be loaned to its members secured by mortgage upon real estate to enable them to secure homes ; such pay- ments to continue until the sum of the payments and profits on each share equal its face value (after deducting necessary expenses incident to the management of the society's busi- ness), at which point of time all the shares of such members as are matured, are canceled or extinguished. 1 1 Scratchley on Building Socie- cial description of building asso- ties, Part 1, Sec. 2 ; Fleming v. ciations or societies, see note to Self, 3 DeG. M. & G. 997; SC, 24 L. section 9. J. Ch. 29 ; 24 L. T. (O. S.) 101 ; 3 In England a building and loan W. R. 89; 1 Jur. (N. S.) 25; 3 Eq. association is called "Society"; Rep. 14 ; 18 J. P. 772. For a judi- that is also the statutory name. 5 6 BUILDING AND LOAN ASSOCIATIONS. CH. II. Sec. 4 — Favorably Received by Courts. Societies, known as building, loan fund, and savings as- sociations, are now recognized as important factors in the social and economic development of this country. The con- trolling idea is the massing of the separate earnings of wage- workers, and the savings of persons of small means, in such a manner as to aid them in procuring homes. It is the or- ganization of thrift and self-help ; a practical application of the maxim that in " union there is strength." The effect of such a movement is to dignify the home ; to foster morality, and to make thoughtful, wise, and responsible citizens. It is for such reasons that the law and the courts, where such associations have been properly conducted, have looked upon them with favor. Whether they shall retain the favorable estimation of legislatures and courts will depend in large measure upon the wise forecast and determined purpose of those who control such institutions. Those departures from the original idea, intended to enhance the profits of inves- tors, without in any degree aiding those who are endeavor- ing to build homes, have been, and in the future probably will be, severely censured by the courts. 1 Sec. 5 — General Scope and Methods of Associations. The conditions which make building, loan, and savings associations or societies desirable are necessarily the same everywhere. It is one of the ordinary manifestations of the development of an industrial people. The methods, the objects, and the remedial measures required are in the main the same. The method followed by the earliest English societies lias been described by an English author 2 as contemplating the 1 Maudlin v. American Savings recently more favorable; see Sel- Minn. 358; s. c. don v. Reliable Savings & Building 65 N. W. Rep. 645; Mills v. Salis- Assn., 32 P. F. Smith 336; Johnson bury B. & L. Assn., ;r, X. ('. 292; v. Elizabeth B. & L. Assn., 104 Pa. Bekelnkaemper v. Bldg. Assn., 22 St. 394; Mercer v. Amber B. & L. Kan. 554; Kupperl v. Guttenburg Assn., 10 Pa. C. C. Rep. 51; Re- Bldg. \ n.. 30 Pa. 165; North port of Legislative Com. of N. Y. , American Bldg. Assn., v. Sutton, Paine's B. & L. Assns. , p. 11. :;."> Pa. 163; The feeling of the z Scratchley on Building Socie- Courts in iVmi' ■yU.-iniii lias hecii lies, p. 4, note. SEC. VI. GENERAL DESCRIPTION. 7 purchase of " a plot or plots of land with or without some tenements upon it ; and after it had been built on at the so- ciety's expense the said tenements were all allotted and mortgaged to the society in some instances, or let to mem- bers or others at a fair rental, and this mode of operation carried on until every member was in possession of a free- hold estate, or had received the amount of his share in full." This plan, however, had not sufficient flexibility to adapt itself to the needs of the members, so that the attribute of a loan company became one of the necessary conditions of their successful operation. As associations are now ordinarily conducted, there must be the payment of stipulated dues ; there would naturally be a time fixed when a share would probably mature and when the payments made upon stock would be supposed to equal the face value of the same ; when a loan fund had accumu- lated, the question naturally arises as to the manner in which allotments shall be made to those desiring to borrow, results in the payment of a premium by, and an award, to the high- est bidder; that, although membership implies the prompt payment of instalments when due, yet that many would probably fail to pay, and that such sums would therefore be withheld from the earning fund of the association and its profits decreased ; that, therefore, such persons should pay a fine, presumed to be equal to the earning capacity of the amounts so withheld ; that if from any cause a member might desire to withdraw from the association, after having entered into an agreement to pay upon his stock to matur- ity, he should be permitted to do so only upon such terms as would work no detriment to the remaining members. 1 Sec. 6 — Benefits Derived from the Plan of Building Associations. The chief benefits to be derived from a membership in a 1 Pfeister v. Wheeling Building Maudlin v. Amer B. & L. Assn.. Assn., 19 W. Virg. 676; Bibb. 63 Minn. 358 ; S. C. 65 N. W. Rep., County Loan Assn. v. Richards, 21 p. 645 : Mills v. Salisbury B. & L. Georgia 592 ; Mercer v. Amber B. Assn., 75 N. C. 292. & L. Assn., 10 Pa. C. C. R. 51 8 BUILDING AND LOAN ASSOCIATIONS. CH. II. building and loan association are the opportunity to secure interest, either upon small savings, or upon larger deposits made as an investment; and to borrow money upon ap- proved security when required. Building and loan stock, in some localities, has been deemed a very desirable investment in the form of prepaid and paid up stock, for the reasons that the resources of the associations are represented by realty mortgages, which by reason of continuous partial pay- ments are being constantly rendered more safe and valuable and are therefore deemed better securities than similar investments. The formal incidents of membership are now so well understood as to make any detailed statement seem un- necessary. 1 Sec. 7 — Terminating Plan. In societies of this class, as the name indicates, a definite time is fixed from which members are required to make pay- ments, upon their stock. If an application for membership is accepted after such date the accrued or back payments 1 There are two classes of mem- evidences of title ; (7) Bidding for bers — investors and borrowers. A loan ; (8) execution of obligations proposed borrower is presumed to of debt ; (9) Payments thereon ac- be a member at the time his appli- cording to the rules and by-laws of cation is made. This is however, the association, not generally true in practice. Where the money is " sold " it is Whore the obtaining of a loan is offered at the full value of each the object of membership the ap- share. The person desiring the plicant generally first ascertains loan, offers the sum he is willing whether his property will be ac- to pay upon each share for the pref- cepted as security for the loan de- erence. This sum is called the sired. The issuance of stock gen- "bonus" or "premium." This erally accompanies the execution sum lie agrees to pay in addition of the liond and mortgage. The to interest and other charges pre- formal steps, however, are; (1)Is- scribed by the rules and by-laws of suance of a stock and credit pass the association. The sum paid for book; (2) Application for loan ; (3) the use of the money is therefore li upon realty, accompanying the higher than the interest usually description, is frequently an affi- paid upon an ordinary loan; but davil covering essential facts; (4) against, this sum is to be credited Report of appraisors ; (5) Approval the proportion of earnings upon 01 rejection of application by his stock, derived from premiums, Hoard of Directors; (i Perfecting fines, and other sources. SEC. VIII. GENERAL DESCRIPTION. 9 must be paid to the date of the issuance of the stock. Un- der this plan the period is also determined at which the business of the society shall be closed. The object to be attained is the same as in other plans of associations ; namely, to provide for partial payments which together with the earnings thereon will, at a given date, equal the face value of the stock subscribed for ; and to enable the member to obtain loans. These associations comprise about thirteen per cent, of the total number of associations in the United States. 1 The comparatively small number of asso- ciations of this class is probably due to the practical objec- tions which develop as an association advances. If a person desires to become a member after the association has been in operation for a considerable time, he must place himself on an equal footing with other members and pay the in- stalments then due, which in many instances amounts to a considerable sum. If it is sufficient to prevent a person from becoming a member, it would in many instances de- prive the associations of desirable members. Again, ex- perience in such associations has shown that the earnings and losses for a given period are difficult to estimate, and that the date fixed at which shares of stock should mature is much earlier than the earnings will permit, so that the borrower must continue his payments for an indefinite period. In many cases this results in hardship. Moreover as the period for closing the association approaches, those who desire to borrow are unwilling to do so for a com- paratively short period, so that money remains idle in the treasury of the association and the earnings are correspond- ingly reduced. This condition results in Avithdrawals, which, if the association is about to wind up its business, become an additional cause of embarrassment. Sec. 8 — Serial Plan. The chief objections to the terminating plan, which ex- perience has demonstrated to be valid, are avoided in the 1 Report of the Commissioner of Labor (1898), Building & Loan As- sociations, p. 24. 10 BUILDING AND LOAN ASSOCIATIONS. CH. II. Serial plan. Serial associations, in this country, comprise about fifty-six per cent, of the entire number. 1 The capital stock of these associations, for the purpose of issuance, is divided into equal portions, and is issued in series. The periods at which issues of stock are made may be long or short — monthly, quarterh r , semi-annually or annually, and these issues continue, until the entire capital stock is ex- hausted. If the series are issued annually, the profits of the first series would be estimated at the expiration of the first year, on the number of shares in that series ; a second series is then issued and at the expiration of the second year the earnings are apportioned among the total number of shares in both series, and so on until the whole amount of the capital stock is issued. While there is a community of interest of all the shareholders in the earnings of the asso- ciation, yet the issuance of stock at different periods, gives to each series a distinct value, and, in a sense, makes it a distinct association. The terminating plan interrupts the continuity of the corporation ; the serial and permanent plans preserve this attribute. The serial embodies features of both the ter- minating and permanent plans. It prevents the associa- tion from becoming extinct upon maturity of the shares, it makes the conditions under which persons may become members more favorable, and invites the co-operation of those who are likely to make valuable additions to the society, either as "borrowers or investors. Sec. 9 — Permanent Plan. Under this system the period during which the association may do business is extended and made perpetual. Persons may become shareholders at any time without making ar- rearage payments. As a rule the profits are divided and a credit entered to each member, at stated periods, upon the basis of the amount actually paid on his shares. There is ater certainty as to the period during which payments mu-.! continue, as wed as the amount to which a mem her is entitled upon withdrawal. Under this plan there is no 1 Report of U. 8. Commr. of Labor (1893), B. & L. Assns., p. 24. SEC. X. GENERAL DESCRIPTION. 11 initiation fee nor any fines or forfeitures for non-payments. Payments are permitted in any amounts desired. The conditions of withdrawal are the same as in other associations. An objection has been urged to this form of association upon the ground that a periodical division of profits enables a withdrawing member to receive an equal benefit with a continuing member ; that the inducement to members to continue in the association is diminished, and that the ability of the association to mature its stock is decreased. It has so many advantages, however, over any other form, and is so readily adapted to the business of large associations, that we may readily believe that it will in the future receive a more general adoption. 1 Sec. 10— Paid Up and Prepaid Stock. Stock is issued called " paid up" stock, which is subject to call and cancellation, and which may or may not participate in the dividends of the association. Usually it is required that the money paid for it shall be paid in for a stated period before the stock which represents it will be permitted to participate in the dividends. A kind of stock called " pre- paid" stock is also issued. The purchaser pays a fixed amount, — say fifty dollars, — on each share of stock of one hundred dollars, and that sum remains until the earnings, together with the original amount paid, equals the face value of the shares, or one hundred dollars each. 1 " Building societies exist under this is not all ; one main object is the provisions of the Act 6 & 7 to enable members to obtain their Will. 4, c. 32, sections 1, 3, 4, 5 (f). £100 by anticipation on their al- The principle is this : members lowing a large discount. For this subscribe monthly sums which are purpose, when a sufficient sum is accumulated till the fund is suffi- in the hands of the treasurer, the cient to give a stipulated sum to members who desire to get their each member, and then the whole shares in advance, bid by a sort of is divided amongst them ; in the auction the sum which they are society now in question the sum to ready to allow as discount, and the be raised for each member is £100. highest bidder obtains the advance. If this were all it w r ould be a very Thus if at the end of a year a sum simple transaction, mere accumu- of £500 is in the hands of the treas- lation, and the only question would urer arising from the monthly be, how to invest sums subscribed subscriptions, and the holder of to the greatest advantage. But ten shares is willing to allow a dis- 12 BUILDING AND LOAN ASSOCIATIONS. CH. II. Sec. 11 — Bowkett Societies. The plan of these societies was formulated by Dr. Bowkett, of Scotland, and is best described in his testimony before the count of fifty per cent, (no one of- fering more), the £500 is or may be advanced to him. being £50 in satisfaction of each of his ten shares. For this accommodation he is bound to pay monthly, till a fund is raised sufficient to give £100 per share to all the other members, not only the original monthly subscription, but also a further monthly sum called re- demption money. The statute (g. ) provides that the shares shall not, in any society, exceed £150 each ; in this society the shares are fixed by the rules, as I have already stated, at £100 each. The amount of the monthly subscriptions and redemption money is fixed by the rules of each society ; here, the monthly subscription on each share is 8s. 6d. , the monthly redemption money 3s. 6d.,so that the monthly payment of each member who has not received his share in advance is 8s. 6d., by those who have been advanced it is 12s. If, after such an advance as I have supposed, no further advances were made, the natural course of the society would be that tbe members, other than the holder of the ten shares, would continue their monthly subscrip- tions, and I In- owner of the ten shares would continue his monthly subscriptions and redemption money, till the fund thus raised should be sufficient to pay £100 per Bhare t<> every member, ol her t han the bolder of the ten satisfied : bares. Tims, if there were one hundred shares, ami al ) he end of i he fin t j ear I here w as £500 in lia ml t In- COndil ion of each share- holder, before any advance made, would be that he would be bound to pay 8s. 6d. per month, say £5 per annum, till by the payments and the £500 in hand the requisite amount, that is £10,000 being £100 for each £100 .share, should have been raised by accumulation. Af- ter the advance, the condition of every shareholder, other than the holder of the ten advanced shares, is that he is to contribute his monthly payments till the}', to getherwith the monthly pa3"ments and redemption money contrib- uted by the holder of the advanced shares, are sufficient to realize not £10,000; but £9,000 that is £100 for each share other than the ten shares of the advanced member, whose shares will have been al- ready satisfied by £500. He loses his interest in the £500 advanced to the holder of the ten shares, but on the other hand the sum to be raised is only £9,000 instead of £10,000, and the monthly contri- bution is increased by the amount of the redemption money paid by the member who has received his ten shares in advance. Further advances are made from time to time, as funds are accumulated, and as members are inclined to give high discount in order to ob- tain payment of their shares by anticipation, the gain to the society arises mainly from the high rate of discount winch members in want of money are ready to give. In truth the whole scheme is but an elaborate contrivance for enabling persons having sums for which they have do immediate want, to SEC. XI. GENERAL DESCRIPTION. 13 royal commissioners appointed to examine into the practices of building societies of Great Britain : " They are based on a principle of arithmetic, which scarcely any one connected lend them to others at a very high rate of interest. In order to secure the due payment of the monthly subscriptions and redemption money by the members who have received their shares in advance, they are obliged to give satisfac- tory, real security to the trustees of the society and "the statute pro- tects such mortgages from the op- eration of the laws which until last session were in force against usury. Besides this advance to a member of his share, deducting discount, the rules provide also for the case of a member desiring to withdraw from the society altogether. By the 16th rule, any member may withdraw on certain terms there laid down ; the principle being, that he is to pay a small sum, by way of fine or penalty, if he with- draws at an early date after the formation of the society ; but if he withdraws after having been a member, and so having paid his subscriptions, for several years, then upon withdrawing he is to receive back the full amount of the subscriptions, and also to take, if the directors think fit, a further sum, to be from time to time fixed by them, by way of bonus upon what are called the profits of the society. This is provided for by the 16th rule, which is thus : — ' That any person who shall be de- sirous of withdrawing from this society any share or shares which shall not have been purchased,' — that is, which have not been taken up or advanced (' purchased ' is an extraordinary and odd way of de- scribing it) — ' shall be allowed to do so on giving one month's notice, in writing, of his or her intention. to the directors at any general meeting of the society ; and the money subscribed in respect of such share or shares shall be repaid to such member, subject only to the forfeitures next hereinafter mentioned ; that is to say, if appli- cation to withdraw shall be made within the first year from the first meeting thereof, a forfeiture of half-a-guinea per share ; if within the second year of such meeting, a forfeiture of 5s. 6d. per share ; that if the application to withdraw any such shai'e or shares shall be made within the fifth or any subsequent year from such first meeting, the directors are hereby empowered to allow the members so desirous of withdrawing, out of the profits which the society shall have re- alized, a bonus for the withdrawal of each share, as they shall from time to time appoint.' It is obvi- ous that this is an arrangement which may, if the calculation be properly made, be carried into ef- fect without injury to the society. When the member withdraws, the society thenceforth loses the bene- fit of his monthly subscriptions ; but then they are relieved from the obligation of making up the £100 to which he would eventually be- come entitled. If the member upon withdrawing merely took back the amount of his subscrip- tions, the society would obviously benefit to the extent of the interest made by means of those subscrip- tions previous to the member with- drawing ; and it is obvious that 14 BUILDING AND LOAN ASSOCIATIONS. CH. II. 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 first instance, the same out of the interest so realized an allowance may be made to the withdrawing member, still leaving to the society some benefit from his past contributions. The sums subscribed by a member who with- draws have contributed to make up the fund out of which the shares of those members who have been advanced (that is, have taken a smaller sum at once, allowing a large discount, in lieu of the full sum of £100) have been made good ; they therefore enable the society to obtain a larger monthly pay- ment, that is, 12s., instead of 8s. 6d. (h) upon each share, and to reduce, on favorable terms, the number of shares eventually to be provided for. This is, in truth, substan- tially an investment at a high rate of interest ; and the benefits there- by accruing may not inaptly be designated by the name of ' pro- fits.' "What is the precise amount of benefit, which from tbese differ- ent causes may have resulted to the society from the subscriptions of each member, must be a problem very difficult to solve, — not, per- haps, admitting of any absolutely accurate solution ; but it may be possible to arrive at it in a rough way, so as, at least, to enable the di lectors to fix, from time to time, l In. sum which may, without detri- ment to the interest of the society, be paid to any member desirous of withdrawing, beyond the amount of t lie principal monies subscribed, ami t he 161 h rule enables the direc- tors to lix upon such a sum ; -it be- ing, I t hink, not inaccurately de- scribed as a bonus upon the profits of the society. The interest of members, as well those taking the shares by anticipation as those quitting the society, are thus toler- ably well provided for ; but another case was contemplated, namely, that of members who, having re- ceived their shares by anticipation, might be desirous of relieving themselves from the burden of con- tinuing the payment of their monthly subscriptions and re- demption money. From the very nature of these societies it is im- possible to know with certainty how long it may be necessary to continue the monthly payments. They must be made until the sum necessary to give every unadvanced member the full amount of his share has been accumulated. The time required for this purpose would be more or less, according to the amount of benefit which the society may derive from the dis- count given on the shares, and from the interest made on the in- vestments, — in other words, as the profits realized be large or small. Reasoning a priori, the fair course would seem to be, that the society should ascertain, as nearl} r as may be, the period of time during which the monthly payments will have to be continued, and thus allow any advanced member to relieve himself from the obligation of con- tinuing his monthly payments on paying down at once a sum equiv- alent to their present value. Thus, if the monthly payment is 12s., and it is ascertained that the payments must probably continue to be made for twelve years, it would seem to SEC. XI. GENERAL DESCRIPTION. 15 amount of interest for their own savings that they are accus- tomed to pay for other people's money ; next, that they can practically obtain one-fourth more than that rate of interest ; be a reasonable arrangement that the advanced member, who was liable to pay 12s. per month for twelve years, should be free from his liability on paying down at once a sum which an actuary should say is equivalent, in present money, to such continued prospec- tive payments. This, however, is not the principle upon which the plan of redemption is given by this society. The provision on this sub- ject is to be found in the 14th rule, and is as follows : — ' That if any member of this society who shall have received his share or shares, or any portion of them, shall be desirous of paying and satisfying the security or securities which shall have given for the same, and shall give notice of such his desire to the directors, the directors shall, within one month thereafter, award to such member the same proportion of profit per share as is allowed on the withdrawal of un- purchased shares ; and the direc- tors shall make a deduction of such profits and of the amount of sub- scriptions paid in by such member, from the full amount expressed to be received in and by the mort- gage ; and the directors are hereby authorized and empowered to re- ceive the balance in one payment, or by such installments as the di- rectors and members shall agree upon ; and on the payment of the balance, together with all fines and other sums due in respect of such shares, the directors shall desire the trustees to deliver up all deeds and documents in their custody re- lating to the security of the mem- ber on such property and at his or her costs to endorse a receipt,' etc., according to the statute. It is im- possible to read this rule without being strongly impressed witli the belief that those who framed it had not duly considered how it would operate. When an unadvanced member withdraws from the so- ciety, it is reasonable, and not nec- essarily inconsistent with his in- terest, that he should receive back, not only the principal sums which he has contributed, but, also by way of bonus, a portion of the benefit which those sums have gained for the society. Up to the time of his withdrawing he has re- ceived nothing. When he with- draws, he loses all right to the share, — that is, £100, to which, if he had not withdrawn, he would, like every continuing member, have been eventually entitled, — and is content to take in lieu of it the amount of what, for a series of years, he has been paying, together with a portion of what has been, as it were, accumulated in respect of those payments towards the eventual realization of his £100 share. This is the position in which a withdrawing member stands at the time of his with- drawal. But the condition on which an advanced member re- deems (which is, in truth, with- drawing) is very different. He is not a member who lias, up to the time of withdrawing, received his full share, though he lias, in fact, received that which he was con- tent to take, supposing redemption were out of the question, as an 16 BUILDING AND LOAN ASSOCIATIONS. CH. II. and, next, that that rate of interest is compound interest. The plan is this : one hundred persons, putting down 9|-cZ. a week, will produce £2 Is. 2d. each year. Leaving the Is. 2d. out of the question, to pay 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 he continues his subscription until, if he is one of the earlier persons, he has paid £62, and, if one of the latter ones, £50. Each member has all his subscription back 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." 2 Sec. 12 — Starr-Bowkett Societies. The chief difference between the Starr-Bowkett societies and the preceding (Bowkett societies) is that in the Starr- Bowkett societies, after a man has repaid that which is lent to him upon property, he has to pay an increased subscrip- tion, 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. " Thus, a man who has an advance of £300 pays back at the rate of £30 a year, and a subscription of Is. 3d. a week, or £3 5s. per annum. At the end of ten years he would have repaid the £300, and paid into the society in subscriptions £32 10s. The society now sa} r s, in order to ena- ble other members, who have been waiting, and are still anx- ious to get their appropriations, to do so, and to make the society terminate as quickly aspossible,we think it is only right equivalent to the whole of his L. J. Ch. 29 ; 24 L. F. O. S. 101 ; share. The rule, therefore, which 3 W. R. 89 ; 1 Jur. N. S. 25 ; 3 Eq. gives to him, on redeeming his ob- Rep. 14 ; 18 J. P. 772. ligations, the same sum, under the * First Report of Commissioners, name of ' profits,' as is given to a p. 64. non-advanced member withdraw- This kind of a building society is ing, appears to be hardly reasona- now prohibited by statute. Act of ble." Lord Cranworth in Fleming Parliament, 1894, 57 & 58 Vict. v. Self, 8 DeG.M. & G. 997 ; s. c. 24 Chap. 47, Sect. 12. SEC. Xlla. GENERAL DESCRIPTION. 17 that you should make up your proportion of subscription, viz. : £81 5*., by paying at the rate of £30 a year 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 has £81 5s. subscrip- tion in the society. At the close of the society their sub- scriptions are returned to the members, the society first deducting a sufficient amount for his share of the working expenses." 1 Sec. 12a — Dayton or Ohio Plan. In Ohio has grown up a plan of ^permanent society having its origin in the city of Dayton, and usually named after that city. In the report of the Inspector of Building and Loan Associations of that State for 1892 this plan is described as follows : " JSTo initiation fee is charged, and the only require- ment for membership is the payment of twenty-five cents for a pass-book. Dues at the rate of twenty-five cents per week for each one hundred dollar share can be paid at any time ; no fines or forfeitures are exacted for nonpayment, and the member can suit his own convenience about his payments. It is a simple, businesslike plan. The member being permitted to begin making payments at any time and in such sums as suit his own convenience, the dividend accredited to him at each settlement is calculated on the basis of his actual payments. Another important feature is the issue of certificates of paid-up stock, the face value of which is paid in at once, instead of being subject to weekly or monthly payments as ordinary running stock. It has been the experience of many associations operating upon the plan of receiving only small weekly or monthly stock payments that often when there is a demand for loans, it requires a long time to ac- cumulate the sum of money desired. With the paid-up stock feature it has been found that this can be regulated in a measure, and it makes available to the association a larger amount of money. Paid-up stock is usually governed by 1 Davis on Building Societies have been abolished. Act of Par- (3rd) 65-69. liament, 1894, 57 & 58 Vict. Chap. These kinds of Building Societies 47, Sect. 12. 2 18 BUILDING AND LOAN ASSOCIATIONS. Cll. II. the same rules regulating running stock, except that it is not issued at all times and that the dividends, instead of being credited, are paid out in cash either annually or semi- annually. Most of the associations issue this stock upon the express condition that it may be called in and canceled at any time. This would be done in the event of an accumu- lation in the treasury of a large sum of money for which there would be no demand from members desiring loans. But experience teaches that it is rarely necessary to re- sort to this remedy, the supply of money being usually reg- ulated by the issue of the stock. Holders of paid-up stock are generally required to have their money on deposit for thirty days before it becomes entitled to dividends, or some associations establish the rule that when the stock is taken between a six months' dividend period it does not begin to draw dividends until the beginning of the next six months. Paid-up stock can be withdrawn just as running stock by giving the usual notice required, and is paid out with running stock in the order in which the notices for with- drawal were filed. Still another feature of the Dayton plan is that the payments made by the borrowing and depositing members are precisely the same. The weekly payment of the borrowing member is applied first to the payment of in- terest and premium upon his loan and the balance placed on a credit to the same. These credits begin to draw dividends at once, and are compounded semi-annually. The payments are required to be continued until the weekly credits and the dividends declared thereon equal the matured value of the shares." x Sec. 13 — Concerning Methods of Business. The prosperity of building and loan associations, and their continuance in the confidence of the public, will, in the future, depend largely upon the wisdom and prudence with which they are managed. The courts have already given admonitions that should be heeded. The compe- titive spirit has led to the adoption of various "plans" more or less plausible and at tractive to possible subscribers. i Ohio Inspector's Report for 1892, pp. 27-28. § 13 GENERAL DESCRIPTIONS. 19 Many of these departures from original methods have been considered by the courts and held to be unsound in princi- ple and practice. In the case of Mills v. the Salisbury Building and Loan Association, 1 the court says : " We are told that these associations are common in Europe and in many of our sister states. We are aware of it. They commenced in Europe under as simple legislation as ours, but were soon perverted. The same may said of them in America." In the case of Maudlin v. the American Savings and Loan Association, 2 the court says : " So-called building associations, operated on the plan of the defendant, have so often become the instruments of oppression and extortion as to call down the censure of some eminent courts. The original purpose of building societies, viz. : to enable people of small means to build or buy homes, is entirely wanting." 3 1 Mills v. Salisbury Building & 63 Minn. 511; Hekelnkaemper v. Loan Association, 75 N. C. 292. Building Association, 22 Kas. 554. 2 Maudlin v. Amer. Savings & 3 See also New York, etc., Ass'n. Loan Ass'n. 65 N. W. Rep. 645, v. Slaughter, 17 Pa. C. C. 66. CHAPTER III. INCOEPORATION. Sec. 14. Legislature Must Create. 15. Special Legislative Act. 16. Validity of Special Charter. 17. Amendments of Special Charter. 18. Incorporation by Court. 19. Incorporation by Articles of Association, Validity of Statute. 20. The Charter. 21. When Life of Corporation Begins. 22. Substantial Compliance with Statutes necessary. 23. Claiming More than Allowed by Statute. 24. Specifying Powers. 25. Place of Business. 26. Amendments of Articles. 27. Recording Articles. 28. Name. 29. Banking Powers. 30. Irregular and De facto Corporations. 31. Estoppel to Deny Corporate Existence. 32. Foreign Building Associations. Sec. 14 — Legislature Must Create. In this country only the legislature can authorize the creation of a corporation. 1 Those societies or collections of individuals which are not organized pursuant to some general or special enactment or authority of the legislature are mere partnerships and the members thereof mere partners. 2 Sec. 15 — Special Legislation Act. It is no uncommon thing for a corporation to be organ- ized under an act of the legislature passed especially for its 1 Franklin Bridge Co. v. Wood, a Wells v. Gates, 18 Barb. 554. 11 Qa. Sl » : Medical Institution v. Patterson, 1 Denio, 61. 20 § 15. INCORPORATION. 21 incorporation. This kind of legislation has been quite com- mon in the United States, much more so than at present ; and under such acts many of the first building associations were organized. In such instances it is not necessary that the legislature should declare in express words that it should be a corporation ; it being sufficient if it be given corporate powers with authority to invoke their exercise. 1 And this is true even though they be called " joint stock companies." 2 If the legislature declare certain named persons a corporation, this makes them a corporation the instant the incorporating act goes into force. 3 But it may provide that they shall be a corporation upon perform- ance of certain acts ; and then until those acts are per- formed no corporation will spring into existence. 4 A corporation may be created simply by declaring that certain persons should constitute a corporation with all the powers of a certain other designated corporation. 5 It is no uncom- mon thing for the legislature to grant to certain named persons " and their associates " a charter. When such is the case the word " associates " usually refers to those already associated with the persons named, but it may also include those who come afterwards. 6 In such instances evidence is admissible to show who were included in the word " associates." 7 The courts will construe liber- ally that part of the provisions of the act for the organization. 8 If the majority of those named refuse to organize the corporation, the minority may proceed to do so ; and if all refuse, the court may compel them to do so by mandamus. The majority have full power to organize 1 Denton v. Jackson, 2 Johns. 4 Dartmouth College v. Wood- Ch. 324; Commonwealth v. West ward, 4 Wheat. 791. Chester Co., 3 Grant Cas. 200; 5 Binghampton Bridge Case, 3 Dean v. Davis, 51 Cal. 406 ; see Wall. 78 ; Penobscot Boom Cor- Falconer v. Campbell, 2 McLean, poration v. Lamson, 16 Me. 224. 195 ; S. c. 10 Myer. Fed. Dec. § 10. 6 Lechmere Bank v. Boynton, 11 2 Blanchard v. Kaull, 44 Cal. 440. Cush. 369. 3 Stoops v. Greensburg, etc., 7 State v. Sibley, 25 Minn. 387. Plank Road Co. , 10 Ind. 47; Little 8 Eakright v. Logansport, etc., Rock, etc.. R. R. Co. v. Little Rock, R. R. Co., 13 Ind. 404 ; Covington, etc., R. R. Co., 36 Ark. 663. etc., Plank Road Co., 3 Ind, 510. 22 BUILDING AND LOAN ASSOCIATIONS. Ch. 3. the corporation, even if the minority do not refuse to assist. 1 Sec. 16 — Validity of Special Charter. The legislature has power to create a corporation in dis- regard of the rules of the common law, and the charter for that reason cannot be questioned. 2 The power of the legislature to create a corporation is not subject to review unless the provisions of the charter granted violate some provision of the Constitution. 3 The charter cannot be attacked collaterally for bad faith or fraud in obtaining it. 4 JSTor that bribery was used in obtaining it. 5 Illegal clauses in the charter will not avoid it. 6 Where the legislature declared the object of incorporating certain individuals to be " to assist members thereof to become their own land- lords," and the principal object of the corporation, as evi- denced by its charter and the by-laws which were declared in advance to have " the force and effect of legal enact- ment," was to authorize usurious interest upon loans, it was held that the whole proceeding was simply an elaborate ef- fort to evade the general laws of usury, and the act was, therefore, void, because it was special legislation. 7 1 Commonwealth v. McKean 2 Penobscot Boom Corporation County Bank, 32 Pa. St. 185 ; Mat- v. Lamson, 16 Me. 224. ter of White River Bank, 23 Vt. 3 Clarke v. Brooklyn Bank, 1 478. Edw. Ch. 361. Where provisions of the special 4 Pattison v. Albany, etc., Asso- charter are like those of a general ciation, 63 Ga. 393 ; Garrett v. statute for the incorporation of Dillsburgh, etc., R. R., 78 Pa. St. societies, and it provides that these 463. special provisions shall govern the 5 Ferguson v. Miner's, etc., Bank, company incorporated by it, such 3 Sneed, 609. provisions control to the exclusion 6 Miller's Estate, 2 Pears. 248; of the general law. Briggs v. Cape Workingman's Building and Loan Cod Ship Canal Co., 137 Mass. 71. Association v. Coleman, 89 Pa. St. A statute incorporating a build- 428; s. c. 36 Leg. Int. 346; 8 W. N. ing and loan association and kI:;i ; New York Cable Co. v. Mayor. 2 Hanna v. International Petro- KM N.Y.I. i Co., 23 ohi,. Si. 622; Palmer " Yalk r. Crandall, 1 Sandf. Ch. ?'. I iawrence, 5 Sandf, 161. 1 79. i j v. Citizens Building, It has been held that a failure §2 99 INCORPORATION. 27 required by the statute must be complied with ; although conditions merely directory need not be, before the corpora- tion springs into existence. 1 Sec. 22— Substantial Compliance with Statute Nec- essary. A substantial compliance with the statute is all that is necessary in the formation of a corporation ; a literal com- pliance is not necessary. 2 Sec. 23 — Claiming More than Allowed by Statute. If more power is claimed in the articles of association than is allowed by statute, the excess will be void and the remainder stand. 3 If there be a conflict between the statute and the articles of association, the provisions of the statute must prevail ; and a by-law passed in pursuance of the statute, although in conflict with the articles, will be valid. 4 to record a charter, as a statute re- quires, will not render the associa- tion void. West Harrisburg Loan and Building Association v. Mor- genthal, 2 Pears. 343. 1 Attorney-General v. Honchett, 42 Mich. 436 ; Heiring v. Adams, etc., Mf. Co., 81 Ky. 300; Moke- lunne, Hill, etc. Co. v. Woodbury, 14 Cai. 424. That article must first be re- corded ; see Indianapolis, etc.. Mining Co. t>. Herkimer, 40 Ind. 142 ; Cresswell v. Oberly, 17 Bradw. 281 ; Johnson v. Crawfordsville, etc., R. R. Co., 11 Ind. 280: and that publication of notice of incor- poration is, see Claggv. Hamilton, etc., Co., 61 la. 121. 2 Ex parte Spring Valley Water Co., 17 Cal. 176 ; People v. Cheese- man, 7 Col. 376 ; Thompson v. People, 23 Wend. 537 ; Hughes % Antietam Mfg. Co., 34 Md. 316 Bigelow v. Gregory, 73 111. 197 Choir Insurance Co. v. Cram. 43 N. H. 641 ; Lord v. Essex Building Association, 37 Md. 320 ; In re Deveaux. 54 Ga. 673. A defective incorporation may be corrected, and it will then be- come a de jure association from the date of the first attempted organi- zation. Spining v. Home Building and Savings Association, 28 Ohio St., 483; See Hagerman v. Ohio, etc., 25 Ohio St. 186. 3 Albright V. Lafayette, etc., As- sociation, 102 Pa. St, 411 ; People v. Cheeseman. 7 Colo. 376 ; Eastern Plank Road Co. v. Vaughn, 14 N. Y. 546. 4 Booz's Appeal, 109 Pa. St, 592 : S. C. 16 W. N. Cas. 365. If less be claimed than the stat- ute allows, the corporation is not for that reason invalid. People v. Proctor, 140 N. Y. 549 ; 35 N. E. Rep. 979; 46 Amer. & Eng. Corp. Cor. 494 ; 24 L. R. A. 57. 28 BUILDING AND LOAN ASSOCIATIONS. Cll. III. Sec. 24— Specifying Powers. The articles of association must specify the object of the corporation, in that respect following the statute. 1 A fail- ure to state the purpose for which organized will render the organization void. 2 Its object cannot be cited by parol evidence. 3 If the incorporators employ the language of the statute specif} T ing for what purposes corporations may be created under it, it will be presumed that the} T in- tended to create a corporation of the same general nature and with the same general powers granted by the statute. 4 Yery general specifications of the object of the incorpora- tion is sufficient. 5 Sec. 25 — Place of Business. Where an officer or a court must first approve or pass upon the sufficiency of the validity of the articles of asso- ciation, and the statute require the town or city to be stated in which its principal place of business would be located, articles that merely state that the proposed cor- poration's principal place of business would be in a certain county should be rejected. 6 But where it was required that the articles specify the " place out of the state " where it was proposed to carry on part of its business; and also "state the name of the town and county in which" the principal part of its business was to be carried on " within the state," it was held that merely designating a district outside of the state was sufficient, if the name of the town and county was given within the state. 7 Sec. 26— Amendments of Articles. If the State does not provide that the articles of associa- i West v. Hullskin Prairie Ditch- sity, 13 Kan. 320; Peoples. Beach, ing Co., 32 In I. 138 ; O'Reiley v. 19 Hun, 259. Kankakee Valley Draining Co., 32 6 People v. Beach, supra; Attor- Irnl. 169. ney-General v. Lormer, supra. See - Attorney-General v. Lormer, State v. Central Ohio, etc., Asso- 59 Mich. 157. ciation, 29 Ohio St. 399. b People v. Self ridge, 53 Cal. 331; B Harvie v. McGregor, 29 Cal. Halletl v. Balloner, 33 Barb. 537. 124. 1 Whetstonev. Ottawa Cniver- ' People v. Beach, 19 linn. § 27. INCORPORATION. 29 tion may be amended, or if the articles themselves contain no provision for their amendment, then they cannot be amended unless every stockholder consents to such amend- ment, 1 unless the State points out the manner in which the amendment shall be made, then such amendment must be executed with all the formalities of the original articles, and be in the same manner made a matter of public record. 2 If there be no power to amend the articles of association ex- cept by unanimous consent, and an amendment is made in that manner, the effect of the amendment is to create anew corporation from the time the amendments are filed in the proper office. 3 Sec. 21 — Recording Articles. If the State requires the articles of association to be filed in some public office for record before the incorporators can exercise the powers of a corporation, then until that is done there is no corporation, and the would-be incorporators if they undertake to transact business as a corporation will be personally liable. 4 Where a duplicate must be filed in a record office, then until such duplicate is filed there is no corporation created ; 5 and by a duplicate is not meant a copy. In such an instance the articles must be executed in duplicate. 6 The statute, however, may provide that the as- 1 Barton v. Enterprise Loan and the necessity of filing a written ao Building Association, 114 Ind. 226 ; ceptance of the provisions of a new s. c. 16 N. E. Rep. 486 ; 5 Amer. and general statute ; see Wohlford St. Rep. 608 ; Bergmans. St. Paul, v. Citizens' Building, Loan and etc., Association, 29. Minn. 275; Savings Association Ind. ; s. c. 13 N. W. Rep. 282 ; Sullivan S. c. 40 N. E. Rep. 694. v. Jockens Building and Loan As- 4 Bigelow v. Gregory, 73 111. 197 ; sociation, 70 Miss. 99; s. c. 12 So. Iudianapolis, etc., Mining Co. v. Rep. 590 ; 46 Amer. & Eng. Corp. Herkimer, 46 Ind. 142 ; Hurt v. Cor., 494. See Hekelnkaemper v. Salisbury, 55 Mo. 310; Childs v. German Building Association, 22 Hurd, 32 W. Va. 66 ; s. C. 9 So. Kan. 549. Rep. 362 ; Kaiser v. Savings Bank, 2 Day v. Mill Owners' Mutual Fire 56 la. 104. Insurance Co., 75 la. 694; s. c. 78 5 Indianapolis, etc., Mining Co. N. W. Rep. 118 ; Wood v. Union v. Herkimer, 46 Ind. 142 ; Cass- Gospel Church, etc., Association, well v. Oberly, 17 Bradw. 281 ; 63 Wis. 9. Hurt v. Salisbury, 55 Mo. 311. 3 Matter v. New York Cable R. 6 Williamson v. Kokomo, etc., R. Co., 109 N. Y. 32. Touching 30 BUILDING AND LOAN ASSOCIATIONS. Cll. III. sociation shall be a corporation before the articles are filed of record, although it may also require that they be recorded and inflict a penalty on the incorporate officers for not hav- ing them recorded. 1 If filed in the proper office the corpo- ration does not fail because the officers recorded them in the wrong book. 2 If the articles be filed for record stealth- ily and without the consent of and contrary to the agree- ment among the incorporators, it has been held that there is no corporation created, although the statutes provide that from the date of the filing of similar articles the association shall be deemed incorporated. 3 Sec. 28 — Name. Every corporation must have a name ; for by that only can it be known. This name is usually designated in the charter or articles of association. In many jurisdictions it is not necessary for a corporation when bringing suit to aver that it is a corporation, if the name is such as is used by corporations, or if it indicate that it is a corporation ; and the same is true when the corporation is sued. 4 Sec. 29 — Banking Powers. Advancing money as loans to its members by a building association is not banking within the meaning of the Ohio statute forbidding all corporations except certain ones to en- gage in banking. 5 So a constitutional provision providing that " No act of the General Assembly authorizing associa- tions with banking powers, shall take effect until it shall be Association, 89 Ind. 390 ; Baker v. The use of the word "National" Nell', ?:; I ml. OS. in the corporate name of a building 1 In re Shakopee Mining Co., 37 and loan association, is not a viola- Minn, ill ; s. o. 33 N. W. Rep. 219; tion of Rev. St. U. S. Sec. 5243, Barrod v. Earner, 32 Wis. 102. prohibiting its use by banking cor- See also Gran by Mining, etc., Co. porations. Lomb u Pioneers' Sav- v. Richards, 95 Mo. 100; Walton ings and Loan Co. (Ala.), 17 So. v. Riley, 85 Ky. 413 ; s. c. 3 S. W. Rep. 070. Rep. (in.). If a contract is entered into with - Walton v. Riley, supra. a corporation by a name not its ■"■ Eticker v. Larkin, 37 Bradw. own, the contract for that reason 625. is not void. 'Odd Fellows' Building Associa- G Forrest City, etc., Association tion v. Bogan, 88 Ark. 201. v, < lallagher, 25 Ohio St. 208. § 30. INCORPORATION. 31 submitted to the people * * * and be approved by a majority of all the electors voting at such elections," does not apply to a State authorizing a building association to receive deposits. 1 The taking by a building and loan association of a member's note in excess of the amount loaned, no part of 1 1 1< ■ loan being retained, is not a discount proceeding within the Texas constitution prohibiting the creating of corporations with banking or discounting privileges. 2 Sec. 30— Irregular and De facto Corporations. Where officers of a corporation are pursuing the evident objects of the corporation, it will be presumed that they are rightfully in office, and that all necessary steps have been taken to authorize them to act for the incorporation. This, however, is a mere rule of presumption. 3 And if a charter has been granted, those acting under it will be pre- sumed rightfully so acting, and only the State can question their authority so to do. 4 If persons have acted as a corpo- ration for a long time, then only the State can question their authority, 5 especially so when rights have been ac- quired under the supposition that a valid corporation had been created or formed. 6 The validity of its corporate ex- istence cannot be litigated collaterally- Its invalidity can only be litigated by a direct proceeding brought by the State. 7 Thus a junior mortgagee cannot defeat a senior mortgagee by impeaching collaterally the corporate exist- 1 Dearborn v. Northwestern Sav- Greene v. Dennis, 6 Conn. 293 ; s. c. ings Bank, 42 Ohio St. 617 ; Bates 16 Am. Dec. 58 ; Sword v. Wicker- v. People's Saving and Loan Asso- sham, 29 Kan. 740. ciation, 42 Ohio St. 655 ; 13 Wkly « Hagerstown Turnpike Co. v. L. Bull. 396. Creeger, 5 Harr & John. 122 ; s. C. 2 Sweeney v. El. Paso Building, 9 Am. Dec. 495 ; All Saints Church etc., Association^ S.W. Rep. 290. v. Lovett, 1 Hall. N. Y. 191. 3 Selma, etc., R. R. Co. v. Tipton, 7 Toledo, etc., R. R. Co. v. John- 5 Ala. 787 ; s. c. 39 Am. Dec. 344. son, 49 Mich. 148 : John r. Farm- 4 Oar River Navigation Co. v. ers' Bank, 2 Blackf. 367 ; s. c. 20 Neal, 3 Hawks, 520 ; Atlantic, etc., Am. Dec. 119: Chester Glass Co. R. R. Co. v. Johnston, 70 N. C. 348; V. Dewey, 16 Mass. 94 : s. C. 8 Am. Elizabeth City Academy v. Lind- Dec. 128 ; Trustees v. Hill, 6 Cow. sey, 6 Ired. L. 476 ; s. C. 45 Am. 23 ; s. c. 16 Am. Dec. 429 ; Grays Dec. 500. v. Turnpike Co., 4 Rand. 578; 5 White v. Slate, 69 Ind. 273; Selma, etc., R. R. Co. v. Tipton, 5 32 BUILDING AND LOAN ASSOCIATIONS. CI). III. ence when the first mortgage was given. 1 " To be a corpora- tion de facto, it must be possible to be a corporation de jure, and acts done in the former case must be legally authorized to be done in the latter, or they are not protected or sanc- tioned by the law. Such acts must have an apparent right." 2 Thus a corporation attempted to be organized under an un- constitutional law is not a, de facto body. 3 If there be a law authorizing the incorporation of such a company, then mere irregularities in forming the association will not enable any one, except the State, to attack its validity. 4 Such irregu- larities may be cured, even as against the State, by subse- quent recognition of the corporation as such by the legisla- ture, 5 and lapse of time of several years will preclude the State from questioning the rightfulness of the organization, especially after property rights under the defective organ- ization have been acquired. 6 A failure on the part of the incorporators to sign the application for a charter will not render the incorporation invalid, when permission to act as a corporation has been received from the court. 7 Nor can a member set up as a defence that he has not himself sub- scribed the articles of association ; 8 for by becoming an owner of stock, each owner becomes a member. 9 Ala. 787 ; S. c. 39 Am. Dec. 344 ; as partners. Eaton v. Walker, 76 Aurora, etc., R. R. Co. v. Law- Mich. 579 ; s. c. 43 N. W. Rep. 638. renceburgh, 56Ind. 80 ; New Haven 4 East Norway, etc., Lutheran Wire Co. Cases, 57 Conn. 352 ; Church v. Froislie, 37 Minn. 447 ; S. C. 16 Atl. Rep. 393 ; 5 L. R. A. S. c. 35 N. W. Rep. 260 ; Moke- 300. lumne, etc., Co. v. Woodbury, 14 1 Williamson v. Kokomo Build- Cal. 424 ; Heald v. Owen, 79 la. ing and Loan Fund Association, 23 ; Tarbell v. Page, 24 111. 46 ; 89 Ind. 389. Baker v. Neff, 73 Ind. 68. 2 Everson v. Ellingson, 67 Wis. 6 Basshor v. Dassel, 34 Md. 503. 634 ; DeWitt v. Hastings, 40 N. Y. 6 State v. Bailey, 19 Ind. 452. Supr. Ct. 463; Snyder v. Stude- 7 Workingman's Building Asso- baker, 19 Ind. 462 ; Krutz v. Paola ciation v. Coleman, 89 Pa. St. 428. Town Co., 20 Kan. 397. 8 Concordia Savings, etc., Asso- 8 Green v. Graves, 1 Doug. (Mich.) ciation v. Reed, 93 N. Y. 474 ; S. c. 351 : lliirllnul, r. Britain, 2 Doug. 4 Amer. & Eng. Corp. Cas. 175; (Mich.) 191 ; States. How. IMich. Pattison v. Albany Building and 51 '. Loan Association, 63 Ga. 373. Tin incorporators or stockhold- 9 Building Association v. Robin- < r of such a corporation are liable son, 46 Leg. Int. 5. §31. INCORPOIl ATI ON. 33 Sec. 31— Estoppel to Deny Corporate Existence. Any one who enters into a contract with a corporation, in which it is described by its corporate name, by such con- tract admits that it is a corporation and estops himself from thereafter denying' its legality whenever such contract is litigated in the courts. 1 This is especially true when it is sought to foreclose a mortgage given by him to the cor- poration for money loaned to him. 2 Nor can a junior mortgagee defeat a senior mortgagee, by showing that the corporation to which the senior mortgage was executed, was defectively organized, if it be a de facto corporation. 3 Nor can a member of the association, even though he be not a borrower, question the legality of the organization of A person who joins a building association solely to borrow, never- theless becomes a member. Setliff v. North, etc., Ass'n. (Tenn. Ch.) 39 Sw. Rep. 546. A mortgagor cannot claim that he is not a borrower, simply be- cause his application for member- ship was made through the secre- tary, and his bid for the loan was not signed, as required by its by. laws. Batz v. Equitable, etc., So- ciety, 65 111. App. 529. 1 Jones v. Cincinnati Type Foun- dry Co. , 14 Ind. 89 ; McLaughlin v. Citizens' Building Associations, 62 Ind. 264; Mechanics' Building Association v. Stevens, 5 Duer, 676 ; Lord v. Essex Building Associa- tion, 37 Md. 320 ; Becket v. Union- town Building Association, 88 Pa. St. 211 ; West Winsted Savings Bank, etc., v. Ford, 27 Conn. 282 ; Albright v. Lafayette Building and Savings Association, 102 Pa. St. 411 ; Hoboken Building Asso- ciation v. Martin, 13 N. J. Eq. 428; Payette v. Free Home Building, etc., 27 111. App. 307; Williamson v. Kokomo Building and Loan 3 Fund Association, 89 Ind. 389; Cohall v. Citizens, etc., Associa- tion, 61 Ala. 232 ; People's Saving Bank, etc., Association v. Collins, 27 Conn. 145 ; Winget v. Quincy Building, etc., Association, 128 111. 67 ; S. c. 21 N. E. Rep. 12 ; 25 Amer. & Eng. Corp. Co.'s, 652 ; Hagerman v. Ohio, Building and Savings As- sociation, 25 Ohio. St. 186 ; Lucas v. Greenville Building and Saving Association, 22 Ohio St. 329 ; La Societe Canadienne v. Lapointe, 5 Montreal Sup. Ct. 59 ; City Bank v. Allen, 1 N. S. W. L. R. 179. 2 Almon v. Fairbanks, 10 N. S. 407 ; Johnston v. Elizabeth Build- ing and Loan Association, 104 Pa. St. 394 ; s. c. 41 Leg. Int. 233 ; 14 W. N. Cas. 244 ; 32 Pitts. Lep. 460 ; La Societe Canadienne v. Lapointe, 5 Montreal Sup. Ct. 59 ; Bates v. People's Saving and Loan Associa- tion, 42 Ohio St. 655 ; S. c. 14 Wkly. L. Bull, 396 ; Massey v. Citizens, etc., Association 22 Kan. 624; Co- hall v. Citizens, etc., Association, 61 Ala. 232. s Williamson v. Kokomo Build- ing and Loan Fund Association , 89 Ind. 389. 34 BUILDING AND LOAN ASSOCIATIONS. Cll. III. the corporation. 1 Nor can an officer of the association do so when indicted for stealing from it or embezzling its funds. 2 Perhaps, however, a person dealing with an alleged corporation where no statute authorized its formation, or the statute was unconstitutional, would not be estopped to deny its incorporation or the validity of its organiza- tion. 3 But persons who have dealt with a corporation, knowing its fraudulent character, cannot question the validity of its organization. 4 When, however, the corpora- tion has expired, or reached the limit of the time for which it was organized, neither a stockholder nor one who has contracted with it is estopped to deny its corporate ex- istence. 5 So if the charter of the corporation has been for- feited by an act of forfeiture before the commencement of the suit, one contracting with it is not estopped to show that it is not then a corporation. 6 Xor is the corporation, or those appearing for it, estopped to set up that it has ceased to be a corporation, whether that corporation has expired by limitation or forfeiture. 7 The corporation can- not deny its existence, except, as we have seen, it may deny its continuing existence at the time suit was brought. 8 1 Mechanics' Building and Loan 10 Ind. 178 ; Dobson v. Simonton, Association v. Minnick, 1 Kulp. 86 N. C. 492. 513 ; Dutchess Cotton Manf. v. 6 Jones v. Bank of Tennessee. 8 Davies, 14 Johns. 238 ; s. c. 7 Am. B. Mon. 122 ; Krutz v. Paola Town Dec. 459. Co., 20 Kan. 397. 2 Shinn v. Commonwealth, 73 That there must be a judicial Va. 899. declaration of forfeiture first, see 8 Harriman v. Southam, 16 Ind. St. Louis Gas Light Co. v. City of 190; Heaston v. Cincinnati, etc., St. Louis, 84 Mo. 202 ; affirming 11 R. R. Co., 16 Ind. 275 ; Swartwout Mo. App. 55 ; Miller v. Coal Co., 31 r. Michigan, etc., R. R. Co., 24 W. Va. 836; s. c. 8 S. E. Rep. 600. Mich. 389; Eaton v. Walker, 76 7 Greely v. Smith, 3 Story, 057 ; Mich. 579 ; S. c. 43 N. W. Rep. 638. Foster v. Essex Bank, 16 Mass. 244. 4 Cochran v. Arnold, 58 Pa. St. Meikel v. German Saving Fund 399; Patterson v. Albany, etc., Society, 16 Ind. 181. ociation, 68 End. 37 3 ; Charles 8 Southern Bank v. Williams, 25 River Bridge v. Warren Bridge, 7 Ga. 534; Ewing v. Robeson. 15 Pick. 371. Ind. 26; Callender v. Painesvill.-, eSturges v. Vanderbilt, 73 X. V. etc., R. R. Co., 11 Ohio St. 516; 884; Grand Rapids Bridge Co. v. United States Express Co. v. Red- Prange, 35 Mich. 400 ; 34Am.Rep. bury, 31 III. 459; McCullough v. 585; Ensey v Cleveland, R. R. Co. , Talladgr Insurance Co., 46 Ala. INCORPORATION. 35 Sec. 32 — Foreign Building Associations. A foreign building and loan association, having some of the features of the building and loan associations organized under the laws of North Carolina, but having, in addition, power to raise funds by issuing interest and dividend bear- ing stock, to buy and sell property in general, and to act as agent and trustee for the investment of funds, is not en- titled to exercise the special powers and privileges of such organizations in that state. 1 376 : DeWitt v. Hastings, 40 N. Y. Supr. Ct. 463. It has been held that a corpora- tion organized for an illegal pur- pose cannot enforce its contracts, and it may be attached when it brings suits upon them, Lincoln Building Association v. Galem, 7 Neb. 173. But see Oregonian Ry. Co. v. Oregon Ry. Co., 23 Fed. Rep. 233 ; Town of Searcy v. Yarnell, 47 Ark. 269 ; s. c. 1 S. W. Rep. 319 ; when the contract itself is not illegal. Touching the right of the State to restrain a building association pro- ceeding in violation of its charter, see State v. Amer. Savings and Loan Association, 64 Minn. 349 ; s. c. 67 N. W. Rep. 1. 1 Meroney v. Atlanta National Building and Loan Association, 116 N. C. 882 ; s. c. 21 S. E. Rep. 924. See also Southern Building and Loan Association v. Harris 98 Ky. 41 ; 32 S. W. Rep. 261 ; New York, etc., Ass'n v. Slaughter, 17 Pa. C. C. 66 ; Pollock v. Caroline, etc., Ass'n (S. C), 29 S. E. Rep. 77 ; Turner?-. Interstate, etc., Ass'n (S. C), 27 S. E. Rep. 947 ; Equitable, etc. , Ass'n v. Hoffman (S. C), 27 S. E. Rep. 692 ; Building and Loan Ass'n v. Griffin (Tex.), 39 S. W. Rep. 656. But see Rhodes v. Missouri, etc., Co., 63 111. App. 77. Upon the principles of comity, a building association of one state may exercise within another state the general powers conferred by the charter and permitted by the laws of the state, if the doing so does no violence to the laws or public policy of such other state. Freie v. Fidelity, etc., Union, 66 111. App. 152; affirmed, 46 N. E. Rep. 784 ; s. c. 166 111. 128. See Baltimore B. & L. Ass'n v. Titlow, 19 Pa. C. C. 518 ; Pryse v. People B. L. & S. Ass'n (Ky.) 41 S. W. Rep. 574. A shareholder and borrower in a foreign association cannot defend in a suit to foreclose his mortgage, on the ground that it had not com- plied with the local statute, if it had done so when he applied for his loan, although he had had the right to apply long before he did for the loan. Illinois B. & L. Ass'n v. Walker (Tenn.) 42 S. W. Rep. 191. Even though no com- pliance has been so made, yet a court of equity will not cancel the mortgage until the loan be paid. New York, etc., Ass*n v. Cannon (Tenn.) 41 S. W. Rep. 1054. CHAPTEE IV. MEMBERSHIP. Sec. 33. Acquisition. 34. Who may Acquire Membership. 35. Infants. 36. Married Woman. 37. Status of Husband. 38. Personal Representatives Continuing Membership — Will. 39. Heirs Succeeding to Member's Rights. 40. Corporations as Stockholders. 41. Subscription for the Purpose of Securing Loan. 42. Depositors as Members. 43. Society may be Estopped to Deny Membership. 44. Person Estopped to Deny Membership. 45. Evidence of Membership. 46. Inspection of Books. Sec. 33 — Acquisition. There is nothing peculiar about the acquisition of mem- bership in a building association. It does not differ from the acquisition of membership in any other corporation, nor does the fact that a member becomes a borrower change his relationship as a member to the association ; he is still, as we shall see, a member. Not infrequently the charter or a by-law requires any one desiring to become a member to sign such charter, or the articles of association or such by-laws ; but that is only directory, for if a person becomes the owner of stock he becomes a member, and cannot escape liability on that ground. 1 This may be also put upon the ground of estoppel ; for having enjoyed the benefit of membership he cannot be heard to deny that he signed the by-laws, especially if that was occasioned by his own neglect. 2 Nor is it necessary, 1 Building Association v. Robin- N. Y. 474 ; s. C. 4 Amer. & Eng. : on, 46 Leg. Int. 5 ; Concordia Sav- Corp. Cas. 175. ing, etc., Association v. Read, 93 2 Parker v. United States, etc., 3G § 35. MEMBERSHIP. 37 that a certificate of membership be issued to the person sub- scribing for the stock ; it is sufficient if he has entered into a contract to take the stock which is binding upon him, or has enjoyed the rights, privileges and emoluments of a stockholder with the consent of the corporation. 1 In order to participate in the corporate meetings it is not necessary that a member have a certificate of membership. 2 Nor is it even necessary for the corporation to have tendered a sub- scriber a certificate of membership in order to maintain an action against him for assessments on his share, 3 even when the action is brought by creditors of the association. Association, 19 W. Va. 744 ; Spear v. Crawford, 14 Wend. 20 ; s. c. 28 Am. Dec. 513 ; Beckett v. Houston, 33 Ind. 393 ; Strong v. Wheaton, 38 Barb. 616 ; Burr v. Wilcox, 22 N. Y. 551 ; Cole v. Ryan, 52 Barb. 168 ; Sckaeff er v. Missouri Insurance Co. , 46 Mo. 248 ; Chaffin v. Cummings, 37 Me. 76 ; Sagory v. Dubois, 3 Sandf. Ch. 466 ; Contra, Busey v. Hooper, 35 Md. 15 ; s. c. 6 Am. Rep. 350. 1 Butler University v. Scoonover, 114 Ind. 381 ; S. c. 16 N. E. Rep. 642 ; 5 Am. St. Rep. 627 ; Chase v. Merrimac Bank, 19 Pick. 564. 2 Beckett v. Houston, 32 Ind. 393 ; McComb v. Barcelone Apart- ment Association, 31 N. Y. St. Rep. 325 ; s. C 10 N. Y. Supp. 546 ; Mc- Comb v. Cordona Apartment As- sociation, 31 N. Y. St. Rep. 334; S. C. 10 N. Y. Supp. 552. 3 Chester Glass Co. v. Dewey, 16 Mass. 94 ; s. c. 8 Am. Dec. 128 ; Miller v. Wild Cat Gravel Road Co., 52 Ind. 58 ; Burr v. Wilcox, 22 N. Y. 551 ; Albany, etc., R. R. Co. v. McCormick, 10 Ind. 499 ; s. c. 71 Am. Dec. 337 ; Heaston v. Cincin- nati, etc., R. R. Co., 16 Ind. 275; S. C. 79 Am. Dec. 430. 5 Spear v. Crawford, 14 Wend. 20 ; s. c. 28 Am. Dec. 513 ; Web- ster v. Upton, 91 U. S. 65 ; Haze- let v. Butler University, 84 Ind. 230. In a suit to foreclose his mort- gage, a mortgagor cannot claim that he is not a member, simply because his application for mem- bership was made through the sec- retary, and his bid for the loan was not signed by him, as required by the by-laws, and so invoke the usury laws of the state. Bates v. Equitable, etc., So., 65 111. App. 529. A certificate from an association for money deposited with it, which states that it is convertible into stock on payment of the regular membership fees, with the reserva- tion of the right to call it in at any time, constitutes the holder a mere creditor and not a member. Groh- mann v. Brown, 68 Mo. App. 630. See also Kimball v, Davis, 52 Mo. App. 194. Where a statute provides that the term ' ' member of a corpora- tion" shall include every person having a right to vote at a meeting for the election of directors, a member of a building association who is in arrears does not lose his membership, although a special statute provides that he is not en- 38 BUILDING AND LOAN ASSOCIATIONS. Ch. IV. Sec. 34 — Who may Acquire Membership. Any one capable of binding himself b}^ contract is capa- ble of binding himself by a subscription for stock. This does not, however, determine his capacity to own stock, as we shall hereafter see, as in the case of infants or married women. An alien friend to the country in which the cor- poration is formed may own its stock. 1 Sec. 35 — Infaiits. An infant may become a shareholder, but he is not any more bound by his contract of subscription than is any other contract he may attempt to bind himself to perform. 2 He cannot, however, keep the benefit accruing from holding his stock and at the same time insist on exemption from liability for assessments made thereon. 3 Until he disaffirms his subscription, regularly made, he is a member of the as- sociation. 4 The association may, however, refuse to accept a minor as a member, either upon original subscription, or when a transfer is made to him. 5 If his stock be forfeited for nonpayment of dues, he cannot complain. 6 If he sub- titled to vote ; for the reason that corporation with power to partici- the statute does not state that the pate in the conduct of its affairs." term " members " shall include no Grohmann v. Brown. 68 Mo. App. one except a person having a right 630 ; Kimball v. Davis, 52 Mo. App. to vote. Bunker v. Steel, 43 N. Y. 194. Supp. 346. There may be a joint ownership 1 Regina v. Arnaud. 9 Ad. & El. of stock. Dennison v. Jeffs, 65 L. (N. S.) 806 ; s. C. 11 Jur. 279 ; 16 L. J. Ch. 435 ; s. c. [1896] 1 Ch. 611 ; J. L. B. 50 : Magdalena Steam Navi- 74 L. T. 270 ; 44 W. R. 476. gation I !o. v. Martin, 2 El. & El. 94. 2 Dublin, etc., R. R.Co.v. Black, " The organization is in fact and 8 Exch. 181; Newry, etc., R. R. in law a partnership with corporate Co. v. Coombe, 3 Exch. 565 ; Mon- ri-ht-. in winch every stockholder umental Building Association v. naber." /// re National Sav- Herman, 33 Md. 128. ing Loan and Building Association, 3 Cork, etc., R. R. Co. v. Caze- 9 \V. N. Cas. 79; Bee Brownlie v. nove, 10 Ad. & El. (N. S.) 935; 1,'u ell, I-. R. 8 Lpp. Cas. 835 ; S. C. London, etc., R. R. Co. v. Mc- 18 L. T. 881 ; 17 .J. P. 757 : King v. Michael, 5 Exch, 114. International, etc., Onion, L70 III. ' In /•<■ Nassau Phosphate Co., 2 L75S. <•. 18 X. E. Rep. 677. Ch. Div. 610. The word " stockholder " means B Symon's Case, L. R. 5 Ch. 298. a member who has a direct firiM.ii- '"■ Donin ?\ McNally. 7 Leg. News. oialinten I in the business of the 860; s. c. I Montreal Supr. Ct., 21. § 37. MEMBERSHIP. 39 scribes when an infant, he may ratify his subscription on attaining full age ; and paying installments, after his majority, upon such stock, and acting as an officer thereof, is a ratification. 1 Sec. 36— Married Women. A married woman cannot become a member of a corpora- tion, nor bind herself to pay dues, fines or a loan. If she borrow money from the association on the assumption that she is a member under an attempted subscription, it can- not be foreclosed except for so much money as she actually received and used in the improvement of her separate estate. The statute providing that fines and premiums of a building association should not be deemed usurious does not apply to a loan by such an association to a married woman. 2 This disability has, however, been removed in many states by enabling a married woman to bind herself by contract ; 3 and in Georgia she is liable, the same as any other person, for dues and fines on stock she holds. 4 Sec. 37 — Status of Husband. While a married woman, at common law, cannot bind herself by a subscription furnished in a building association, yet if her husband joins with her he will be bound, and he also will be bound by any personal obligation she may give for money borrowed by her in which he joins. 5 If an un- 1 Whittingham v. Murdy, 60 L. Building Association v. Mixell, 84 T. Rep. 956 ; Under the English Act Pa. St. 313 ; S. c. 34 Leg. Int. 266 ; for winding up of a Building As- Tanner's Appeal, 95 Pa. St. 118 ; sociation, (37 & 38 Vict. c. 42 S. 32) Dilzer v. Beethoven Building As- an infant sign the agreement for a sociation, 103 Pa. St. 86; s. c. 15 dissolution. Dennison v. Jeffs, Phila. 344 ; 39 Leg. Int. 383 ; Wifr- [1896J 1 Ch. 611 ; s. c. 65 L. J. Ch. ters v. Sowles, 38 Fed. Rep. 700. 435 ; 74 L. T. 275 ; 12 T. L. R. 251 ; 3 City Building, etc., Association 44 W. R. 476. v . Jones, 32 S. C. 308 ; s. C. 10 S. E. 2 Wolbach v. Lehigh Building Rep. 1079. Association, 4 W. N. Cas. 157 ; s. C. 4 Goodrich v. Atlanta National 34 Leg. Int. 265 ; 84 Pa. St. 211 . Building and Loan Association, 96 Salter Building Association v. Rice, Ga. 803 ; s. c. 22 S. E. Rep. 585. 8 W. N. Cas. 12; S. C. 37 Leg. Int. 5 Wiggins' Appeal, 100 Pa. 155 ; 146 ; Good Hope Building Associa- S. C. 12 W. N. Cas. 209 ; 39 Leg. tions v. Steele, 11 W. N. Cas. 204 ; Int. 589. S. c. 39 Leg. Int. 70 ; Juniata 40 BUILDING AND LOAN ASSOCIATIONS. Cll. IV. married woman subscribe for shares and then marry, her husband, at common law, may claim them as his own. 1 So where a woman has money on deposit at interest with a building association, and afterwards marries, without any agreement in the nature of a settlement to her separation, her husband has a right to recover such money, although it has been previously paid to his wife during their coverture. A deposit by her after marriage is in the same position. Notice to him of an intention to pay her will not protect the society. 2 If she has taken stock in her husband's name, then such stock, at least, is liable to forfeiture for the non-payment of dues thereon or premium bid for loans. 3 If a loan be made to her husband she cannot deposit the recovery of the amount due on a foreclosure of a mortgage given to secure it by alleging her coverture. 4 i Luard's Case, 1 De Gex F. & J. 533 ; Burlinson's Case, 3 De Gex & Sin. 18; Sadler's Case, Id. 36; White's Case, Id. 157 ; Ex -parte Hatcher, 12 Ch. Div. 284. 2 Griffiths v. Victorian Perma- nent, etc., Society L. R., 6 Vict. (Australian) 259. 3 Good Hope Building Associa- tion v. Steel, 39 Leg. Int. 70 ; S. C. 15 Phila. 181. 4 Luzerne Building Association v. McDermott, 2 Kulp. 203. A husband bought shai'es in his own name out of monies belong- ing to liis wile. He gavenotice to the society that he intended to transfer the shares to her, but not thai they were paid for out of her own monies. Nearly two years af- terwards he obtained payment of 1 he monies from I lie society, and on being asked for the certificates at the time of the payment, he a rea onable excuse for t heir non-production, with a promise that they should be produced the next day. The wife, who had all along held the certificates, brought an action against the society for payment of the monies, but the court held that payment had al- ready been made to the person legally entitled, without notice, actual or constructive, of the plaintiff's claim, and that she was not entitled to succeed against the society ; Nolloth v. Simplified Building Society, 53 L. T. 859 ; S. C. 34 W. R. 73 ; 2 T. L. Rep. 97. A married woman may sign the instrument of dissolution for her husband, under the English Build- ing Society's Act ; Dennison v. Jeffs [1896], 1 Ch. 611 ; S. c. 65 L. J. Ch. 435; 74 L. T. 270; 12 T. L. R. 251. The court refused to fol- low the Scottish case of Second Edinburgh and Leith Building Society v. Aitken, 19 Rettie, 603; s. c. 29 Scot. L. R. 456. § 38. MEMBERSHIP. 41 Sec. 38 — Personal Representative Continuing Member- ship—Will. It is quite clear that the personal representative of a de- ceased member cannot continue the membership unless some statute or his testator's will authorizes him so to do. " The nature, purpose, incidents and liberties of membership in the association," said the Supreme Court of Alabama, " exclude the hypothesis that an executor or administrator, unless it be an executor having authority by the will of the testator, can employ the assets in his hands for administration in the continuance of membership in the association. These assets are devoted by law primarily to the payment of debts, and, after the payment of debts, to distribution to the next of kin, in case of intestacy, or, if there be a will, to distri- bution as it may appoint. The line of the duty and author- ity of the personal representative is distinctly marked, and it corresponds precisely to the accomplishment of these purposes. The object of the association, expressed in first article of the constitution, is ' the accumulation of a fund by the monthly subscriptions or savings of the members thereof to assist them in procuring for themselves such real estate as they may deem desirable.' There is no power in a personal representative, in the absence of express testa- mentary provision, to employ the assets either in invest- ments or for accumulations. An inseparable incident for membership is the right to anticipate stock by obtaining an advance thereon. Such advance cannot be obtained unless security by mortgage of real estate is furnished the associa- tion. Borrowing money is not a power or duty of a per- sonal representative, and to the real estate of his intestate or testator he has no title which could be conveyed by mort- gage. When the clause of the constitution referring to the continuance of membership, in the event of the death of a member who has taken an advance on stock, is read, it seems self-evident, that it is the heir, or the devisee only, who is in- vested with the privilege of continuing the membership." 1 1 Montgomery, etc. Association in his will, to continue the mem- v. Robinson, 69 Ala. 413. The tes- bership. /*/. tator may authorize his executors, 42 BUILDING AND LOAN ASSOCIATIONS. Ch. IV. But where the administrator of the deceased has the power to elect to carry out a loan he must perform the contract of his decedent if he so elects. 1 In January, 1864, a non-borrowing member died intestate. No administrator was appointed until June, 1807. In that interval his shares were in arrears, and in consequence the society, in November, 1805, declared the shares forfeited, and carried the amount thereof to the credit of the profit and loss account. After the society had been wound up. or Avas supposed to have been wound up, and the assets dis- tributed, letters of administration were obtained, and the administrator applied to the society to be admitted as a member thereof, but was refused. It was held that the pro- ceedings of the society to forfeit the shares in the absence of a personal representative was illegal ; that they could not do so any more than they could proceed at law to enforce payment of the calls; that the administrator was entitled to relief, and that the lapse of time between the attempted forfeiture of the shares and the procuring of the letters was no answer. No rule of the society covered this point. 2 1 Licking County Saving, etc., Contract, 13 Rep. 218; s. c. [1895] Association v. Bebout, 29 Ohio 1 Ch. 663 ; 69 L. J. Ch. 427 ; 73 L. St. 252; Snider's Estate. 34 Leg. T. 411 ; 43 W. R. 417; 2 Monson, 257. Int. 49. See Knox v. Shepherd, 2 See also In re Bolton Benefit Loan L. T. Rep. (N. S.) 351 : Kelsall v. Society v. Booth, 12 Ch. Div. 679 ; Tyler, 25 L. J. Exch. 153 : s. c. 30 s. c. 49 L. J. Ch. 39 ; 28 W. R. 164; J. P. 150; 11 Exch. 513; 26 L. T. In re South London Fish Market . 226. See the case of Thorne Co., 39 Ch. Div. 324 ; s. c. 00 L. T. v. Thorne, 63 L. J. Ch. 38 ; s. c. 69 68 ; 37 W. R. 3. L. T. 3; (1893); 3 Under a bequest of " money and Ch. 196; 8 Rep. 282. valuables" deposits in a building 2 Glass v. Eope, L6 (Irani Ch. society will pass. 420; affirming, II Grant Ch. 484. Cameron v. Hunter, L. TJ. 17 Thai shares are personal properly. Vict. (Austr.) 217. "Ifurtherbe- and go to the administrator, see queath all the remainder of money 1 ■■-. Hope, 16 . 194. ber." Rosenthal on Building As- Notwitbstanding this, it has been sociations, Sec. 40. said: "There are two classes of " Bates v. People's, etc. , Associa- members— depositors and borrow- tion, 42 Ohio St. 655. ers. Generally the membership is 3 Criswell's Appeal, 100 Pa. 488 ; soughl For the purpose of making Grohmann v. Brown, 68 Mo. App. a afe deposit of the small surplus 630. earnings of persons, who otherwise ' lii re Victoria Permanent Bene- wouldhaveto keep this surplus at fit I'.uililin.^ Society, L. K. '.) Kq. hand where il is an afe and Liable 605; s. c. 39 L. J. Ch. 628; 18 W. to be expended. These are called R. 967 ; 22 L. T. (N. S.) 777. members. A person § 44. MEMBERSHIP. 45 the association could not deny the right of membership ex- isting after such decree of foreclosure. 1 This was a case where the association itself accepted the payments. But where two directors of twelve accepted stock payments under like circumstances, and their act was disavowed at the next meeting, it was held that the association was not bound by such payments, and could deny the claim of mem- bership set up by reason thereof. 2 Sec. 44 — Person Estopped to Deny Membership. So a person entering into the relationship of a member in fact with the association may be estopped to deny that he is a member. Such is an instance where the provisions of a charter requires all members of the association to sign it and provides that a loan should be made to no other per- sons than members. En such an instance a borrower cannot set up that he is not a member by reason of his failure to sign the charter. 3 Yet where the mortgage contained a recital that the borrower owned a certain number of shares, and it was prepared by the society's solicitor and not read by the borrower, it was held that he was not estopped by such recital, he being ignorant of it when he signed the mortgage. 4 Sec. 45 — Evidence of Membership. The stock-book kept by the corporation is prima facie evidence of membership. As we have seen, it is conclusive evidence of the membership of stock upon the inspectors of election when a dispute arises over the right to vote certain stock. But in a proper instance it may be shown by parol 1 North American Building As- Association, 19 W. Va. 744 ; Lock- sociation v. Sutton, 35 Pa. St. 463. wood v. Robbins, Clev. Rep. 101 ; See also Lime City Building, Loan Reynolds v. Georgia State, etc., and Saving Association v. Black, Ass'n. (Ga.), 29 S. E. Rep. 187 ; 136 Ind. 544; s. C. 35 N. E. Rep. Concordia etc., Ass'n v. Read 93 829. N. Y. 474. 2 Card v. Carr, 1 C. B. (N. S.) * In re Victoria Permanent Bene- 197 ; s. c. 26 J. J. C. P. 113. fit Building Investment and Free- 3 Howard Mutual Loan and Fund hold Land Society L. R. , 9 Eq. Association v. Mclntire, 3 Allen 597 ; s. c. 18 W. R. 565 ; 22 L. T. 571 ; Parker v. United States, etc., N. S. 855. 46 BUILDING AND LOAN ASSOCIATIONS. Cll. IV. who is the actual owner. 1 A stockholder may show by parol, in an action against a building association for money alleged to have been loaned it by him, that a certifi- cate of stock received by him from the association was issued to him not as a stockholder but merely to evidence the loan. 2 Sec. 46 — Inspection of Books. Every stockholder, by reason of his holding stock, has a right to inspect the books of the corporation, when sought at the proper time, independent of any statute giving him the privilege. 3 Where a statute confers the right upon a stockholder to examine the books of the corporation, and does not attach any condition to his exercise of such right, he has the absolute right to make the inspection without assigning any reason whatever for his action. 4 In such an instance it is no defence to say that the stockholder claim- in o- the ri^ht to make the examination is hostile to the com- pany's interests. 5 But where a statute gave a stockholder the rifht to examine the books at all reasonable times, it was held that he must state to the officers for what pur- pose he desired to make the inspection ; and that he could not maintain a mandamus to secure the inspection unless he i Chaffin v. Cummings, 37 Me. S. C. 6 So. Rep. 88 ; 26 Am. & Eng. 76 ; Dobinson v. Hanks, 16 Sim. Corp. Cas. 127 ; 6 Rail & Corp. L. 407; s. C. 39 Eng. Ch. Rep. 406; 12 J. 88 Mutter v. Eastern, etc., R. L. T. (O. S.) 238 ; German Union, R. Co. L. R. 38 Ch. Div. 92 ; s. c. etc., Association, v. Senchmeyer, 36 W. R. 401 ; 57 L. J. Ch. 615 ; 59 50 Pa. St. 67. L. T. (N. S.) 117 ; State v. Sports- 8 Wild v. Western Union Build- men's, etc., Association, 29 Mo. ing and Loan Association, 60 Mo. App. 326; Mitchell v. Rubber, Re- A pp. 200. claiming Co., (N. J.) ; 24 Atl. Rep. *Cockburn v. Onion Bank, 13 407 ; States. St. Louise, etc., R. R. La. Lnn.289; Ranger v. Champion Co., 29 Mo. App. 301; Lyon v. Cotton Press Co., 51 Fed. Rep. 61; American Screw Co., supra. Lyon v. American Screw Co., in 5 State v. St. Louis, etc., R. R. R. I. 172; 3. 0. 17 AH. Rep. 61; Co., 29 Mo. App. 301; State v. Commonwealth v. Phcenix Iron Sportsmen's, etc., Association, 29 Co., 105 Pa. St. lll;s.c.51 Am. Mo. App. 326 ; People v. Pacific Rep. I I : J3 \mrr. L. Reg. 388; 38 Mail Steam Ship Co., 50 Barb. 280; ( v llt . L. J. 524. S. C. ::l How. Pr. 193; 3 Abb. Pr. • Fo ter r. White, 86 Ala. 467; (N. S.) 364. § 46. MEMBERSHIP. 47 had so stated the purpose to the officers, and he must also allege the purpose in the petition for the writ so that the court could judge of its reasonableness. 1 A statute confer- ring the right to make the examination within a certain period after a corporate election does not exclude the authority of the courts to compel the officers, upon a proper showing, to allow an inspection after such period of time has expired. 2 A corporation cannot deprive a stockholder of his right of inspection on the plea that the books contain other matters which he has no right to inspect or know, and that an inspection would enable him to obtain such other infor- mation. 3 The right of inspection may be regulated by a by- law, it would seem. 4 It will not be allowed for speculative purposes nor for the gratification of curiosity, 5 nor will it be granted where its exercise would result in great incon- venience and hindrances in the conduct of the business of the corporation. 6 It involves the right to take copies and make memoranda and extracts of such portions of the record as pertains to such stockholder's rights and inter- ests. 7 The stockholder has the right to make the inspection by an agent or by an attorney, or by an expert, 8 but he must conduct the examination in a peaceable manner, and i Reginar. Wilts, etc., Canal Co.. Co. L. R., 38 Ch. Div. 92 ; Rex v. 3 Ad. & El. 477; Regina v. Grand Merchants,' etc., Co., 2 B. & Ad. Canal Co., 1 Ir. L. Rep. 337 ; See 115 ; Rex v. Lucas, 10 East. 235 ; In Langelier v. Laroche L. R., 3 re Burton, etc. Co. , 31 L. J. Ch. 62 ; Quebec, 239. Martin v. W. J. Johnston Co., 62 3 People v. Eadie, 133 N. Y. 573 ; Hun, 557 ; s. c. 42 N. Y. St. Rep. s. c. 30 N. E. Rep. 1147 ; affirming, 409 ; 17 N. Y. Supp. 133 ; 11 Rail. & 18 N. Y. Supp. 53; s. c. 53 N. Y. Corp. L. J. 122; Bronwer v. Cotheal, St. Rep. 649. 10 Barb. 216 : S. c. 5 N. Y. 562 ; 3 People v. Pacific Mail Steam- Contra, Commonwealth v. Empire ship Co., supra. Pass. R. R. Co., 134 Pa. St. 2:57; * Cockburn v. Union Bank, 13 s. c. 19 Atl. Rep. 629 ; 7 Rail. & La. Ann. 289 ; State v. St. Louis, Corp. L. J. 470. etc., R. R. Co., 29 Mo. App. 301. 8 Hide v. Holmes. 2 Moll. 372 ; 5 People v. Walker, 9 Mich. State v. Bienville Oil Works Co., 28 La. Ann. 204: Foster v. White, 6 4 Commonwealth v. Phoenix 86 Ala. 407 ; s. c. 6 So. Rep. 88 ; 26 Iron Co., 105 Pa. St. Ill; S. C. 51 Am. & Eng. Corp. Cas., 127; 6 Am. Rep. 184. Rail. & Corp. L. J. 88. 7 Mutter v. Eastern, etc., R. R. 48 BUILDING AND LOAN ASSOCIATIONS. Cll. IV. the court, in granting an order to inspect the books, may provide that if the inspection be not conducted in a peaceable manner the person making it shall be guilty of contempt. 1 If a company has been created in another state, yet it may be compelled to allow an inspection of its books in the state where they are situated at the demand of the stock- holders, although such books are not in the home state of the corporation. 2 1 William v. Prince of "Wales, etc., Co., 33Beav. 338. 2 Swift v. State, 7 Houst, (Del.) 338 ; s. c. 6 Atl. Rep. 856. We take the following from a note to the case of Stettauer v. New York, etc., Co., 43 N. J. Eq. 46 (S. c. 24 Cent. L. S. 365); "An inspection will not be allowed to gratify mere idle curiosity ; People v. Walker, 9 Mich. 328; nor be- cause some of the books are neces- sarily kept in another State, where the main office is, in violation of a statute of Connecticut ; Pratt v. Meriden Cutlery Co. , 35 Conn. 36 ; See Sykes's case, 10 Beav. 162 Ervin v. Oregon R. Co., 22 Hun (N. Y), 566 ; Cain v. Pullen, 34 La. Ann. 511; nor to fish out a defence; Birmingham Co. v. White, 1 Ad. & El. (N. S.) 282; Imperial Gas Co. v. Clarke, 7 Bing. 95 ; See Hoyt v. Amer. Ex. Bank, 1 Duer (N. Y.), 652; Shoe and Leather Asso.,1'. Bailey, 17 Jones & Sp. (N. Y. 385; nor upon an allegation of belief that the company's af- fairs are being conducted im- properly and the officers unduly chosen, and alleging mismanage- ment in some particulars not af- fecting petitioners, nor then in dispute; Rex v. Merchant Tailors' Co., 2 Barn. & A<1. 115 ; norto fur- nish materials to the other side for a new trial; Pratt v. Goswell, 9 C. B. (N. B.) 706; nor to ascertain whether petitioners would better accept, with the other sharehold- ers, what was offered her for her holding in an old company, which was being wound up, rather than proceed with an arbitration ; Re Glamorganshire Banking Co., 28 Ch. Div. 620 ; nor to establish jus- tification in an action against the petitioner for libel, imputing in- solvency to the company and with the accounts, and on other grounds; Reg. v. Grand Canal, 1 Ir. L. Rep. 337 ; nor where the petition does not specify the particular books asked for and the object of the petitioner in making the applica- tion to the officers, and also to the court ; Reg. v. London & St. Cath- erine's Docks Co., 44 L. J. (Q. B.) 4 ; See Hunt v. Hewitt, 7 Ex. 236 ; Pepper v. Chambers, 7 Ex. 226 f New England Iron Co. v. New York Loan Co., 55 How. Pr. (N. Y.) 351; Central, etc., R. Co. v. Twenty-third St. R., 53 How. Pr. (N. Y.) 45; Commissioners v. Lemly, 85 N. C. 341 ; Walker v. Granite Bank, 44 Barb. (N. Y.) 39 ; nor whether certain allegations in the applicant's affidavit are true ; nor whether he lias documents in his possession relating to the mat- ter in issue. Rayner v. Alnusen, 15 Jur. 1060." The fact that the society took tlir lays to consider and secure legal advice as to whether a mem- CHAPTEK V. GOVERNMENT OF BUILDING ASSOCIATIONS. Sec. 47. Repository of Supreme Power. 48. Place of Holding Meetings and Doing Business. 49. Assembling for a Corporate Election — Notice. 50. The Quorum. 51. Right to Vote. 52. Conduct of an Election. 53. Number of Votes a Stockholder may Cast. Sec. 47 — Repository of Supreme Power. The membership of the association, in a convention duly assembled, have the supreme power of the association, sub- ject to its charter and the laws of the state. 1 In this re- spect it does not differ from any other kind of corporation. Sec. 48— Place of Holding Meetings and Doing Business. A corporation can have only one domicile, not two or more ; 2 so that it cannot be created by two states, for it must have its domicile in one or the other of them, and not in both. 3 In such instances, there is a corporation in ber had the right to inspect the See Grimes v. Harrison, 28 L. J, books is not a denial of his right to Ch. 823; s. C. 33 L. T. (O. S.) 115; make the examination. Lange- 5 Jur. (N. S.) 528; 26 Beav. 435; 23 Her v. Laroche L. R., 3 Quebec, J. P. 421, and In re Kent Benefit 239. Building Society, 1 Dr. & Sm. 417; The general corporation laws for S. C. 7 Jur. (N. S.) 1045; 30 L. J. the inspection of corporate books Ch. 785; 4 L. T. 610; 9 W. R. 686. applied to building associations. 2 Bank of Augusta v. Earle, 13 Buker v. Steele, 43 N. Y. Supp. Pet. 519 ; Rece v. Newport News, 346. etc., Co., 32 W. Va. 164; s. C. 9 S. 1 Hagerman v. Ohio Building E. Rep. 212. and Savings Association, 25 Ohio 3 Ohio, etc., R. R. Co. v. Wheeler, St. 186 ; Morton Gravel Road Co. 1 Black. 286 ; Farnum v. Black- v. Wysong, 51 Ind. 4; Carroll v. stone, Canal Co., 1 Sumn. 46 ; Cov- Mullanphy Savings Bank, 8 Mo. ington etc. Bridge Co. v. Mayer, 31 App. 249 ; Martin v. Nashville Ohio St. 317. Building Association, 2 Coldw. 418 ; 4 49 50 BUILDING AND LOAN ASSOCIATIONS. Cll. IV. each state. 1 That domicile or residence " is necessarily where it exercises corporate functions. It dwells in the place where its business is done. It is located where its franchises are exercised." 2 They cannot establish agencies for the transaction of their business at any other place than that fixed by their charters or articles of association for the residence. 3 They have not perambulatory powers. 4 If a corporation migrates from one state to another, and transfers the whole of its business, including its personnel, it does not carry its attributes of incorporation with it, and the stockholders form nothing but a partnership. 5 The stockholders cannot hold a corporation meeting beyond the boundaries of the state where it is incorporated ; 6 but the corporation may, through its agents, enter into binding con- tracts beyond the state boundaries. 7 So its directors may meet beyond the boundaries of the state and there transact business. 8 They may even execute a mortgage in another state upon land situated in the home state and owned by the corporation. 9 And if no place for the meeting of the annual or special meeting of the stockholders is prescribed in its charter or by-laws, or in a statute, the officers authorized to call such meeting, or to give notice thereof, may specify where it shall be held. 10 In such an instance the board of 1 Ta re St. Paul, etc., R. R. Co., But see Merrick v. Van Santvoord, 36 Minn. 85; Clark r. Barnard, 108 34 N. Y. 208; reversing, 38 Barb. U. s. 136 : Railroad v. Harris. 12 574. Wall. 65; Racine, etc. , R. R. Co. v. 6 Miller v. Ewer, 27 Me. 509 ; s. c. ters' Loan and Trust Co., -It) 46 Am. Dec. 619; Freeman v. 111. 331. Machias, etc., Co., 38 Me. 345; 2 Bristol v. Chicago, etc., R. R. Franco-Texan Land Co. v. Laigle, Co., 15 111. 136; New Albany, etc., 59 Tex. 339. R. ];. Co. v. Haskell, LI Ind. 301. 7 Lane v. Bank, 9Heish, 419. 8 Attorney-General v. Oakland 8 McCall v. Byram, Mf. Co., 6 Co. Bank, I Walk. Ch. (Mich.) 90 ; Conn. 428. But not if a statute People v. Oakland Co. Bank, 1 prohibits their meeting abroad. (Mich.) 1 1 ill. 's v. Parish, I I N. J. Eq. 380. 'Underwood v. Waldron, 12 9 Galveston R. R. Co. v. Cowdrey, Mich. 78 : People v. Ti • 1 1 Wall. 159. Wend. '.'1 1. "' ( lorbettu. Wood-wan I, 5 Sawy. Ward. 106 Mass. 58. 108. § 49. GOVERNMENT. 51 directors may fix a place, and the officers issuing the call must comply therewith. 1 Sec. 49 — Assembling for a Corporate Election — Notice. Mandamus lies to compel the officers to call a corporate meeting where they are required by statute or the by-laws so to do. 2 If the charter prescribe annual elections for the selection of officers, but docs not designate when they shall be called, leaving the question to the officers, then such officers cannot prolong the existence of their own tenure by refusing to call an election until near the end of the year in which it should be called. 3 The fact that the charter or a statute prescribe that the annual elections shall be held at such a time and place as the by-laws shall prescribe does not pre- vent the corporation holding an election at the first assem- blage of the stockholders after it is incorporated and before any by-laws have been adopted. 4 The election may be held on Sunday, at least that of a benevolent corporation. 5 The person authorized to call a special election must make the call, and no one else can do so. 6 If called by an officer not empowered to do so, all the proceedings held thereat are void. 7 But the directors may call a special meeting of the stockholders, although they have prescribed by a by-law that the president or secretary must do it. 8 No corporate business, which the stockholders must transact, can be per- formed unless at a corporate meeting duly assembled, even if a majority of such stockholders be present and all consent 1 Commonwealth v. Smith, 45 5 People v. Young Men's, etc.; Pa. St. 59. Society, 65 Barb. 357. That the action of a corporate 6 Reily v. Oglebay, 25 W. Va. 36, meeting held beyond the state can- Bethany v. Sperry, 10 Conn. 200; not be collaterally attached, see Goulding v. Clark, 34 N. H. 14S ; Humphrys v. Mooney, 5 Colo. Ashuelot R. R. Co. v. Eliot, 57 N. 282. H. 397. 2 American Railway Frog Co. v. 7 Reilly v. Oglebay, 25 W. Va. Haven. 101 Mass. 398; s. c. 3 Am. 36; Contra, only irregular, Cham- Rep. 377. berlain v. Painsville, etc., R. R. 3 Mattu v. Primrose, 23 Md. Co., 15 Ohio St. 225 ; Walworth v. 482. Brackett, 9S Mass. 98. 4 Boston, etc., Mf. Co. v. Moring, 8 Citizens' Insurance Co. v. Sort- 15 Gray, 211. well, 8 Allen, 217. 52 BUILDING AND LOAN ASSOCIATIONS. Cll. V. to it. 1 The same is true of a directors' meeting. 2 To constitute a special meeting a valid one, due notice thereof must be given in accordance with the by-laws or charter ; all the members must be notified. 3 Of course this does not apply to stated meetings, unless the by-laws or charter require the notice to be given. 4 If a by-law or the charter prescribe the manner in which the notice shall be given, that method must be pursued, even to the contents of the notice where the state charter does not prescribe them. 5 If no method of giving notice is prescribed by the charter or by-laws, then it would seem that personal notice to each stockholder must be given. 6 From these decisions it may be gathered that the notice must be issued by the person having authority to issue it ; ' that it must contain the time and place of holding the meeting unless the charter or a by- law fix them ; and 8 must contain a statement of the busi- ness to be transacted. 9 But if all those entitled to notice appear at a meeting and without objection from any one all proceed to transact the business of the corporation, the right to notification is waived and the business transacted will be valid. 8 If a single member not having voted objects, no business can be transacted. 9 "Where a by-law or the charter 1 German v. Evangelical Congre- People v. Bachelor, 22 N. Y. 128 ; gation v. Pressler, 14 La. Ann. 799. Atlantic Mutual Fire Insurance 2 Dispatch Line v. Bellamy Mf. Co. v. Sanders, 36 N. H. 252. Co., 12 N. H. 205; S. c. 37 Am. s Hunt v. School District, 14 Vt. Dec. 203 ; Elliott v. Abbott, 12 N. 300 ; s. c. 39 Am. Dec. 225 ; Stow H. 549; S. C. 37 Am. Dec. 227; v. Wyse, 7 Conn. 214 ; s. c. 18 Am. Pierce v. New Orleans Building Dec. 99. Co., 9 La. 397 ; 8. C. 29 Am. Dec. 6 Stow v. Wyse, 7 Conn. 214; s. c. 448 : Harrington v. Liston District 18 Am. Dec. 99. Tp., 47 la. 11. ' Sampson v. Bowdoinham, etc., Rex v. May. 5 Burr.2681; Kyn- Corporation, 36 Me. 78; Little v. aston V. Mayor of Shrewsbury, 2 Merrill, 10 Pick. 543; Merritt v. sn. L051; Res v. Bill, 4 B. & C. Fairis, 22 111. 303. 141 ; Smyth v. Darley,2B. L. Cas. B Judah v. American, etc.,Insur- Im thia lasl case it was held ance Co., 4 Ind. 333; People v. thai tin- omission to notify a single l.ntohelor, 22 N. Y. 128; Jones V. corporator rendered fli<' election Milton Turnpike Co., 7 Ind. 547; \.,i Fed. Rep. 91. i All- n r. Bill, 16 Cal. 118. § 52. GOVERNMENT. 55 ever, vote it. 1 In the absence of a statute or a valid by- law, a shareholder cannot authorize some one else to vote his shares by proxy. 2 The corporation, without any statu- tory provision, may authorize by a by-law the voting of shares by a proxy duly given. 3 Even though it be given for a valuable consideration, a proxy may be revoked by the person giving it, or by his assignee duly registered on the books of the association. 4 If the charter or a statute pro- vide that a vote may be cast by proxy, the corporation by a by-law cannot deprive the owner of such right, or so encumber it as to render it practically worthless. 5 Stock- holders may be represented at a meeting at which action is taken to increase the assets, in pursuance of a notice, given by an officer of the state, calling a meeting of the stock- holders for that purpose. 6 Courts will grant an injunction to prevent the voting for a proposition ultra vires to the corporation. 7 A non-resident stockholder may vote his stock ; 8 even so may a foreign executor on producing an exemplified copy of his letters.* Sec. 52 — Conduct of an Election. If any statute prescribes the method or mode of conduct- 1 Brewster v. Hartley, 37 Cal. 15 ; 6 Broadwell, v. Inter-Ocean s. c. 99 Am. Dec. 237 ; Union Sav- Homestead and Loan Association, ings Association v. Seligman, 92 161 111. 327 ; s. c. 43 N. E. Rep. 1067. Mo. 635 ; s. c. 15 S. W. Rep. 630. ' Campbell v. Poultney, 6 Gill & 2 Phillips v. Wickham, 1 Paige, J. 94 ; Webb. v. Ridgely, 38 Md. 590. 365 ; Busey v. Hooper, 35 M<1. 27 ; 3 State v. Tudor, 5 Day, 329 ; s. c. Pfaff v. Kensington Building As- 5 Am. Dec. 162 ; Commonwealth sociation, 6 W. N. Cas. 349. v . Detwiller, 131 Pa. St. 614 ; 7 L. Touching distinctions on this R. A. 357 ; 47 Leg. Int. 144 ; 20 point, see Woodruff v. Dubuque, Pitts L.J. (N. S.)378; 18 Atl. Rep. etc., R. R. Co.. 30 Fed. Rep. 91; 990; People v. Crowley, 69 111. 195 ; and Converse v. Hood, 149 Mass. Contra, Taylor v. Griswold, 14 N. 471 ; s. c. 21 N. E. Rep. 878. J. L. 222; s. c. 27 Am. Dec. 33; 8 Detwiller v. Commonwealth, People v. Twaddell, 18 Hun, 427 ; 131 Pa. St. 614 : s. C. 25 W. X. C. see Smith v. Smith, 3 Desau (S. C), 329, 47 Leg. Int. 144 ; Common- 557. wealth v. Hemingway, 131 Pa. St. 4 Reed v. Bank, 6 Paige, 337. 614 ; s. C. 7 L. R. A. 360 ; 25 W. 5 In re White v. N. Y. Agricul- Mas. 337 ; 18 Atl. Rep. 962. tural Society, 45 Hun, 580; S. C. 9 In re Cape May, etc., Co., 51 10 N. Y. St. Rep. 594. N. J. L. 78 ; s. c. Atl. Rep. 191. 5t> BUILDING AND LOAN ASSOCIATIONS. Ch. V. ing an election, that method must be substantially followed to render it valid ; but if there be no such statute, then it may be regulated by a by-law duly adopted. 1 If a statute prescribes the appointment of three inspectors, an election held where only two are appointed will be valid. 2 When the inspectors are appointed by an officer not authorized to do so, the election held by them will be void ; 3 but not so when the corporators take it upon themselves to make the appointment. 4 A shareholder who is a candidate may serve as an inspector. 5 If the right of a member to vote be chal- lenged the inspectors must determine his right from an inspection of the books closed, and cannot make inquiries outside thereof. 6 If a proxy offered is regular in form, and apparently the act of the stockholder, the inspectors must receive the vote it represents, and cannot enter upon an inquiry touching whether or not it is a forgery." If the vote be by ballot, then the ballot as voted must be counted and the intention of the person voting it cannot be inquired into. 8 If two ballots be cast folded together, both must be rejected. 9 And if three directors are to be elected and a ballot is cast with four names upon it, it must be rejected. 10 A vote cast for an ineligible person is thrown away, and such vote cannot be counted in determining how many ballots were cast. 11 i Commonwealth v. Wcelper, :i 382 ; Peoples Tibbetts, 4 Cow. 358. s. & ];. 29; S. <'. 8 Am. Dec. 628; T /// re Cecil, 36 How. Pr. 177 ; State '■. Tudor, ~> Day, 329 ; s. c. ■"> Tn re St. Lawrence Steamboat Co., Am. Dec. 162; Commonwealth v. 44 N. J. L. 529. Detwiller, 131 Pa. St. 614 ; s. c. 25 A person holding a proxy who \Y. NT. Cas. 329; IT Leg. Int. Ill: acquiesces in a decision that he 20 Tin-. I.. .1. (N.S.) 378; 7 L. R. cannot vote will he held to have A. 357 ; 18 Atl. Rep. 990. consented to such a decision. State - In re Excelsior Fire Insurance /•.Chute. :'.! Minn. 135; S. C. 24 N. Co.. 16 A hh. Pr. 8. W. Rep. 253. pie v. Peck, M Wend. 604 ; - Lonbat v. Le Roy, 15 Abb. Pr. .'I \im. Dec. 101. See Slate /\ I X. S. ) II. Merchant, ■■'> < >hio St. 251. 9 People v. Seaman. .". Denio, 409. '• Tn re Wheeler, 2 Abb. Pr. 361.; l0 People v. Loomis, 8 Wend. 396. Ex parte Willcocks, 7 Cow. 402 stale y. Thompson, 27 Mo. 365. s. c. 17 Am. Dec. 525. " See 2 Burr, 1021, note. But see '■l,i re Long Island R. h\, 19 Tn re St. Lawrence Steamboat Co., Wend. 87; People v. Kip. I Cow. I4N. J.L.529. £ 53. GOVERNMENT. 57 Sec. 53 — Number of Votes a Stockholder may Cast. It is a general rule that in joint stock corporations a stockholder may cast a vote for each share of stock he owns. But such is not the rule in building and loan associations. In such institutions a member of the association has only one vote, whether he own one or any number of shares. This limitation has been established by a custom arising out of the peculiar construction of these societies. 1 No doubt the charter, or even a by-law, of the association may provide a different rule ; such as giving more votes for each share of stock held. 2 i There is no direct adjudication 48 L. J. Ch. 341 ; 40 L. T. 353 ; 47 on this point, but see State v. Roh- W. R. 433. liffe (N. J. L.), 19 Atl. Rep. 1099, 2 A member may hold any nuni- where the practice seems to have ber of shares. Morrison v. Glover, been recognized. See also Cutbill 19 L. J. Ex. 20, 25 ; 4 Exch. 430 ; v. Kingdom, 1 Exch. 494: s. c. 17 14 L. T. (O. S.) 204; 14 L. P. 84; L. J. Exch. 177, and hire Horbury Murray v. Scott, 9 App. Cas. p. Bridge Coal Co., 11 Ch. Div. 109; 519. CHAPTEK VI. OFFICERS, THEIR POWERS AND LIABILITIES. Sec. 54. Usual Officers. PRESIDENT. Sec. 55. President's Election — Resignation. 56. Proving President's Official Character. 57. Power to Bind Association. 58. Acts in Manifest Violation of his Duty. 59. Acting for Another or for Himself. 60. Implied Powers — Two Theories. 61. Proof of Power to Act. 62. Custom, Usage or Habit of Acting Enlarging his Powers. 63. How he should Execute Contracts. 64. Discharging Duties of Other Officers. 65. Declarations and Admissions. 66. Notice to President on Effecting Corporation. 67. Liability. 68. Compensation. 69. Nature of Office. VICE-PRESIDENT. SECRETARY. 70. Status. 71. Length of Office. 72. ( lustodian of Seal. 7:;. Keeper of Corporate Records. 71. Medium of < lommunication with the Public. 75. Power to Bind Corporation. 76. Notice to, AN' Inn not Binding on Corporation. ;;. Transfers of Stock. 78. Liability on Bond. 79. < lompensation. TREASURER. st). Elections— Status— Duties. 81. Power to Contract for Association. 83. Settlement of Debts Release of Claims. 88. Power to Bring Suit or Confess Judgment. E I. Liability on Bond. 58 § 54. OFFICERS — PRESIDENT. 59 ATTORNEY. 85. Appearance of Association by Attorney. 86. Who may Employ. 87. Eetainer and Authority. ACTUARY OR SURVEYOR. 88. Officers. DIRECTORS. 89. Essential to Association — Tenure of Office. 90. Election. 91. Right to Vote at an Election. 92. Proof of Acceptance of Office — Resignation. 93. Defacto Directors, and the Validity of their Acts. 94. Must Act together. 95. Individual Director's Powers. 96. Voting by Proxy. 97. Majority Rule — Quorum. 98. Presumption Concerning Acts of Board. 99. Ratification of Act Performed by Less than Majority. 100. Board Contracting with One of its own Number. 101. President Counts as a Director. 102. Accidental Meetings. 103. Meetings Outside of State. 104. Board Must be Duly Assembled — Notice. 105. Directors Cannot Delegate Powers. 106. Directors' General Powers. 107. General Obligations of Directors — Liability. 108. Contracts with Corporation. 109. Liability of Directi us. 110. Liability in Particular Instances of Building Associations. 111. Association may Sue its Director for Losses Incurred. 112. Liability of Directors to Creditors. 113. Director's Compensation. TRUSTEES. 114. Nature of Office. OFFICERS, THEIR POWERS AND LIABILITIES. Sec. 54 — Usual Officers. The usual officers of a building association are : (1) Pres- ident ; (2) Yice-President ; (3) Secretary ; (4) Treasurer ; (5) Board of Directors ; (6) Trustees, occasionally ; to which may be added ; (7) Attorney or Solicitor. The authority, power and liability of each one of these several officers will be discussed. 1 1 The rule which governs the ing association, who knows of the dealings of a depositor in a build- limitations imposed by the consti- 60 BUILDING AND LOAN ASSOCIATIONS. Ch. V. PRESIDENT. Sec. 55— President's Election— Resignation. The President is the presiding officer, not only of the Board of Directors of a building- association ; but also of its stock- holders at their general meeting. Unless a statute, or the charter or the by-laws, require him to be elected by the share- holders, he is elected by the Board of Directors. As a member of the Board of Directors he is entitled to vote upon all questions coming before it, including the question who shall be his successor ; and if a successor to him be elected at a meeting of which he has had no notice, the election will be void. 1 He cannot resign his office so it will be effectual, it has beea held, until his resignation has been accepted by the Board of Directors. 2 Sec. 56 — Proving President's Official Character. To establish the official character of the president it is sufficient to prove that he acted in that capacity in the affairs and dealings of the society. 3 And if an unauthorized person act as president, the society may so ratify and adopt his act that it will be bound by it. 4 This is especially true where the society avails itself of the benefit of a contract made for it in its name by a person at the time unauthorized to bind it. 5 Where, however, evidence of this kind cannot be resorted to, it must be shown that he is president de jure y and this proof may be made by parol or by thebooksof the •iai ion. 6 tution on the officers, do not apply 49 N. Y. Supr. St. Rep. 715; s. c. as againsl these persons who are 21 N. Y. Supp. 764 : 15 Daly, ■V-)~. not aware of any restrictions upon 8 Cahill v. Kalamazoo Mutual the apparent powers of such offi- [nsurance Co., 2 Doug. (Mich.) S:n-lis /•. Duckworth, He, 124 ; s. C. 43 Am. Dec. \'u. ii 6 Ohio l»i'-. 354; s. c. I * Blackman v. Branch Bank, 8 Ohio X. I'. ".'I I. Ah. 103. i State v. Smith, 15 Ore. 98 ; s. C. B Kennedy v. Cotton, 28 Barb. ! I Pac. Rep. 814 ; Jordoin v. Die 59. ! Lower C. Jur. 825. ''' Cr:i\\ ford v. Branch Bank, 7 2 Duranl Land [mprovemenl Co. Ala. 205, V. Tli'. i, i .,n I |..ii tun Eled ri<- ' '<>., § 58. OFFICERS — PRESIDENT. 61 Sec 57— Power to Bind Association. Within the scope oi' his authority the acts of the presi- dent in the management of its business are the acts of the society. 1 Acts outside the corporate business do not bind the society. 2 Any contract which is partly for himself and partly for the association will not bind the latter, unless the rights of innocent persons be involved ; for he must act wholly for the association in order to bind it. 3 So, if a certain matter has been referred to the board of directors he cannot usurp their authority and bind the association with reference to such matters. 4 If he have no power to make a contract with reference to a certain subject, he has no power to affirm a contract made by his predecessor with reference to that subject. 5 Where he has power to enter into a con- tract and bind his association, he has the relative power to release a party to the contract or substitute another in his stead. 6 Sec. 58— Acts in Manifest Violation ot His Duty. An act which is manifestly in violation of his duty will not bind his association; and all persons dealing with him are chargeable with notice of his lack of authorit}^ in such instances. 7 Such would be an instance of the waiver of the performance of the terms of the contract entered into by the board of directors. 8 And this is especially true if he be 1 Topeka Primary Association v. 4 Third Avenue R. R. Co. v. Martin, 39 Kan. 750 : s. c. 18 Pac. Ebling, 12 Daly, 99. Rep. 941 ; Kenton Insurance Co. 5 Lyndon Mill Co. v. Lyndon v. Bowman, 84 Ky. 430 ; s. C. 1 S. Literary, etc., Institute, 63 Vt. W. Rep. 717 ; Marlatt v. Levee 581 ; s. c. 25 Am. St. Rep. 783 ; 22 Steam Cotton Press Co., 10 La. Atl. Rep. 575. 583 ; s. C. 29 Am. Dec. 468 ; Siebe 6 Indianapolis Rolling Mill Co. v. v. Joshua Hendy Machine Works, St. Louis, etc., R. R. Co., 26 Fed. 86 Cal. 390 ; Lancaster County v. Rep. 140. Cheraw, etc., R. R. Co., 28 S. C. » Brouwer v. Appleby, 1 Sandf. 135. 158 ; Brouwer v. Hill, lSandf. 629 ; 2 Alpena National Bank v. Green- Spyker v. Spence, 8 Ala. 333. baum, 80 Mich. 1 ; S. C. 44 N. W. 8 Dawes v. North River Insur- Rep. 1123. ance Co., 7 Cow. 462. See contra, 3 First National Bank v. Gifford, Haynes v. American Popular Life 47 la. 575 ; Claflin v. Farmers', etc., Insurance Co., 3 Jones & Sp. 266. Bank, 25 N. Y. 293. 62 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. personally interested. 1 lie cannot by collusion loan out the funds of the association to a known irresponsible party ; 2 nor can he (even with the consent of the secretary) with- draw funds from the custody of the treasurer, and deposit them elsewhere. 3 Sec. 59— Acting for Another or for Himself, His association is not bound by a contract where he clearly acts as the special agent of a third person and not as an agent of the association. 4 Nor is his association liable where he acts for himself and not for it. 5 His corporation is not bound for money he borrowed, and gave his individual note, even though such money was borrowed for the benefit of the association and so actually used ; evidence to show an undisclosed principal being in- admissible, because it would be a violation of the statute of frauds, the promise of such a collateral contract must be in writing to be binding upon it. 6 Sec. 60— Implied Powers — Two Theories. Two theories prevail with reference to the right of those dealing with the president of an association to presume he has authority to bind his association with reference to the particular transaction. First. The president of a business corporation has the authority of a general agent for the purpose of binding it by contracts made within the ordi- nary scope of its business ; and a person dealing with him, 1 Gallery v. National Exchange Mich. 1 ; s. c. 44 N. W. Rep. 1125; Bank. II Mich. L69 ; S. C. 32 Am. First National Bank v. Bennett, 33 Rep. I 19. Midi. 520. - I'n 1 National Bank v. Reed, ° Wisconsin, etc., Bank v. Filer, 36 Mich. 263; Bank of United 83 Mich. 496 ; s. c. 80 Mich. 67; Statesu. Dunn, 6 Pet. 51 ; Bankof Hall v. Auburn Turnpike Co., 27 Metropoli v. Jones, 8 Pet. 12; Cal. 255 ; s. c. 85 Am. Dec. 75. Eodge v. First National Bank, 22 6 Bauman v. Manistee Salt, etc., Gratt. 51. Co., 94 Mich. 363; s. c. 53 N. W. 8 Citizens' Savings & Loan Asso- l>V|>. 1113; Arnkens v. Rouse, 26 ciation v. Ruhl, 55 [11. A.pp. 65. Ohio L. J. 221 ; Tradesmen's Na- 1 St. Nicholas Insurance ''<>. v. tional Bank v. Manhattan Lumber Ho w. 150; Alpena Na- Co., L8 N. Y. Supp. 920. tional Bank v. Greenbaum, 80 §60. OFFICERS — PRESIDENT. 63 in the absence of notice to the contrary, has the right to act upon that assumption. 1 Second. The president has no implied authority, by virtue of his office, to act as the agent of his corporation, but derives his power, like other agents, from the board of directors, who wield the powers of the corporation and exercise an original rather than a delegated power, or he derives it from the corporation itself. In all such instances, when his authority is challenged, he must show a delegation of power from the directors or from the corporation itself in express terms or such as may be im- plied from the habit of acting with their apparent consent. 2 1 Marlatt v. Levee Steam Cotton Press Co., 10 La. 583 ; s. C. 29 Am. Dec. 468 ; Chicago, etc., R. R. Co. v. Boone County, 44 111. 240 ; Voris v. Renshaw, 49 111. 425 ; Moser v. Kreigh. 49 111. 425; Chicago, etc., R. R. Co. v. Coleman. 18 111. 297 ; s. c. 68 Am. Dec. 544 ; Sparks v. Dispatch Transfer Co., 104 Mo. 531 ; s. C. 24 Am. St. Rep. 351 ; Richmond, etc., R. R. Co. v. Snead, 19 Gratt. 354 ; s. C. 100 Am. Dec. 670 ; Dougherty v. Hunter, 54 Pa. St. 380 ; Steamboat Co. v. Mc- Cutcheon, 13 Pa. St. 13 ; Smith v. Smith, 62 111. 493 ; Bambrich v. Campbell, 37 Mo. App. 460 ; Ceeder v. Load. & Sons Lumber Co., 86 Mich. 541 ; S. C. 24 Am. St. Rep. 134 ; Griffins v. Land Co. , 3 Phila. 447 ; Siebe v. Joshua Hendy Ma- chine Works, 86 Cal. 390 ; Lancas- ter Co. v. Cheraw, etc., R. R. Co., 28 S. C. 134 ; Topeka Primary As- sociation v. Martin, 39 Kan. 750 ; s. c. 18 Pac. Rep. 941 ; Kenton In- surance Co. v. Bowman, 84 Ky. 430 ; s. c. 1 S. W. Rep. 717 ; Ex parte Sargeant, 17 Vt. 425 ; Car- roll v. Cone, 40 Barb. 220. As an illustration it may be stated that if a corporation is en- gaged in the manufacture and sale of a certain article, it will be presumed that its president has authority to make sales of that article in the ordinary course of its business. Horton Ice Cream Co. v. Merritt, 63 Hun, 628 ; s.C. 17 N. Y. Supp. 718. 2 Holbrook v. Fanquier, etc., Turnpike Co., 3 Cranch C. C. 425 ; Wait v. Nashua Armory Associa- tion, 23 Atl. Rep. (N. H.) 77 ; 14 L. R. A. 356 ; 34 Cent. L. J. 119 ; Mount Sterling, etc., Turnpike Road Co. v. Looney, 1 Met. 550 ; s. c. 71 Am. Dec. 491 ; First National Bank v. Kimberlands, 16 W. Va. 555; Hodge v. First National Bank, 22 Gratt. 51 ; Brooklyn Gravel Road Co. v. Slaughter, 33 Ind. 185 ; West- ern R. R. Co. v. Bayne, 11 Hun, 166 ; Bacon v. Mississippi Insur- ance Co., 31 Miss. 116; Walworth County Bank v. Farmers' Loan, etc., Co., 14 Wis. 325; Westerfield v. Radde, 7 Daly, 326 ; Mahone i\ Manchester, etc., R. R. Co., Ill Mass. 72; S. C. 15 Am. Rep. 9; Titus v. Cairo, etc., R. R. Co., 37 N. J. L. 98 ; Dawes v. North River Ins. Co., 7 Cow. 462 : Marine Bank v. Clements :; Bosw., 600 : Farmers' Bank v. McKee, 2 Pa. St. 318 : Westcott r. Atlantic Silk Co., 3 Met. 282. This rule would limit the func- 64 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. Under ikejlrst theory the president, as we have said in the note, has power to make sales, in the ordinary course of the business, of commodities in which it deals ; 1 to employ at- torneys to defend and prosecute ordinary litigation of the corporation ; 2 to transfer negotiable paper in the ordinary course of business, and for that purpose to indorse it and thereby bind the company ; 3 to purchase chattels used in the ordinary course of its business, 4 and to give the note of the corporation in payment; 5 to so acknowledge a debt as to take it out of the statute of limitations ; 6 to secure a debt due the company, even by a convey- ance of land to himself; 7 to authorize a broker to sell certain stock which the company has taken to secure a loan ; 8 and to assign mortgages payable to him- self given by shareholders to secure the payment of their respective shares. 9 Under the second theory the president of a corporation has no power to bind the corporation, that a note shall be given up at its maturity without payment ; 10 to agree to an agreement whereby in order to secure his release as an indorser, the security of a debt due his company will be impaired ; u to tions of a president to presiding 4 Sparks v. Dispatch Transfer over the directors and stockholders Co., 104 Mo. 531 ; S. C. 24 Am. St. at their respective meetings, and Rep. 351 ; 12 L. R. A. 714 ; 15 S. limit his power to deal with the W. Rep. 417 ; 34 Am. & Eng. Corp. public to the extent he is especially Cas. 373. empowered. Lyndon Mill Co. v. 5 Richmond, etc., R. R. Co. v. Lyndon Literary, etc., Institute, Sneed, 19 Gratt, 354 ; s. c. 100 Am. 63 Vt, 581 ; s. c. 25 Am. St. Rep. Dec. 670. 783 ; 22 Atl. Rep. 575 ; Steam Boat 6 Morgan v. Merchants' Bank, 13 < !o. v. McCutcheon, 13 Pa. St. 13. Lea, 234. 1 Borton Ice Cream Co. v. Mer- 7 Brown v. Mechanics, etc., Na- ritt, 03 Hun, 628; s. c. 17 N. Y. tional Bank, 58 Hun, 610, mem.; S,,,,,,. 7 is. s. C. 18 N. Y. Supp. 861 ; 35 N. Y. - Wei berbee v. Fitch, 117 111. 67 ; St. Rep. 665. American Insurance < '<>. '■. < takley, 8 Sistare v. Best, 16 Hun, 611. '.i Paige, 196 ; S. C. 38 Am. Dec. 561 « Yalk v. Crandall, 1 Sandf. 179. Reno Water Co. v. Leete, \7 Nev. l0 Brouwer v. Applehy, 1 Sandf. 1 58. ; Howland /■. Myer, :; N. Y. 290; " Gallery v. National Exchange Palmer v. Nassau Bank, 78 [11.380; Bank, 41 Mich. 169; s. c. 32 Am. Irwin v. Bailey, 8 Biss. 528; Caryl Rep. 149. v. McElrath, :; Sandf. 176. §60. OFFICERS PRESIDENT. 65 stay an execution held against a debtor of the company by using its name ; J to bind the corporation by acts done for himself personally ; 2 to make a contract for the purchase of materials to repair the company's buildings ; 3 to make an affidavit of local prejudice, in order to secure the removal of a cause of action to the United States courts ; 4 to change contracts authorized by the directors after they have been made; 5 to make admissions which will release the maker of a note given to the association ; 6 to accept an order on a third person in satisfaction of a note held by the company ; 7 to convey real estate owned by it ; 8 to commence an action on behalf of the corporation, or to appear for it, in court and thereby bind it by the result of the litigation ; 9 to confess a judgment against the corporation ; 10 to give the power of attorney to confess a judgment; 11 to sell the company's lands ; 12 to make an assignment of the company's property 1 Pick. 215 1 Spyker v. Spence, 8 Ala. 333. 2 Smith v. Los Angeles, etc., As- sociation, 78 Cal. 289 ; Wisconsin, etc., Bank v. Filer, 83 Mich. 496 ; s. c. 80 Mich. 67 ; Hall v. Auburn Turnpike Co., 27 Cal. 255 ; s. c. 87 Am. Dec. 75. 3 Lyndon Mill Co. v. Lyndon Lit- erary, etc., Institute, 63 Vt. 581 ; s. c. 25 Am. St. Rep. 783. 4 Mahone v. Manchester, etc., R. R. Co., Ill Mass. 72 ; s. c. 15 Am. Rep. 9. 5 Western R. R. Co. v. Bayne, 11 Hun., 166. 6 Hodge v. First National Bank, 22 Gratt. 51. 7 First National Bank v. Kimber- lands, 16 W. Va. 555. 8 Leggett v. New Jersey Manufac- turing Co., 1 N. J. Eq. 541 ; s. c. 23 Am. Dec. 728. 9 Ellsworth Woolen Manufactur- ing Co. v. Fance, 79 Me. 440 ; s. c. 10 Atl. Rep. 250 ; Globe Works v. Wright, 106 Mass. 207 ; Markey v. Mutual Benefit Insurance Co., 102 Mass. 78 ; White v. Westport Cotton 5 Manufacturing Co., s. c. 11 Am. Dec. 168. 10 Thew v. Porcelain Manufactur- ing Co., 5 S. C. 415; Adams®. Cross- wood Printing Co., 27 111. App. 313; Joliet Electric Light Power Co. v. Ingalls, 23 111. App. 45; Stokes v. New Jersey Pottery Co. , 46 N. J. L. 237. 11 Stokes v. New Jersey Pottery Co., supra. If the power is given under seal, the seal implies prima facie authority to execute the instru- ment, which may be disproved. Parker v. Receiver, 49 N. J. L. 465. If the president be authorized to purchase property and execute an obligation for the payment of the debt, he has authority to insert in the obligation a power of attorney to confess judgment on it. McDon- ald v. Chisholm, 131 111. 273; s. c. 23 N. E. Rep. 596; affirming S. C. 30 111. App. 176. 12 Fitzbugh v. Franco-Texas Land Co., 81 Tex. 306; s. c. 36 S. W. Rep. 108 ; Stokes v. New Jersey Pottery Co., 46 N. J. L. 237. (36 BUILDING AND LOAN ASSOCIATIONS Ch. VI. for the benefit of its creditors; 1 to consent to the appoint- ment of a receiver; 2 to release a debt due the company, much less give away its assets ; 3 to relieve against a forfeit- ure of shares for non-payment of dues ; 4 to bind the corpora- tion by a promissory note, when not given for a debt he was authorized to create ; 5 to borrow money and bind the com- pany for its payment, even if used in its business; 6 to dis- pose of the notes belonging to the association, 7 or to do any act which will have the effect of overturning or revoking an action of the directors. 8 Sec. 61 — Proof of Power to Act. The power of the president to act and bind the association may be shown to have been conferred by an oral vote of the board of directors or stockholders. 9 So it may be circum- proved by parol. 10 So the authority to act may be shown by stances alone. 11 1 Hoyt v. Thompson, 5 N. Y. 32n ; Walworth County Bank v. Farmers' Loan, etc., Co., 14 Wis. 325; Gibson v. Goldthwaite, 7 Ala. 281; 8. c. 42 Am. Dec. 592; Luse v. Isthmus Transit R. R. Co., 6 Ore. 125; s. c. 25 Am. Rep. 506; Usher v. Sutton, 31 Kan. 286. - Walters/'. Anglo-American Mort- gage, etc., Co., 50 Fed. Rep. 316. aOlney v. Chadsey, 7 R. I. 234; Bank of United States v. Dunn, 6 JVt. 51 ; PottS V. Wallace, 146 U. S. 689; Thompson v. McKee, 5 Dak. 172; 8. c. 37 N. W. Rep. 367. 4 Weeks V. Silver Islet, etc., Min- ing Co., 55 X. V. Supr. Ct. 1; s. c. 8 N. Y St. Rep. L10. But see In dianapolis Rolling Mill v. St. Leone, etc., R. R. Co., L20 U. 8. 256. • \\< Cull i b Moss, 5 I )eni<>, Cattron '-. Firsl Universalist Society, 46 la. 106; see Richmond, R. R. (!<>. r. Sliced, I!) ( Iratt. LOO Am. Dec. 670. 8 Life, etc., Insurance ( '<>. r. Me- chanii Fire Insurance < k>., 7 Wend. 31 ; Hyde v. Larkin, 35 Mo. App, 365. This last act holds that he can- not assign the matter of the company for the loan. 7 First National Bank v. Lucas, 21 Neb. 280. 8 Madison Insurance Co. v. Griffin, 3 Ind. 277; Tradesmen's National Bank v. Manhattan Lumber Co., 18 N. Y. Supp. 920. A court cannot presume that the president and secretary had author- ity to join in the execution of an instrument stating thai a person who had made a note to their building association was acting for a third person in so doing, and declaring such note to be the obligation of such party. Novak ». Vypomocny, etc., Ass'n, 68 111. A pp. (182. 9 Clark v. Pratt, 17 Me. 55. 11 Bank of United States v. Dan- didge, L2 Wheat. 64;Magill«. Kauff- man, I S. & R. 317; s. c. 8 Am. Dec. 11 Fifth National Bank ». Navassa Phosphate Co., 119 N. V. 256; s. c. § 63. OFFICERS — PRESIDENT. 67 Sec. 62 — Custom, Usages or Habit of Acting — Enlarging His Powers. If the public perceive the president of an association habit- ually exercising certain powers belonging to it, and no steps are taken to publicly restrain him, they have a right to rely upon his authority to act in other instances of the same character, and the corporation will be bound to any one inno- cently relying and acting upon the appearances thus held out. 1 Thus, if he has repeatedly borrowed money and given the obligation of the company for it, authority to secure a fur- ther loan may be inferred. 2 And the same is true of the indorsement and execution of notes, 3 and of drawing checks to pay debts of the association. 4 Sec. 63 — How lie should Execute Contracts. In order to escape personal liability, the president of an association, executing a contract of such association, should execute it with appropriate words, showing that it is the contract of the association, and not that of himself; and his merely adding to his signature his official title will not relieve him from personal liability upon it. 5 A distinction, 23 N. E. Rep. 77; McDonald v. Co. v. Fitzgerald, 137 U. S. 98; Chisholm, 131 111. 273; s. c. 23 N. E. s. c. 11 Sup. Ct. Rep. 36. Rep. 596; Sparks v. Dispatch Trans- 4 Fulton Bank v. New York, etc., fer Co., 104 Mo. 531; s. c. 24 Am. Co., 4 Paige, 127; Neifer v. Bank of St. Rep. 351 ; Cahill v. Kalamazoo Knoxville, 1 Head. 162. Mutual Insurance Co., 2 Dong. 5 Sturdivant v. Hall, 59 Me. 172; (Mich.) 124; s. c. 43 Am. Dec. 457; s. c. 8 Am. Rep. 409; Burlingame v. Brown v. Donnell, 49 Me. 421; s. c. Brewster, 79 111. 515; s. c. 22 Am. 77 Am. Dec. 266. Rep. 177; Hays v. Crutcher, 54 Ind. 1 Olcott v. Tioga R. R. Co., 40 260; Tannett v. Rocky Mountain Barb. 179; Sherman Center Town National Bank, 1 Colo. 278; 9 Am. Co. v. Swigart, 43 Kan. 292; s. c. 19 Rep. 156; Towne v. Rice, 122 Mass. Am. St. Rep. 137 ; Ceeder v. Loud & 67 ; Bank v. Cook, 38 Ohio St. 442 ; Sons' Lumber Co., 86 Mich. 541; Scott v. Baker, 3 W. Va. 285; Pent z S. c. 24 Am. St. Rep. 134; 49 N. W. v. Stanton, 10 Wend. 271 ; S. C. 25 Rep. 575; Fitzgerald, etc,. Construe- Am. Dec. 558; Savage v. Rix, 9 1ST. tion Co., v. Fitzgerald, 137 U. S. 98. II. 263; Dutton ». Marsh, L. R. 6 Q. 2 Martin ». Niagara Falls Paper B. 361; Brunswick-Balke-Collender Manufacturing Co., 44 Hun, 130; Co. v. Boutell, 45 Minn. 21; s. c. 47 Spengler v. Butterfield, 6 Colo. 356. N. "W. Rep. 261; Eaile v. Pierce, 32 3 Fitzgerald, etc., Construction Md. 327; s. c. 3 Am. Rep. 139; Boyd 68 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. however, must be drawn between the signatures of officers to the contracts of their banks evidenced by commercial paper; for this, by usage, the officer is not bound, although he sign or indorse a note in his own name, adding his official title. 1 But in the case of an ordinary corporation, a deed describing the grantors as a corporation, but signed by its president in his own name and with his own seal, is not the deed of the corporation, but the president's own private deed. 2 This case, however, seems to be not at one with more recent authorities. 3 If he execute a contract without authority, he will be personally bound for its performance. 4 Sec 64 — Discharging Duties of Other Officers. Where a statute, or the charter, or a by-law, requires a particular officer to perform a certain thing, the president cannot usurp such officer's authority and perform it. Thus, the president cannot authenticate an instrument which a statute requires the secretary to authenticate. 4 And a by- law giving " the general charge and direction of the business of the company, as well as all matters connected with the interests and objects of the corporation," does not empower him "to do an act which, by another by-law, is expressly given to a separate committee." 5 Sec. 05 — Declarations and Admissions. Where a president of an association has authority, either as a special or general agent of the association, to do a cer- tain act or acts, he has authority to bind the corpora- lion by his declarations and admissions. 6 Thus, if he have v, Johnston, 89 Tenn. 284; s. c. 14 Supp. 234; 47 N. Y. St. Rep. 576; 8. W. Rep. 804. Fitch c. Cunningham, 42 Hun, 590, i Slate Bank ». Fox, :} Blatchf. mem.; s. c. ION. Y. St. Rep. 17. 481; Folger v. Chase, L8 Pick. 63; 5 Twelfth Street Market Co. v. Houghton '. First National Bank, Jackson, 102 Pa. St. 269. 26 Wis. 668; s. o. 7 Am Rep. 107. See a case where a president was - Hutch i\ Barr, 1 Ohio, 890. held competent to act as secretary of '■'■ Episcopal Church v. Varian, 28 a meeting of shareholders of a cor- Barb. 644; Olcottfl. Tioga R.R. Co., poration. Budd v. Walla Walla 40Barb. L79; Elites. Puteif er, 4 Al- Printing, etc., Co., 2 Wash. Ty. 847. len, 165. 6 Bullock v. Consumers' Lumber li Mi, v. Campbell, 20 N. Y. Co. (Gal.), 81 Pac. Rep. 367. § 67. OFFICERS — PRESIDENT. 69 power to execute a deed, lie has power to point out the boundaries of the land conveyed, and thereby bind the corporation. 1 Sec. 66 — Notice to President as Affecting Corporation. Notice to the president of anything pertaining- to the duties of his office, or, where he acts as an agent, of anything per- taining to his agency, is notice to the corporation, and will bind it. Thus, the oral resignation of a director made to him, who had incapacitated himself for the office by a sale of all his stock, is notice to the company. 2 If, however, the notice affects him in his private capacity, and his personal interest is opposed to that of the company, then such notice is not notice to the company, and it is not affected by it. 3 Sec. 67— Liability. The president of a corporation is liable to third persons for losses sustained by them in dealing with it on the faith of his misrepresentations concerning its financial condition. 4 So, too, he is liable for any misrepresentation of facts form- ing a material inducement for entering into the contract. 5 But he is not liable for the acts of other officers of the cor- poration. 6 In the management of the affairs of the associa- tion he must exercise reasonable care and diligence to preserve the assets and prevent losses. 7 He must not seek to make a personal benefit for himself out of the powers 1 Holmes v. Turner's Falls Lum- v. Wcare, 79 la. 678; s. c. 44 N. W. ber Co., 150 Mass. 535; s. c. 23 N. E. Rep. 915. Rep. 305. 5 Clark r. Dunham Lumber Co., 86 2 Briggs v. Spaulding, 141 U. S. Ala. 220; 5 So. Rep. 560. 232; s. c. 5 Bkg. L. Jr. 41; 10 Rail. e Long r. Citizens' Bank, 8 Utah, & Corp. L. J. 62; 11 Sup. Ct. Rep. 104; s. c. 29 Pac. Rep. 878. 985. 7 Sullivan v. Lewiston Institute of 3 Barnes v. Trenton Gas Light Co., Savings, 56 Me. 507; "Williams v. Mc- 27 N. J. Eq. 33; see Winchester v. Kay, 46 K J. Eq. 25; s. c. 18 Atl. Baltimore, etc., R. R. Co., 4 Md. Rep. 824; Davis v. Memphis City 231. R. R. Co., 22 Fed. Rep. 883; Briggs * Tyler v. Savage, 143 IT. S. 79; v. Spaulding, 141 U. S. 132; s. c. 11 s. c. 12 Sup. Ct. Rep. 340; King v. Sup. Ct. Rep. 895; 10 Rail. Corp. L. Davis, 16 N. Y. Supp. 427; 61 Hun, J. 62. 427; 41 N. Y. St. Rep. 898; Hubbard 70 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. conferred upon him by the corporation, but must exercise them for its benefit in the utmost good faith. 1 He cannot speculate in claims against the association ; and, if he buy them up and make a profit out of them, he must account for the profits, not only to the shareholders but also to the cred- itors. 2 He cannot use the corporate funds for his own bene- fit ; and any creditor receiving them with notice of their origin will be liable to the association for the amount received. 3 If he receive property in satisfaction of a debt due the corporation, the property will be held by him in trust ; and he cannot claim it as his own. 4 This does not prevent him, however, from entering into contracts with the association where everything is open and fair and nothing concealed. 5 He may advance money to the corporation, even though it be insolvent to his knowledge, and, by contract entered into before or at the time of advancement, secure to himself a preference over its other creditors. 6 If he become interested with a customer of the association and allow him a loan upon insufficient security, he will be personally liable for any loss sustained. 7 If he convert the property of the association to his own use, he will be liable, just as any other agent of the association would be. 8 But he is not liable upon ultra vires contracts of the corporation, although he entered into them on its behalf. 9 Sec. 68 — Compensation. The President is always a member of the Board of Direc- tors, and, like them, he is not entitled to compensation for his services, unless some statute, or thecharter or bylaws of the association, or a contract with the association to which 1 Thomas v. Sweet, 37 Kan. 183; ° Bank Commissioners v. St. Law- s. c. 11 Pac. Rep. 545. rence Bank, 8 Barb. 436; Sanders v. -hi. Page, 11 Colo. 518; s. c. 19 Pac. :; Reed '. Hank of Newburgh, 6 Rep. 468a; Bush v. Wadsworth, 60 377. Mich. 255. 1 Markley v. Rhodes, 59 la. ~>7; 7 Oakland Bank v. Wilcox, 60 Cal. ilso VVarner v. .McMullin, 131 12(>; First National Bank v. Heed, 36 870; is Ail. Rep. L056, Mich. 263. Bradley v. Williams, 8 Hughes, H Hays v. Kenyon, 7 11. I. 136. Murray r. Valid. -rl.ilt ,89 Barb. B Hol1 V. WiiHidd Bank, 25 Fed. 140. Hop. 812. § 69. OFFICERS— VICE-PRESIDENT. 71 his own vote was not essential, has provided it for him. * If he perforin the service, a subsequent contract for com- pensation cannot be enforced against the association. 2 If a corporation become insolvent, a valid claim cannot be enforced against it for the president's salary, by the directors, even though a by-law ante-dating insolvency provides that he shall have such compensation as the board of directors shall determine. 3 The board of directors fix his salary, usually, without the aid of his vote. 4 But he may claim pay for services that are clearly outside the scope of his duties as president, although there be no contract touching them. 5 VICE-PRESIDENT. Sec. 69— Nature of Office. The vice-president acts in place of the president when the latter dies or is absent so that he cannot perform his duties, or resigns. The same presumption prevails touching the validity of his acts as does that concerning the acts of his superior. Thus if he execute a deed in the name of the corporation it will be presumed that he had authority to do so, the same as if the president had executed it. 6 If the directors be authorized to elect a vice-president, it is not necessary that a by-law create the office or provide for his election. 7 1 Citizens' Bank v. Elliott, 55 la. 5 Bartlett v. Mystic Biver Corpo- 104; s. c. 39 Am. Bep. 167: Martin- ration, 151 Mass. 433; s. c. 24 K E. dale«. Wilson-Cass Co., 134 Pa. St. Bep. 780; Toponce v. Corinne Mill, 348; 26 W. K Cas. 48; 19 Atl. Bep. etc., Co., 6 Utah, 439; s. c. 24 Pac. 680 ; 19 Am. St. Bep. 706. Bep. 534 ; Outterson v. Fonda Lake 2 Martindale v. Wilson-Cass Co., Paper Co., 49 N. Y. St. Bep. 556; supra; Ellis v. Ward, 137 111. 509; s. c. 20 N. Y. Supp. 980. s. c. 25 N. E. Bep. 530; McAvity v. It lias been held that the guaran- Lincoln Pulp, etc., Co., 82 Me. 504; teeing of the corporation's paper is s. c. 20 Atl. Bep. 82; Wood v. Lost not such extra services or entitles the Lake, etc., Co., 23 Ore. 20; s. c. 37 president to compensation therefor. Am. St. Bep. 651 ; 23 Pac. Bep. 848. Leavitt v. Beers. II. .V D. Supp. 3 McAvity v. Lincoln Pulp, etc., 221. But see the Indianapolis, etc., Co., supra. B. B. Co. v. Hyde, 122 Ind. 188; * Ward v. Davidson, 89 Mo. 445; s. c. 23 N. E. Bep. 706. s. c. 1 S. W. Bep. 846; Butts v. 6 Smith r. Smith, 62 111. 493. Woods, 37 N. Y. 317; Jones v. Mor- 7 Colman v. West Virginia Oil, etc., rison, 31 Minn. 140. Co., 25 W. Va. 148. 72 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. SECRETARY. Sec. 70— Status. The secretary of a building association is an officer of the corporation and not an officer of the board of directors. 1 He is not, however, " an employee " nor a " servant " within the meaning of a statute creating a preference in favor of the wages of a servant or employee of a corporation. 2 Sec. 71— Length of Office. He holds his office until his successor is duly elected, if the by-laws do not provide a different rule. 3 If a by-law pro- vide that the directors may remove him at pleasure, he accepts the office with a view that such officers may exer- cise this power ; and if they do, he cannot recover damages because of the fact that his term of office is cut shorter than what it would otherwise have been. 4 Sec. 72 — Custodian of Seal. The secretary is the custodian of the corporate seal, unless a statute or the by-laws provide otherwise ; and if he affix it to a paper the presumption is that he acted in pursuance of an authority duly given him. 5 Sec. 73 — Keeper of Corporate Records. The secretary of a corporation is the proper person to keep its records ; and therefore the proper witness by whom to identify such records, its books and papers. 6 He may use force to protect and retain possession of them, without being guilty of an assault and battery, not using unnecessary force. 7 lb- is not an insurer of the safety of the records, but only ;i bailee for hire; and if he exercise the care i Ehrenzeller o. Union ('anal Co., Co., 118 N. Y. 484: s. c. 29 N. Y. 1 Rawle, 181. St. Rep. !M4;23 N. E. Rep. 806; 7 a Wells /-. Southern Minnesota L. R. S. 82. i: i; ('..., I McCrary, l*; Coffin v. 6 Evans v. Lee, 11 Ncv. 194. i olds, ::7 N. V. cm. a Smith v. Natchez Steamboat Co., » South Bay Meadow Dam Co. z>. I How. (Miss.) 47!). <■ 80 Me. 547. 7 Ilcminway ». Ilcminway, 58 »D0U I Merchants' Insurance Conn. -1-1:5 ; s. c. 19 Atl. Rep. 766. § 75. OFFICERS — SECRETAKY. 73 required of the latter, he will not be liable if they be lost or destroyed. 1 Sec. 74 — Medium of Communication with the Public. The secretary is the agent through whom the corporation communicates with the public, and upon whose official state- ments the public may rely. 2 If he execute an obligation of the corporation, it is prima facie the act of the company, and its execution must be denied under oath if the plea of noii est factum is to be relied upon. 3 Sec. 75 — Power to Bind Corporation. The secretary has no inherent power to bind his corpora- tion, 4 although it may become liable by ratification of his acts. 5 He cannot bind the corporation by a "due-bill" in consideration of the surrender of his stock ; 6 nor bind it by a written acknowledgment that a certain sum is due the in- dividual to whom it is given ; 7 nor release a debtor of a cor- poration under an authority to renew a note he owed it ; 8 nor assign an account tbe association holds; 9 nor compro- mise a disputed claim ; 10 nor sign a draft against the corpo- ration's funds. 11 He may be, however, especially authorized to do all these things. But he cannot bind the society by the acceptance of the payment of dues or interest contrary to the provisions of the by-laws, 12 unless the practice of the society has been different from that prescribed by the by- 1 Mowbray «. Antrin, 123 Ind. 24 ; 8 Moshannon Land & Lumber Co. s. c. 23 N. E. Rep. 858. v. Sloan, 109 Pa. St. 532; s. c. 7 Atl. 2 Columbia Insurance Co. v. Mason- Rep. 102. heimer, 76 Pa. St, 138. 9 Read v. Buffum, 79 Cal. 77; s. c. But see British Mutual Banking 21 Pac. Rep. 555; 12 Am. St. Rep. Co. v. Charnwood Forest R. R. Co., 131. L. R. 18 Q. B. Div. 714; s. c. 56 L. I0 Delta Lumber Co. v. Williams, J. Q. B. 449; 35 W. R. 590. 73 Mich. 86; s. c. 40 N. W. Rep. 940; 3 Frye v. Tucker, 24 111. 180. 5 Rail. & Corp. L. J. 139. 4 Williams v. Chester, etc. , R. R. u First National Bank v. Hogan, Co., 5 E. L. & Eq. 497. 47 Mo. 472. 5 Fawcett v. New Haven Organ 12 Morrow v. James, 4 Mackey, D. Co. , 47 Conn. 224 ; New England In- C. 59. This was a case where the by- surance Co. v. DeWolf , 8 Pick. 56. laws required payment of dues to be 6 Gregory v. Lamb, 16 Neb. 205. made at general stated meetings '» 7 Sears v. Illinois Wesleyan Uni- and it was held that he could not versity, 28 111. 183. bind the association by accepting 74 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. laws, and he had followed that practice. 1 He cannot bind the society by payments that should be made to the treas- urer, according to the by-laws. 2 He cannot bind the society contrary to its will ; nor by his contract beyond the scope of his functions, nor by a contract ultra vires. Of course, the assent of the association to one of his contracts may be inferred, where he had prior thereto been making similar contracts on its behalf and it had received the benefit of them. 3 An agreement between a secretary and the surety of a borrower that the latter should be released in a certain contingency, is not binding upon the societ}', if there be no evidence to show that the agreement was made with the knowledge of its officers, or that the board of directors had authorized him to enter into the agreement, or that his dec- larations were made in the course of the business he was authorized to transact, and that the contingency had arisen. 4 But if the arrangement of the transaction be left with the society, it will be bound. 5 If the secretary agree with the borrower to insure the premises being mortgaged, the asso- ciation will be bound. 6 The mere fact that he has the books of the society in his charge, will not render his declaration binding on the society to the effect that only a certain amount is due on such mortgage. 7 Nor will the society be them at other times. VanWagen- Loan Association, 95 Pa. St. 101. en v. Genesee Falls, etc., Asso., See also Novak v. Vypomocny, 88 Hun, 4.'5 ; s. c. 84 N. Y. Supp. etc., Ass'n, 68 111. App. 682. If he 491, <> s X. Y. S. Rep. 498. * accept a note in settlement of ar- Haverson v. Cole, 6 W. R. 17. rearages, the association cannot Prairie State Loan and Building As- afterwards deny his power to agree sociation v. Gorrie, 64 [11. App. 325; to an extension, Dreschler v. Ful- affirmed, 170 111. 240 ; 48 N. E. Rep. ham, Colo ; S. C. 52 Pa. Rep. 1016. The rules required the sec- 685. retary to receive payment only in 5 Jones v. National Building As- oonjunction with the treasurer and sociation, 94 Pa. St. 215. one of the trustees, bul in practice 6 Chicago Building Society v. he alone received them; and pay- Cro well, 65 111. 453. Mr 1,1 to liim alone was held bind- 7 Johnston v. Elizabeth Building in ■■ on the society. : 1 1 1 « I Loan Association, 104 Pa. St. - Browne v. Sanders, 20 I). C. 394. But see London & County, 455; :-. c. 20 Wash. L. Rep. 277. etc., So. v. Angell, 65 L. J. Q. B. Chicago Building Society v . 194; and Harvey v. Muncipal Per- Crowell, 65 III. 453. manent, etc., So,, 53 L.J. Rep. Ch. •(,., r. Citizens' Building and 1126; s. c. L. R. 26 Ch. Div. 273. §76. OFFICERS — SECRETARY. 75 bound by his statements how many payments will be neces- sary to extinguish a mortgage; for that is only a mere mat- ter of opinion. 1 His power to receive money for the asso- ciation cannot be implied from the fact that lie had on other and previous occasions received money from members and paid it over at the weekly meetings, where the by-laws provide that all payments must be made to tin; treasurer. 2 He has no power to release a shareholder's liability on his bond given for a loan, and the shareholder is bound to know- that fact. 3 Where the directors of a building association authorize its secretary to place lands (of which the secretary was mortgagee) in the hands of an auctioneer for sale, it was held that he had no authority to withdraw the land from sale without a resolution of the directors to that effect.* Sec. 76 — Notice to, when not Binding on Corporation. Where the secretary and treasurer of a building associa- tion were authorized to make loans without the sanction of a board of directors, and he loaned money to a married 1 Hammerslough v. Building, Loan, etc., Association, 79 Mo. 80; Lake v. Security Loan Association, 72 Ala. 207. 2 Van Wagenen v. Genesee Falls Permanent Savings and Loan Association, 88 Hun, 43 ; s. c. 3-4 N. Y. Supp. 491. Nor is the as- sociation estopped on the ground that the secretaiy gave a pass book to the person who gave him the money to pay the association, and because on each occasion the secre- tary returned it to him with an entry as to the date of the regular meeting, and of the amount given him to pay the association. Id. See Prairie State B. & L. Ass'n 170 111. 240 ; S. c. 48 N. E. Rep. 1016. 3 Almon v. Busch, R. E. D. (N. S.) 362. 4 Ross v. Victorian Permanent Society, L. R. Eq.,8 Vict. (Austra- lia) 254. The secretary and president have no authority to withdraw funds from the custody of the treasurer and deposit them elsewhere. Citi- zens' Savings and Loan Association v. Ruhl, 55 111. App. 65. The secretary of a building asso- ciation cannot bind his association by the acceptance of a bill of ex- change, unless authorized so to do by the board of directors. Brown- ing v. British American Friendly Society, 3 Low. Can. Jur. 306. But the association is liable to the stockholders for his fraud prac- ticed upon them while performing his official duties. Prairie State Loan and Building Association v. Gorrie, 64 111. App. 325 ; Prairie State Loan and Building Associa- tion v. Nubling, 64 111. App. 329; s. c. 48 N. E. Rep. 1016. 76 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. woman, taking a mortgage on her land, with the knowledge that the money was for her husband, and that he was the real borrower ; it was held that the mortgage was void, but the association was not affected by the knowledge of the secretary and treasurer, and the part taken by them in the transaction, when the power to loan money was lodged in superior officers. 1 Sec. 77— Transfers of Stock. Beina: the custodian of the books and records of the asso- ciation, he has charge of the stock or transfer book. It is his duty to keep this book, subject to the control of the president and directors. It is his duty to see that all trans- fers of stock are properly made, either by the stockholders themselves or persons having authority from them. If upon presentation of a certificate for transfer, he is at all doubtful of the identity of the party offering it with its owner, or if not satisfied with the genuineness of a power of attorney produced, he can require the identity of the party, in the one case, and the genuineness of the document in the other, to be satisfactorily established before allowing the transfer to be made. In either case he must act upon his own responsibility. 2 Sec. 78 — Liability on Bond. The by-laws of a building association required dues and assessments to be paid to the secretary at weekly meetings, ;ind also required him to give bond for the faithful perform- ance of bis duties. It was held that the bond covered all money received by him in his official character, whether paid at the time required or not. 3 Where the secretary's bondis ex- pressly conditioned that be shall faithfully perform the duties of his office so long as be shall continue in office as secretary, i Freeman v. Mutual Building Y. 286 ; Pratt v. Taunton Copper and Loan Association, 90 Ga. L90; Co., 123 Mass. 110; s. c. 25 Am. B.C. 15 S. E. Rep. 758. Rep. 87; SewaU v. Boston Water ^Telegraph I '■-. y. Davenport, 97 Power Co., 4 Allen, 277; s. c. 81 U. S. ::<;'.); Pollock <•. National Am. Dec. 701. Bank, 7 N. Y. :.'7t; s. c. 57 Am. 8 Tylerv. The Old Post Associa- Dec. 520 ; Weaver v. Barden, 49 \. I ion, 87 [nd. 323. § 78. OFFICERS — SECRETARY. 77 the fact that he was appointed by a board of directors elected for only one year will not limit the liability of his sureties to that year, if his appointment be general and unlimited, and no duration of his term is fixed by statute or in the by-laws of the corporation. 1 The by-laws of the association enter into and form a part of his bond where it is conditioned that he " do all things required of him by the by-laws of said corporation which may be now in force, or which may be hereafter enacted by " the corporation. 2 But the sureties on his bond are not liable for the misappropriation by him of moneys belonging to borrowers, which has been secured by note and mortgage to the association and placed upon special deposit with him in bags marked with the borrow- er's name, and subject to their call. 3 The secretary of a building society employed a private clerk to transact the business of the society. The directors had drawn checks from time to time, which were handed over to this clerk by them and with the knowledge of the secretary, for the purpose of being paid by him to the withdrawing mem- bers ; but instead of being so applied they were misappro- priated by the clerk. It was held that the secretary was responsible for the acts of his clerk to whom he had en- trusted the moneys, in the same manner and to the same extent as if the directors had placed the moneys in his own hands, and he himself had handed them over to his clerk. 4 1 Humboldt Savings and Loan tary. Shinn v. Commonwealth, 73 Society v. Wennerhold, 81 Cal. 528 ; Va. 899. Metropolitan Loan Association v. The sureties of a secretary are Esche, 75 Cal. 513. not liable for money paid him 2 Humboldt Savings and Loan which under the rules ought not to Society v. Wennerhold, supra. have been paid him ; and it makes 3 Id. no difference that for years such 4 In re Mutual and Permanent had been the practice of the secre- Benefit Society, 48 J. P. 54. If he tary, acting under a resolution of forms the design, either before or the managing committee to re- at the time of the receipt of a check, ceive moneys of the society, even to appropriate it to his own use, although the sureties had notice, even with the intent of returning Sperry v. Dransfield, 2 N. Z. L. the amount thereof, he will be Rep. 319. guilty of larceny, although the A tender of a mortgagor in a for- check be payable to him as secre- eign building association is prop- 78 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. Sec. 79 — Compensation. In order to recover for his services it is not necessary that a secretary show an express contract with his company for compensation. 1 And herein the rule differs from that relat- ing to the president, vice-president, or a director, who must show an express contract entered into before the services were rendered. If a salary has once been provided for an office it continues until abrogated, notwithstanding change in the corporation take place, even though there be a con- solidation with another company. 2 For extra services he is not entitled to extra pay, if the salary was fixed when he accepted the office, even though such extra service were not in contemplation at that time. 3 If the company become in- solvent, he is not preferred to its general creditors. 4 If all the business, property and franchise of the corporation be sold (with his consent) his right to further compensation is at an end. 5 If his salary be fixed, by resolution when elected, at so much per month, the corporation may change the amount, even though he were employed for a year. 6 He cannot audit and pay his own claim against the association. 7 If a by-law of the association authorize the board of direc- tors to discharge the secretary at any time, they may do so even though he have a contract with the association for a definite period of time ; for he contracts with reference to this by law. 8 A verbal agreement to pay for his services is sufficient to enable him to recover them without showing a written agreement or one of record. 9 If his employment is erly made to the local secretary 5 Long Island Ferry Co. v. Ter- and treasurer of such association, bell, 48 N. Y. 427. Smith v. Old Dominion, etc.,Ass'n, c Bennett v. St. Louis Car Roof- >!<; S. E. Rep. 10; s. c. 119 N. C. ing Co., 23 Ms. App. 587. 257. 7 Peterborough R. R. Co., v. 1 Smith ''. Long fsland R. R. Co. Wood, 61 N. H. 418. L02 X. V. 190; reversing. : , .'. ) Hun, 8 Douglass v. Merchants' Insur- es, ance Co., 118 N. Y. 484; S. C. 23 N. - Rodney u. South R. R. Associa- E. Rep. 803; 7 L. R. A. 822; 44 tion, :: X. Y. St. Rep. 564 ; s. C. 11 Bun, 629, mem. : 9 N. Y. St. Rep. Daly, 70. 302. hi- v. Chartiers, 25 Pa. St. 337. 9 Outterson v. Fonda Lake Paper 1 Poole v. Wesl Poinl Butter, Co., 49 X. V. St. Rep. 556; s. c. 20 etc., V.ssociation, 80 Fed. Rep. 513. X. Y. Supp. 980. § 80. OFFICERS — TREASURER. 79 entered on record on the corporation's books, still it may be shown by parol that they were not to begin unless certain things were brought to pass and that they did not come to pass. 1 If a by-law provide that his compensation shall be iixed by the board of directors, he will be bound to accept, such an amount as they decide to give him, even though he has already performed services. 2 If the directors have the power to select a secretary, they have the power to fix the amount of his salary, unless some statute or by-law deprive them of that power ; or place it elsewhere. 3 If the appoint- ment be irregular, yet that will not deprive him of his right to the salary if the association have willingly accepted the services which he has rendered them; 4 but it is not liable if it has contested his right to the office, he thrusting his services upon it. 5 If the association enter upon a business prohibited by law, he is not entitled to pay for services thus rendered when it was violating the law. 6 TREASURER. Sec. 80 — Election — Status — Duties. The treasurer is usually elected by the board of directors, unless the statute, or charter or by-laws provide differently. A director may be elected to the office of treasurer. 7 He is 1 Sears v. Kings Co. Elevated R. The directors have no power to R. Co., 152 Mass. 151; S. C. 25 N. E. fix or enlarge the compensation of Rep. 98 ; Delano v. Smith Charities, the secretary, and take from loan 138 Mass. 63. or working funds, other than as 2 Eagle, etc.,Manf. Co. v. Browne, provided by the charter, money to 58 Ga. 240 ; Pfeiffer v. Lansberg pay him for extra service. Loan Brake Co., 44 Mo. App. 59. & Protection Ass'n v. Holland , 63 3 Waite v. Windham, etc., Co., 111. App. 58. 37 Vt. 608. An undertaking to pay an officer 4 Waite v. Windham, etc., Co., an exh-a fee or sum beyond that 36 Vt. 18. fixed by the charter is not binding 5 Waterman v. Chicago, etc., R. upon the corporation, although R. Co., 139 111. 658; 32 Am. St. extra services have been rendered. Rep. 228 ; 29 N. E. Rep. 689 ; 34 111. Id. App. 268. ' In re Corporation Officers, 3 Pa. ■ Dudley v. Collier, 87 Ala. 431 ; C. C. 188. s. c. 13 Am. St. Rep. 55 ; 27 Am. & Eng. Corp. Cas. 440 ; 6 Rep. 304. 80 BUILDING AND LOAN ASSOCIATIONS. CI). VI. the proper person to have custody of the association's funds, and the board of directors cannot deprive him of their cus- tody. The}? - may be restrained from so doing at the suit of a, shareholder. 1 Unless he have a special agreement with the association, he should keep its funds separate from his own, and pay them out or turn them over upon all proper demands. 2 If he pay over the funds of the association on ultra vires contracts, but pursuant to proper directions, he will not be personally liable for them. 3 Sec. 81 — Power to Contract for Association. Unless the by-laws, a statute, or the charter empower him so to do, the treasurer has no authority to enter into a con- tract on behalf of the association and bind it thereby. Not even to borrow money on its credit. 4 But where a building association had become insolvent and made an assignment for benefit of its creditors, the treasurer was held to be entitled to be reimbursed as a general creditor for moneys paid by him on orders drawn upon him before the assign- ment, for which the assignee had refused to allow him credit in the settlement of his account as treasurer. 5 So when he has advanced dues of members credited in his account, the creditors may reimburse him therefor. 6 But if he make payment out of his pocket, for a purpose author- ized by the directors, although not within the corporate powers, he cannot recover of the corporation if it refuse to reimburse him. 7 i Pearson v. Tower, 55 N. H. 215. 150 Mass. 207 ; s. c. 22 N. E. Rep. S.-.- Citizens' Savings and Loan 020; 5 L. R. A. 641 ; 28 Amer. & 4,880. v. Etuhl, 55 111. A|»|). (15. Eng. Corp. Cas. 579. 2 Second Avenue R. R. Co. v. •> < ihristian's Appeal, 102 Pa. St. Colman, '-'I Barb. 300. 184. ■Holmes V. Willanl, 125 N. Y. ,; I la nnony Building Association 75: s. c. 25 N. E. Rep. 1083; II v. Goldbeck, 13 W. N. Cas. 24. L. R. A. 170; Grimes V. Earrison, 7 In re Kent Benefit Building .1. Ch.828: 8.C.88 L. T. Rep. Society, 30 L. J. Ch. 785; 4 L. T. 115; 5 Jur. (N. 8.) 528 ; 20 Beav. Rep. (N. S.) 610; 1 D. & S. 417; 7 185; 28 J. P. 421. Jur. (N. S.) 1045; 9 W. R. 685. < Crafl v. South Boi ton 14. R. Co., § 84. OFFICERS — TREASURER. 81 Sec. 82 — Settlement of Debts — Release of Claims. The treasurer has no power to settle a claim the associa- tion holds against an individual ; nor to settle a claim such person holds against the association. 1 Nor can he execute a binding release of a liability to the association. 2 Thus he cannot release a claim for a loss on a policy in favor of the association. 3 Nor can he assign a mortgage given the asso- ciation to secure a debt due it ; 4 nor to assign a note due it. 5 Sec. 83 — Power to Bring Suit or Confess a Judgment. The treasurer of an association has full power to bring and maintain a suit to collect money of the association, without any previous order of the board of directors so to do. 6 But he has no power to confess a judgment against his corpora- tion. 7 Sec. 84 — Liability on Bond. The sureties of a treasurer are liable upon the bond they sign, although he does not sign it. 8 He cannot accept any- thing else in payment of dues or fines than money, and the acquiescence of executive officers cannot excuse him. " The executive officers or directors of this corporation had no authority," said the court, " to set aside the constitution and by-laws, or change the duties of the treasurer as therein prescribed, nor can they by their unauthorized acts relieve 1 Brown v. Weymouth, 36 Me. The cases in this section apply 414 ; State Bank v. United States to instances where no by-law or Pottery Co. , 34 Vt. 144. statute empowered the treasurer 2 Dedham Institute for Savings to perform such acts. v. Slack, 6 Cush. 408. 6 Bristol County Savings Bank v. 3 Carver Co. v. Manufacturers Keary, 128 Mass. 98. Insurance Co., 6 Gray, 214. 7 Stevens v. Carp River Iron Co., i Jackson v. Campbell, 5 Wend. 57 Mich. 427 ; 24 N. W. Rep. 572. 160. 5 Holden v. Upton, 134 Mass. 177 ; 8 Wilkes v. Clement, 9 U. C. Q. B. Holden v. Hoyt, 134 Mass. 181. 339; See Farmers and Mechanics' See also Com. v. Reading Savings Building Society v. Langstaff, 9 Bank, 133 Mass. 16 ; s. c. 43 Am. U. C. Q. B. 183. Rep. 495. 6 82 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. the sureties, from their responsibility to the corporations re- presenting all the members or stockholders, for a breach of the laws of the association." 1 One of the rules of a build- ing society provided for an annual audit of accounts, and that after the auditing and signing of the accounts the treasurer should not be considered answerable for mistakes, omissions, or errors afterwards found in the accounts. It was held that though the audited accounts must be received as prima facie evidence, the rule afforded no protection against the right of the members to impeach the accounts on the ground of fraud. 2 Where it appeared that the accounts had not been audited according to a statute, it was held that the treasurer could show that his accounts had been treated by the society as settled accounts. 3 If a treasurer serves with- out compensation, he is a gratuitous bailee, and as such is liable only for gross negligence. His official position and designation do not in any degree enlarge his liability as such bailee. If he gives a bond for the faithful performance of his duties, he is only bound to perform them in regard to the bailment, and his duty as such bailee is not changed by the bond. Where the by laws required all allowances to be made by the board of directors and the warrants to be signed by the president and attested by the treasurer ; it was held that the treasurer might pay the warrant thus signed and that he is not guilty of negligence in so doing, even if no allowance for it had been made. So where the secretary was the active manager of the association, and it was customary to pay the money to hitn for the withdraw- ing members, it was held that it would not be considered negligence <>n the part of the treasurer to pay the money to him forthe withdrawing members upon orders duly signed 1 People's Building and Loan As- is the rule for making the assess- sociation v. Wroth, 43 N. J. L. ment. rO; Mueller v. Cohen, 27 Ohio I,.. I. - llolgate v . Shutt, L. R. 27 Ch. 853. Div. Ill ; s. c. 53 L. J. Ch. 774; 51 In il„. in t case ii was also L. T. 133 ; 32 W. R. 773. held thai where fines and dues .-ire '■'■ llolgate v. Shutt L. R. 28 Ch. m, i actually received by the treas- Div. Ill; s. c. 54 L. J. Ch. 436 ; 51 urer, i be damage sustained I bereby L. T. 07:5 ; 49 J. P. 228. § 84. OFFICERS — ATTORNEY. 83 by the president and attested by the secretary. 1 If he deposit the funds of the association in a proper bank to its credit he will not be liable if the bank fail or is robbed, he using- ordinary care in selecting- a bank. 2 And the same is true where the board of directors direct him where to deposit the funds. Where he gives bond, holding at the time a definite term, the obligation of the bond, being in general terms conditional for the good behavior of the officer, it will not extend beyond such definite term. " To enlarge the responsibilities of sureties in the bond there must be express words in the conditions extending the time beyond the fixed term of the office. It is not enough that the recital should be, so long as he shall continue in office, or until a successor shall be appointed ; if the office is annual or lim- ited, the surety will not be prejudiced by a failure to ap- point, according to the requirement of the law or rule which regulates such appointment. His intention to assume a further and continuing liability must be found in the words of the bond. It is not a matter for inference, but for ex- position. The surety is only bound according to the words and the intentions expressed in his bond." But words in the bond providing that it shall be in force during the time the treasurer " shall continue in the said office, whether of the present term for which he has been duly elected, or of any succeeding terms to or for which he may be elected," continue the obligation of the bond so long as the treasurer continues to serve. 3 ATTORNEY. Sec. 85 — Appearance of Association by Attorney. If an association appear in a suit by attorney, it will i Hibernia Building Association 214; 2 P. C. 315 ; 38 L. J. P. C. v. McGrath, 32 W. N. Cas. 233 ; s. C. 35. Foster v. Essex Bank, 17 Mass. 154 Pa. St. 296 ; 26 Atl. Rep. 377. 479. Mowbray v. Antrim, 123 Ind. 24 ; 3 People's B. & L. Asso. v. Wroth, s. c. 23 N. E. Rep. 858. 43 N. J. L. 70. 2 Walker v. British Guarantee On the assignment of a treasurer Association, 21 L. J. Q. B. 257 ; 16 the society is not entitled to pref- Jur. 885 ; 16 J. P. 582 ; 19 L. T. erence. Ex parte Bailey, 5 D. G. (O. S.) 87; Giblin v. M'Mullen, 17 Mac. & G. 380; S. C. 18 Jur. 988; W. R. ; 21 445 ; L. T. Rep. (N. S.) 23 L. J. Bank. 36. 84 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. be presumed that the attorney thus appearing was duly authorized to represent the association. 1 So if the attorney appearing dismiss the suit, it will be presumed that he had authority so to do, and proof of express authority is not necessary. 2 Sec. 86— Who may Employ. The managing officers of a corporation may employ coun- sel to protect or secure the interests of the corporation without authority from the governing board. 3 Thus the president can do so, 4 or the treasurer. 5 Additional counsel may be employed, even though the general attorney have assigned to him a stated salary under provisions of the by- laws or a statute. 6 And payment for services rendered under a contract with the corporation not under seal will not be a misapplication of the corporate funds. 7 Sec. 87 — Retainer and Authority. His employment need not be under the seal of the cor- poration. 8 His consent to a judge's order referring a matter to arbitration is binding on the corporation, even though his employment be not under seal. 9 When employed, his ad- 1 State Bank v. Bell, 5 Blackf. 4 Id.; Savings Bank, etc., v. 127 ; Brookville Insurance Co. v. Benton, 2 Met. (Ky.) 240. Records, 5 Blackf. 170 ; Bridgton 5 Western Bank v. Gilstrap, 45 v. Bennett, 23 Me. 422. Mo. 419 ; Root v. Olcott, 42 Hun, 2 Union Manufacturing Co. v. 536. Pitkin, 14 Conn. 174. 6 Bank of Alabama v. Martin, 4 Strictly speaking, the solicitor of Ala. 615. an English Building Society is not 7 Regina v. Priest, 15 Jur. 554; one of the officers, but he may so s. c. 20 L. J. Q. B. (N. S.) 17 ; 1 act as the financial agent as to Eng. L. & Eq. 250. make himself an officer. In re 8 Regina v. Priest, 15 Jur. 554 ; Liberator Permanent Benefit s. c. 20 L.J. Q. B. (N. S.) 17; 1 Building Society, 71 L. T. Rep. 406 Eng. L. & Eq. 250. (1895). 9 Faviellr. Eastern Counties R. ; American InsuranceCo. v. Oak- R. Co., 2 Exch. 344; s. c. 17 L. J. lev, 9 Paige, 496; B.C. 88 Am. Dec. Exch. 297. See Hall v. Norwalk 561 ; Afumfordv. Bawkins, 5 Denio, Eire Insurance Co., 57 Conn. 105; 855 ; Southgate v. Atlantic, etc., s. c. 17 Atl. Rep. 356. It. R. Co., 61 Mo. 89; Western Bank v. Gilstrap, 45 Mo. 419. § 87. OFFICERS — ATTORNEY. 85 missions in court are binding upon the corporation. 1 lie may give notice for summary proceedings provided by statute. 2 His representation, although fraudulent, made to a person about purchasing shares of stock, concerning the condition of the association, are not binding upon it, and are not admissible to show that the purchaser relied upon them. 3 He cannot bind the association outside of the scope of his authority. Thus an applicant for a loan repre- sented to the association's attorney that he could make the searches incident to the examination of the title more quickly than any one else ; and he induced the clerk of the county recorder to issue a certificate, omitting one mortgage on each of the properties, assuring the clerk that these mort- gages were paid. The loan was made, but these omitted mortgages swept away the property. It was held that the attorney of the association could not bind it by authority given him by the applicant for the loan, such an act not being within the scope of his powers ; that the applicant was not the agent of the association so as to affect it with knowledge of the prior mortgage ; and that the recorder was liable for the loss. 4 The attorney cannot bind the society by placing on record a mortgage the directors have rejected ; 5 nor cancel a mortgage without their authority. 6 The secretary of an association directed a debtor of it to pay what he owed to its attorney, and the latter accepted payment by check of the debtor's agent, who then had the money on hand but afterwards became insolvent, the at- torney retained the check until after insolvency intervened. It was held that as between the debtor and the association, the latter must stand the loss. 7 1 Municipality No. 2 v. Orleans 5 Conway v. Log Cabins Perma- Cotton Press, 18 La. 122 ; 36 Am. nent Building Association, 52 Md. Dec. 624; Troy Turnpike Co. v. 137. McChesney, 21 Wend. 296. 6 Tradesman's Building and Loan 2 Curry v. Bank, 8 Port. (Ala.) Association v. Thompson, 31 N. J. 360. Eq. 536 ; s. c. 32 N. J. Eq. 133. 3 Burnes v. Pennell, 2 H. L. Cas. 7 Kilpatrick v. Home Building 497. and Loan Association, 119 Pa. St. * Peabody Building and Loan 30 ; s. c. 12 Atl. Rep. 754. Association v. Houdman, 89 Pa. St. A. borrowed money of one asso- 261. ciation to pay off another mort- 86 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. The association is liable to pay for his services. 1 A charge made to each applicant for a loan for the purpose of paying the attorney of the association does not render the transac- tion usurious or illegal. 2 ACTUARY OB SURVEYOR. Sec. 88— Officers. The actuary is an officer to apportion profits and losses, and to assist in the preparation of literature and perform such other duties as the directors may require. But few associations have such an officer. The officer who makes the valuation of properties upon which prospective loans are to be made is called in England the surveyor. Theoret- ically he is an expert in values. He is bound to exercise the same care as the attorney of the association ; and if he grossly and carelessly overvalue property, whereby a loss occur to the association, he will be personally liable. 3 DIRECTORS. Sec. 89— Essential to Association — Tenure of Office. Statutes or charters almost universally, if not quite, pro- vide the office of director and the mode of tilling it. But if gage, and an order was drawn to 2 Hopkins v. Baker, 2 P. & H. his order; he indorsed it to a (Va.) 110; Hoboken Building As- solicitor, with whom, by custom of sociation v. Martin, 13 N.J. Eq. the association, borrowers were 428 ; Smith v. Wolf, 55 la. 555. compelled to treat. The solicitor 3 If the surveyor make, negli- paid a surplus to A., retaining gently, an over-valuation of prop- enough to satisfy the mortgage, erty, and thereby the society is led which 1 if agreed to do. Themort- into making too high a loan and gage was not satisfied, and the soli- incurs a loss, he will be liable for citor absconded with the money, the loss. Moneypenny v. Hart- Leaving two mortgages against the land, 1 Cas. & P. 353; S. C. 2 Ibid. property. It was held that the 378. But in such a case he must solicitor acted as the agent of the be acting for and on behalf of the association, and that, it innst hear society and not on behalf of the the loss. Cunningham v. Mutual, borrower. Le Lievre v. Gould, 4 .tc.. \.8s'n, 6 Pa. Diet. Rep. 99. Rep. 274; s. c. [1893] 1 Q. B. 491; 1 Thompson v. Sullivan, 38 S. C. 62 L. J. Q. B. 353; 58 L. T. 620 ; 41 684 ; s. c. 22 Amer. & Eng. Corp. W. R. 468; 57 J. P. 484. Cas. 615. § 89. OFFICERS — DIRECTORS. 87 no statute were to do so the association would have the in- herent power to create the office, fill it and provide for future vacancies therein. 1 And if an association were to organize and provide that no directors should be elected until its principal work was performed, a court of equity would, upon proper application, order an election to be held, regardless of the fact that the appointed time had not arrived. 2 When elected the directors hold their offices until their successors are elected, whether or not a statute or by-law so provide. 3 This rule applies to a director elected to fill an unexpired term of a predecessor. 4 A mere failure to elect directors at the appointed time does not work a dis- solution of the society. " The stockholders compose the cor- poration, and a mere failure to elect officers at the time designated will not work a dissolution, nor will this court, in an action by the corporation against its debtor, look into the regularity or validity of the election of the corporate officers. That question cannot be thus tried collaterally. Where the fact of an indebtedness is established, a very clear case should be made out to enable the debtor to escape liability on the ground that the association has ceased to exist." 5 A statute providing that an omission to elect officers shall work a certain forfeiture has no application where the vacancies are occasioned by a judgment of ouster.' 5 A by-law providing that the directors shall serve one year " or " until their successors are elected will be construed to mean that they shall serve one year " and " until their suc- cessors are elected. 7 If the charter or a statute fix the tenure of office of director, it cannot be enlarged by the board by a by-law, nor can it be restricted against the 1 Hurlbut v. Marshall, 62 Wis. 5 Hoboken Building Association 590 ; s. c. 22 N. W. Rep. 852. v. Martin, 2 Beas (N. J.) Eq. 427. 2 Terwilliger v. Great Western 6 People v. Fleming, 59 Hun, Telegraph Co., 59 111. 249. 518 ; s. c. 37 N. Y. St. Rep. 157 ; 13 3 People v. Runkle, 9 Johns. 147 ; N. Y. Supp. 715. Foot v. Prowse, 1 Str. 625 ; Vernon 7 Chemical National Bank v. Society v. Hills, 6 Cow. 23 ; S. c. 16 Colwell, 132 N. Y. 250 ; s. c. 30 N. Am. Dec. 429 ; Hunter v. Sun Mu- E. Rep. 644 ; 14 Daly, 361 ; 14 N. Y. tual Insurance Co., 26 La. Ann. 13. St. Rep. 682. 4 Huguenot National Bank v. Studwell, 6 Daly, 13. 88 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. wishes of a majority of the shareholders, even though * a statute confer all the power of the association upon the directors, except the power to increase its capital. 2 If some of the members of the board disqualify themselves by transferring their shares of stock, an election of an entire new board will be illegal. 3 Sec. 90— Election. Directors are elected by the stockholders at their annual meetings, usually, or at such time and place as the statute, by-laws, or charter may fix. They may be elected at a called meeting if the statute, charter, or by-law so provide ; but that meeting must be called by the officers authorized to make the call. 4 If a by-law provide that the board of directors call such a meeting upon demand made, a demand upon each director separately is sufficient, and a demand upon the board as such is not necessary. 5 A de facto officer is competent to make the call, and the persons elected will be directors dejure. 6 If the proper officer or board refuse to make a call for an election where a statute or bylaw require it, he may be compelled to do so by mandamus, even though the election was required to be held on a certain day, at the suit of a stockholder. 7 The directors have no power what- ever to lill vacancies in their own board. 8 But a statute may confer upon the board such powers. If it do, and only ;i minority of the board remain in office, such minority cannot fill the vacancies. 9 In the absence of a provi' siou in a statute or in the by-laws fixing a day for the election, notice of the time and place, even the very hour, 1 Elkins v. Camden, etc., R. R. Barb. 697 ; People v. Cummings, 72 Co., :;<; X. -J. Km- 467. N. Y, 4133. 2 Nathan v. Tompkins, *2 Ala. Perhaps no previous demand for 437; S. <-. 'J S<>. Rep. 747. an election is necessary. Id. I:; acts are binding on all the stockholders. 1 Their contracts for and on behalf of the association are binding upon both the association and the person with whom they enter into them. 2 A de facto director incurs the same liability as a de jure director. 3 If, however, he has resigned the office, lie will not be liable, although his resignation has not been ac- cepted 4 Sec. 94— Must Act Together. In all matters involving a policy or judicial discretion, the board of directors cannot delegate their authorit}', and they must act together as a board and not individually. A majority cannot bind the corporation by their individual names ; they must come together in consultation, and act by what is the equivalent of a resolution. 5 An act other- wise valid, but which is not binding on the corporation, can- not be satisfied " by individual consent of a majority of the board." 6 Thus a deed of a corporation signed by every member of the board of directors is invalid if it was not 1 Boardman v. Keystone Stand- ard Watch Co., 8 Lane. L. Rev. 25; Rockville, etc., Turnpike Co. v. Van Ness, 2 Cranch C. C. 449; Ohio, etc., R. R. Co. v. McPherson, 35 Mo. 13 ; s. c. 86 Am. Dec. 128 ; Thames Haven Dock, etc., Co. v. Hall, 3 Eng. Ry. Cas. 441. 2 Wilson v. Kings County Ele- vated R. R. Co., 114 N. Y. 487; s. c. 21 N. E. Rep. 1015 ; 24 N. Y. St. Rep. 81 ; 6 Rail. & Corp. L. J. 324 ; 40 Alb. L. J. 346. 3 Halstead v. Dodge, 51 N. Y. Supr. 169 ; Newcomb. v. Reed, 12 Allen, 362 ; Squires v. Brown, 22 How. Pr. 35 ; Pearsons v. Wheeler, 55 N. H. 41 ; Steam Engine Co. v. Hubbard, 101 U. S. 188. 4 Chandler v. Hoag, 5 T. & C. 197 ; S. c. 2 Hun, 613. A member of a building associa- tion is charged with notice that its charter prohibits the directors alone from making contracts in behalf thereof. Citizens' Savings, Building and Loan Associations, 55 111. App. 65. 5 Cammeyer v. United German Lutherian Churches, 2 Sandf . Ch. 186 ; Ross v. Crockett, 14 La. Ann. 823. But see In re Bonellis Tele- graph Co., 12 Eq. 246 ; s. c. 40 L. J. Ch. 567 ; 19 W. R. 1022. 6 First National Bank v. Drake, 35 Kan. 564 ; s. c. 11 N. W. Rep. 445 ; 57 Am. Rep. 193 ; Junction R. R. Co. v. Reeve, 15 Ind. 236 ; McCortle v. Bates, 29 Ohio St. 419 ; s. c. 23 Am. Rep. 758 ; Edgerly v. Emerson, 23 N. H. 555 ; s. c. 55 Am. Dec. 207 ; Harrington v. Dis- trict Township, 47 la. 11 ; First National Bank v. Christopher, 40 N. J. L. 435 ; s. c. 29 Amer. Rep. 262 ; In re Marseilles R. R. Co. L. R. 7 Ch. 161. 9-1 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. authorized by a resolution adopted at some meeting of the board. 1 Likewise the individual declarations of the directors does not bind the association. 2 Sec. 95 — Individual Director's Powers. An individual director, when not duly appointed agent for that purpose, has no authority as a director to bind his cor- poration, 3 even though he own a majority of its shares. 4 Nor can he bind it by his declarations, nor by a construction put upon its contracts. 5 Where two directors, but not con- stituting a quorum, were present at an interview between a contractor and the corporation's agent, for a particular pur- pose, it was held that this was no evidence of the assent of the corporation to an arrangement made by the agent which exceeded his powers. 6 Sec. 96— Voting »y Proxy. A director cannot vote at a board meeting by proxy. It 1 Baldwin v. Canfield 26 Minn. 43. See also Butler v. Cornwall, 22 Conn. 335 ; D'Arcy v. Tamar, etc., R. R. Co. L. R., 2 Exch. 158 ; s. C. 2 Hurl & C. 463 ; 36 L. J. Exch. (N.S.) 37; 14 W. R. 96, In re County Life Insurance Co., L. R. 5 Ch. 288. 2 Cannon River Manf. Associa- tion v. Rogers, 51 Minn. 388 ; s. c. 53 N. W. Rep. 759. That usage may change all this, see Bank of Middlehury, v. Rut- land, etc., R. R. Co., 30 VI, l.V.t, and Waite v. Windham County Mining Co. 37 Vt. 608. 8 Chicago, etc., R. R. Co. v. James, 22 Wis. L94 ; National Bank v. Norton, 1 Hill. 572; Hartford Bank v. Hart, 3 Daj (Com) 491 ; s. \ni. Dec. 274 Shackelford v. New Orleans, etc., R. R. Co., 37 Miss. 202 ; Harper y. < ialhoun, 7 How. (Miss.) 208 ; Filon v. Miller Brewing <'o., r> N. Y. Supp. ■">; ; s. <■. 38 N. Y. St. Rep. en'.'; Bank of Healdsburg v. Bailhache, 65 Cal. 327 ; Browning v. Hinkle, 48 Minn. 544 ; s. c. 31 Am. St. Rep. 691 ; 51 N. W. Rep. 605 ; Cascade, etc., Insurance Co. v. Journal Pub. Co., 1 Wash. 452; s. C. 25 Pac. Rep. 331 ; Doyle v. Mizner, 42 Mich. 332 ; Lockwood v. Thunder Bay River Boom Co., 42 Mich. 536; Deadrick v. Wilson, 8 Baxt. 108 ; Kupfer v. Soutli Parish, 12 Mass. 185. 4 Allemong v. Simmons, 124 Ind. L99; s. c. 23 N. E. Rep. 768. & Hartford Bridge Co. v. Granger, 4 Conn. 142. 6 Barcus v. Hannibal, etc. , Plank Road Co., 26 Mo. 102. See also Waite v. Windham County Mining Co., 36 Vt. 18. Of course a director may act as agent of a corporation, when au- thorized by the board to do so, and biinl it by his contract. Goodwin r. I 'nion Screw Co., 34 N. H. 378 ; N.ilional Security Bank v. Cush- § 97. OFFICERS — DIRECTORS. 95 is his duty to attend the board's meeting and consult with his fellow directors ; and to allow him to vote by proxy would be to allow him to evade such duty. 1 Sec. 97 — Majority Rule — Quorum. Unless some statute or a by-law provide otherwise, a majority of all the directors may rule the corporation; and a less number than that are incompetent to transact busi- ness. 2 It takes a majority of all the directors to constitute a quorum. 3 Thus where there were five directors provided for by statute, and at a meeting only two were present and one Avhose resignation had been accepted at a previous regular meeting, it was held that they could not transact business. 4 A statute which declares that at any regular meeting a majority of those present shall be competent to transact the business of the corporation, does not authorize a minority to act. 5 Where a majority of the directors have assembled, a majority of that majority may transact business and bind the corporation. 6 If the affairs of a corporation are intrusted to the management of not less than a fixed number of directors, then it is not bound by the act of a fewer number, although that number constitutes a majority of them. 7 Any business transacted by a board of directors man, 121 Mass. 490; Holmes v. Mo. App. 555; Edgerly v. Emer- Board of Trade, 81 Mo. 137. son, 23 N. H. 555 ; s. C. 55 Am. 1 Craig Medicine Co. v. Mer- Dec. 207. chants' Bank, 59 Hun, 561 ; 14 N. Y. 4 Wickersham v. Crittenden, 93 Supp. 16 ; 36 N. Y. St. Rep. 923. Cal. 17 ; s. c. 28 Pac. Rep. 788. 2 Attorney-General v. Abbott 5 Ex parte Willcocks, supra. 154 Mass. 323 ; s. C. 28 N. E. Rep! 6 Id. ; Cotton v. Davis, 1 Stra. 346 ; 13 L. R. S. 251 ; Booker v. 53 ; Buell v. Buckingham, 16 la. Young, 12 Gratt. 303 ; Wells v. 284 ; s. C. 85 Am. Dec. 516 ; Foster Rahway, etc., Co., 19 N. J. Eq. v. Mullanphy Planing Mill Co., 92 402 ; Despatch Line v. Bellamy Mo. 79 ; s. c. 4 S. W. Rep. 260 ; Manf. Co.,12N. H. 205; s. c. 37 Despatch Line v. Bellamy Mf. Co., Am. Dec. 203; Cram v. Bangor, 12 12 N. H. 205; S. c. 37 Am. "Dec. Me. 354. 203; Cross v. Fisher [1892] 1 L. R. 3 Ex parte Willcocks, 7 Cow. 477 ; S. C. 06 L. T. 448 ; 8 L. T. 402 ; S. C. 17 Am. Dec. 525 ; People R. 230 ; 56 J. P. 372. v. Walker, 2 Abb. Pr. 425; s. c. 23 ' Carel v. Carr, 1 C. B. (N. Y.) Barb. 304 ; Hax v. Davis Mill Co., 197 ; S. c. 2S L. T. 124 ; 26 L. J. C. 39 Mo. App. 453 ; St. Louis Coloni- P. 113 ; Bottomley's Case, L. R. 16 zation Association v. Hennessy, 11 Ch. Div. 681. 96 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. when less than a majority are present is void ; l nor can less than a majority change the terms of a valid contract pre- viously entered into by a board having a majority present when it was executed. 2 If there be a vacancy, that vacancy must, however, be counted in determining the number neces- sary to constitute a quorum. 3 But if a member be dis- qualified to hold the office, yet he may be counted for the purpose of obtaining a majority ; ami if it is only by count- in^ his vote that a measure is carried bv a maiority of those present, still the act will be valid, 4 unless it be a transaction in which he is personally interested. 5 If a statute prescribe the number of directors and give them power to adopt such by-laws as they should adjudge necessary, the board may adopt a by-law prescribing what number should constitute a quorum, though that number in fact be less than a majority of their number. 6 If more directors be elected than the statute, charter or by-laws authorizes, still their acts will be valid, unless the stockholders attack them. 7 Sec. 98 — Presumption Concerning Acts of Board. " "When the act purports to be the act of the board, it may 1 Coryell v. New Hope, etc., Co., 6 Hoyt v. Thompson, 5 N. Y. 320. 9N. J.Eq. 457; Ex parte Morrison, 7 Hax v. Davis Mill Co., 39 Mo. 11 Jur. 719 : Junction R. R. Co. v. App. 453. Reeve, 15 Ind. 236. The board of directors cannot 2 Tennessee, etc., R. R. Co. v. expel one of their number. State East Alabama R, R. Co., 73 Ala. v. Ohio, etc., R. R. Co., 6 Ohio C. 426. C. 414. 3 Rex v. Devonshire, 1 B. & C. That usage may change the ma- G09. jority rule, see Lyster's Case, L. I f the Board of Directors au- R. 4 Eq. 233 ; Lane v. Brainard, 30 thorize a committee to enter into Conn. 56. So when the words of a contract, at least a majority of the charter are doubtful. Rex v. thai com in it t.. 93 Mich. Watts. 385 ; s. c. 26 Am. Dec. 75. 53 N. W. Rep. '-'is. *Sargeant v. Webster, 13 Met. »Buell v. Buckingham, 16 [a. 197 ; S. C. 46 Am. Dec. 743. .■-I , lm.Dec.516; Foster B Bank of Maryland v. Ruff, 7 [ullanphy Planing Mills Co., 92 Gill & J. 448 ; Glen's Falls Paper Mo. 79; 3.C. 1 S. W. Rep. 260 ; < !ity ( !o. V. White, 18 Hun, 214. <»f St. l.ouis v. Alexander, 23 Mo. 6 Despatch Line v. Bellamy Mf. ter Turnpike Co. v. Co., 12 X. H. 205; s. c. 37 Am. § 104. OFFICERS — DIRECTORS. 99 special meeting, the acts of the board are not binding on the corporation. 1 Sec. 103— Meetings Outside of State. Meetings held outside of the state, if duly called, are valid ; and business then transacted cannot for that reason be impeached. 2 Sec. 104 — Board must be duly Assembled — Notice. Before a board of directors can transact business binding on the corporation, it must be duly assembled. 3 Thus if a statute require the president to call a meeting, and if there be more than two directors, such directors cannot call a meeting so long as there be a president. 4 A notice for stated meetings is not necessary where the by-laws fix the time and place. 5 All the members must be notified, when notice is required, 6 but all need not be present. 7 The object of the meeting need not be stated, especially for ordinary transactions. 8 The notice should be received personally, or left at the director's usual place of residence, unless a statute or bylaw provide differently. 9 Directors, Dec. 203 ; Hoyt v. Bridgewater Pac. Rep. 153 ; Reilly v. Oglebay, Copper Mf. Co., 6 N. J. Eq. 253; 25 W. Va. 36; Smith v. Dorn, 96 Hillyer v. Overman, etc., Co., 6 Cal. 73 ; s. c. 30 Pac. Rep. 1024. Nev. 51. Contra, State v. Smith, 4 Smith v. Dorn, supra. 48 Vt, 266. 5 state v _ Bonnell, 35 Ohio St. 10 ; 1 Gordon v. Preston, 1 Watts. "Warner v. Mower, 11 Vt. 385 ; Pike 385 ; S. C. 26 Am. Dec. 75 ; Stow v. Co. v. Rowland, 94 Pa. St. 238 ; Wyse, 7 Conn. 214 ; s. c. 18 Am. Doyle v. Mizner, 42 Mich. 332 ; Dec. 99 ; Despatch Lineu. Bellamy State v. Ferguson, 31 N. J. L. 107. Mf. Co., supra.; Lockwood v. Me- 6 Commonwealth v. Cullen, 13 chanics' National Bank, 9 R. I. 308 ; Pa. St. 133 ; S. C. 53 Am. Dec. 450. s. c. 11 Am. Rep. 253. 7 Story v. Furman, 25 N. Y. 214. 2 Ohio, etc., R. R. Co. v. Mc- 8 Savings Bank v. Dove's, 8 Conn. Pherson, 35 Mo. 13 ; s. c. 86 Am. 191. Dec. 128 ; Wood Hydraulic, etc., That the directors may dis- Co. v. King, 45 Ga. 34 ; Wood v. regard a by-law they themselves Boney, N. J. ; s. C. 21 Atl. have enacted concerning notice, Rep. 574; McCall v. Byram Mf. see Samuel v. Holladay, 1 Woodw. Co., 6 Conn. 428 ; Arms v. Conant, 400. 36 Vt. 744. 9 Bank of Little Rock v. McCar- 3 Thompson v. Williams, 76 Cal. thy, 55 Ark. 473 ; 18 S. W. Rep. 153 ; s. C. 9 Am. St. Rep. 187 ; 18 759 ; 29 Am. St. Rep. 60. 100 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. however, out of the state need not be notified. 1 "Where a regular meeting adjourns over to an adjourned meeting all the absentees must be notified of such adjourned meeting. 2 Sec. 105 — Directors Cannot Delegate Power. In all matters involving personal trust or discretion, the board of directors cannot delegate their powers. 3 Thus the association cannot delegate to an agent the power to sell land it owns upon such terms and for such a price as he deems best. 4 Nor can the directors delegate power to an officer of the corporation to make assessments on the stock of the shareholders. 5 But the board has the power to delegate mere ministerial power. 6 Thus they may authorize the president to borrow money, and execute the note of the corporation for it. 7 They may appoint one of their own members agent to perform minis- terial duties. 8 But the board cannot invest an agent with the permanent and supreme control of the corporation ; 1 Chase v. Tuttle, 55 Conn. 455 ; s. c. 12 Atl. Rep. 874 ; 3 Am. St. Rep. 64. If all be not notified, the proceed- ings will be void. Doernbecher v. Columbia City Lumber Co., 21 Ore. 4 Gillis v. Bailey, supra. Contra, Burrill v. Nahant Bank, 2 Met. 163 ; s. c. 35 Am. Dec. 395 ; Whitney v. Union Trust Co., 65 N. Y. 576; Burr v. McDonald, 3 Gratt, 215. 5 Ex parte Winsor, 3 Story, 411 ; 573 ; S. C. 28 Pac. Rep. 899 ; 28 Silverhook Road v. Greene, 12 R. Am. St. Rep. 766 ; 11 Rail & Corp. I. 164 ; s. c. 7 Repr.187. L. J. 153. 2 Thompson v. Williams, 76 Cal. 153 ; 18 Pac. Rep. 153 ; 9 Am. St. Rep. 187. The notice calling the meeting must be reasonable. Ex parte Smith, ::'.» Ch. Div. 546; s. c. 58 L. .1. (h. l;;| . 60 L. T. 97; 4 T. L. R. 466, 712. ; Gillia v. Bailey, 21 N. II. 149; Despatch Line v. Bellamy Mf. Co., 12 N. II. 805; s. c 87 Am. Dec. 20:;-, Tippets v. Walker, l Mass. 505; Female Orphan Asylum y. Johnson, 48 Me. 180; In re Leeds Banking Co. L. U. 1 Ch. A pp. 561 ; I Mm. (N. 8.) 855; 14L.T. (N.S.) 717. That the board of directors of a building association may make such a levy, see Wohlford v. Citi- zens' Building Loan Association, 140 Ind. 662 ; S. c. 40 N. E. Rep. 694. 6 Northampton Bank v. Pepoon, 11 Mass. 288; Spear v. Ladd, 11 Mass. 94 ; Stevens v. Hill, 29 Me. 133. 7 Fleckner v. Bank of United States, 8 Wheat, 338 ; Ridgeway v. Farmers' Bank, 12 S. & R. 256 ; B. C. 14 Am. Dec. 681. 8 Merrick v. Reynolds, etc., Co., 101 Mass. 381. § 106. OFFICERS — DIRECTORS. 101 and it may be doubted if the stockholders themselves can do so. 1 They may, however, contract through a committee of their own members. 2 But if a duty be imposed upon the president of the association, the board cannot shift it to another person. 3 Authority conferred upon a committee to convey real estate, includes authority to execute a proper deed and attach the seal of the corporation to it. 4 If a committee be authorized to collect a claim, it may bring suit in the name of the corporation for that purpose, and of course employ an attorney if necessary. 5 If the committee exceed their powers, but the board of directors acquiesce in their action, the corporation will be bound. 6 But if a material fact has been concealed, and the board has not been guilty of negligence in not discovering it, the corpora- will not be bound by a seeming acquiescence of such board. ~ Sec- 106 — Directors' General Powers. The directors, if there be no restrictions in the charter, or statute or by-laws, have all the authority of the corporation itself in the conduct of its ordinary business. 8 But the stockholders cannot commit any authority to the directors not given by the charter of incorporation or a statute, and 1 Queen v. Second Avenue Ry. 6 St. Louis Domicile, etc., Asso- Co., 14 How. Pr. 281 ; 3 J. & S. ciation v. Augustin, 2 Mo. App. 154 ; Flagstaff Silver Mining Co. v. 123. As to arbitration, see Mur- Patrick, 2 Utah, 304. dock v. Blesdell, 106 Mass. 370 ; 2 Berks, etc. , Co. v. Myers, 6 S. Fryeburg Canal v. Frye, 5 Me. 38. & R. 12 ; S. C. 9 Am. Dec. 402 ; 6 McNeil v. Boston Chamber of Palmer v. Gates, 3 Sandf. 137 ; Commerce, 154 Mass. 277 ; s. c. 28 Sheridan Electric Light Co. v. N. E. Rep. 245. Chatham National Bank, 127 N. 7 Wardell v. Union Pacific R. R. Y. 517 ; s. c. 28 N. E. Rep. 467 ; 40 Co., 4 Dill. 330. N. Y. St. Rep. 311 ; Union Pacific Members of committees are per- R. R. Co. v. Chicago, etc., R. R. sonally liable for losses occasioned Co., 51 Fed. Rep. 309. by their negligence. Williams v. 3 Weidenfeld v. Sugar Run. R. McKay, 46 N. J. Eq. 25 ; S. c. 18 Co., 48 Fed. Rep. 615. Atl. Rep. 824. That the delegation of power 8 Bank v. Rutland, etc., R. R. will not be presumed, see Tippets Co., 30 Vt. 159 ; Stevens v. Davi- v. Walker, 4 Mass. 595. son, 18 Gratt. 819 ; S. C. 98 Am. 4 Burrill v. Nahant Bank, 2 Met. Dec. 692. 163 • s. c. 35 Am. Dec. 395. 102 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. their vote to do so is a nullity. 1 The public have a right to assume that the directors have all the power conferred upon them by the charter or governing statute, and if a by-law, adopted by the stockholders, curtail that power, a person dealing with the corporation will not be bound by the by- law unless it be actually brought to his notice. 2 Neither can a by-law confer power upon the board of directors when the charter has placed the particular power in the member- ship of the corporation. 3 And power given to a corpora- tion in its charter to adopt by-laws touching " the time, manner, and terms," upon which a certain act may be done will not authorize it to adopt a by-law in contravention of the general law of the state. 4 The management of the busi- ness of a corporation is confined to the directors, unless the charter or a statute place it elsewhere, and they cannot be deprived of that right by the stockholders, 6 nor can the stock- holders instruct them. ]STor can the stockholders join an- other officer with them nor compel them to act with one not a director. 6 The directors in such matters may disregard the will of the stockholders. 7 But the stockholders may t im ns; tct business at its regular meetings which is of an ex- traordinary character, such as the board of directors have no power to exercise ; and if they do attempt to exercise it the stockholders may ratify their acts by the mere adoption of them. 8 The directors, without the consent i Wyman v. Hallowell, etc., 5 W. & S. 233 ; Dayton, etc., E. R. Bank, 14 Mass. 58 : s. c. 7 Am. Co. v. Hatch, 1 Disney, 84. Dec. 194; Salem Hank v. Glouces- 6 Charlestown Boot, etc., Co. v. ter Bank, 17 Mass. 1 ; S. c. 9 Am. Dnnsmore, 60 N. H. 85 ; Cann v. Dec. 111. Eakins, 23 N. S. 475. 2 Union Mutual Fire Insurance 7 Commonwealth v. St. Mary's Co. V. kVyser, 32 N. II. 313; S. C. Church, S. & R. 508; German 64 Am. Dec. 375; Campbell v. Evangelical Congregation i\ Press- Merchants' [nsurance Co., 37 N. ler, 14 La. Ann. 811 ; Union Turn- II. II ; s. c. 72 Am. Dec 324 ; Sul- pike Co. v. Jenkins, 1 Caines, 881. livan v. Triunfo Gold, etc., Co., 8 Forbes v. San Rapal Turnpike 28 < '.i I. Co., 50 Cal. 340; Eureka Iron, etc., ; /•:./■ parte Winsor, 8 Story, Works v. Basnahan, 60 Mich. 332 ; III. Burr v. McDonald, 3 Gratt. 215; 4 Seneca County Bani v. Lamb, Union Pacific R. R. Co. v. Chicago, 26 Barb. 595. etc., R. R. Co., 51 Fed. Rep. 309; '■ Dana r. I'.ank of United States, S. <\ -17 Fed. Rep. 15, affirmed. § 106. OFFICERS — DIRECTORS. 103 of the stockholders have no power to increase the capital stock of the corporation. 1 And this is true even if the charter vests all the powers of the corporation in the board. 2 Nor can the directors reduce the capital stock. 8 Not having the power to change the charter of their cor- poration, 4 the board of directors have no power to apply to the legislature for a change in that instrument, and if they do the corporation will not be bound by such amendments when made. 5 Nor can the board of directors by indirection increase the stock of the association ; 6 nor make a general assignment of the assets of the association to pay its debts. 7 If the association has power to borrow money, the board of directors may do so, 8 and they may secure such debt by as- signing mortgages and bonds given to the association. 9 They have authority to levy an assessment on stock when it is necessary to equalize the several stockholders of a build- ing association. 10 They cannot give away the assets of a corporation ; n but the} r have the power to compromise dis- puted claims. 12 They cannot use the funds of the associa- tion to defend or prosecute the rights of an individual. 13 1 Railway Co. v. Allerton, 18 8 Fleckner v. Bank of United Wall, 233 ; Gill v. Balis, 73 Mo. States, 8 Wheat. 338 ; Ridgway r. 424. Farmers' Bank, 12 S. & R. 25(5 ; 2 Id. ; Heath v. Erie R. R. Co., 8 s. c. 14 Am. Dec. 681 ; Tripp v. Blatch. 347. Swanzey Paper Co., 13 Pick. 291. 3 Percy v. Millaudon, 8 La. 568 ; 9 North Hudson, etc., Associa- Hartridge v. Rockwell, R. M. tion v. First National Bank, 79 Charlt. 260. Wis. 31 ; s. c. 11 L. R. A. 845 ; 47 4 Starks v. Burke, 9 La. Ann. N. W. Rep. 300 341. 10 Wohlford v. Citizens' Building 5 Marlborough Mfg. Co. v. Smith, Loan Association, 140 Ind. 662; s. C. 2 Conn. 579 ; State v. Adams, 44 40 N. E. Rep. <;<>4. Mo. 570 ; Zabriskie v. Hackensack, n Bedford R. R. Co. v. Bowser, etc.,R. R. Co., 18 N. J. Eq. 178; 48 Pa. St. 29; Frankfort Bank v. s. c. 90 Am. Dec. 617 : Boisdere v. Johnson. 24 Me. 490. Citizens' Bank. 9 La. 506 ; s. c. 29 12 People v. Lowe, 117 N. Y. 175 ; Am. Dec. 453. s. c. 22 N. E. Rep. 1016 ; 31 Amer. 6 Finley, etc., Co. v. Kurtz, 34 & Eng. Corp. Cas. 249 ; reversing, Mich. 89. 47 Hun, 577. 7 Bank Commissioners v. Bank 13 Harbison v. First Presbyterian of Brest, Har. Ch. (Mich.) 106. Society, 46 Conn. 529 ; s. c. 33 Arn. Contra, Merrick v. Trustees, etc., Rep. 34. 8 Gill (Md.) 59. 104 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. Their contracts will not be set aside for mere errors of judgment. 1 S ec . 107— General Obligation of Directors— Liability. Directors are regarded as trustees of the stockholders and are governed by principles applicable to trustees in general. 2 They must exercise their powers for the benefit of the com- pany, and act in the utmost good faith. They cannot deal with the corporate funds and property for their private gain. They cannot deal for themselves and the corporation at the same time ; and they must account for all profits made by the use of the company's assets and for moneys made by a breach of trust 3 A director cannot become interested ad- versely to the interests of the association. 4 If he act openly, however, and to the full knowledge of the shareholders, he may retain such profits as he has been able to make out of his position by the use of his own funds ; the rule that he must account for all profits made by him by reason of his official position applying only to secret profits. 5 He must account for all bribes or gratuities he has received to affect his official action. 6 He cannot conduct his private litigation at the corporate expense. 7 i Jesup r. Illinois, etc., R. R. Co., Branch Bank v. Collins, 7 Ala. . Rep. 483 : Arapahoe Cattle, 95. etc., Co. v. Stevens, 13 Colo. 534; * Brewster v. Stratman, 4 Mo. s. c. 22 Pac. Rep. 823. App. 41 : Attaway v. Third National 8 Robinson v. Smith, 3 Paige, Bank, 93 Mo. 485; reversing 15 222; s. C. 2! Am. Dee. 212 : Simons Mo. App. 578. /■. Vulcan Oil and Mining Co., Gl 5 Hedges v. Paquett, 3 Ore. 77; Pa. St. 202 ; S. C. 100 Am. Dec. 628; Cavendish-Bentinck v. Fenn, L. R. Cook v. Berlin Mill Co., 43 Wis. L2 App. Cas. 652. 433; Koehler v. Black, etc., River ''Metropolitan Bank v. Heiron, K. (;. Co., 2 Black. 215; Choteau L. R. 5 Exch. Div. 319; S. C. 31 ,-. Allen, 70 Mo. 290; Briggs v. Moak. 717 ; Bliss v. Matteson, 45 Spaulding, 111 U. S. 132. N. Y.22; Simons v. Vulcan Oil and BWardr. D.im'Uoii, s'.t Mo. 115 ; Mining Co., 61 Pa. St. 202 ; S. C. Wardell v. Railroad Co., 103 U. S. LOO Am. Dec. 628; Gaskell v. 651; Stevens v. Will.ml. 43 Vt. Chambers, 28 Beav. 368 -j Weston's 692 ; Sj kes'8< lase, L. R. L8 Eq. 255 ; < iase L. R., 10 Ch. Div. 579 ; Bent i Percy v. Millaudon, 8 La. 568; R. R. Co. v. Vanderbilt, 5 Hun, [art, (La.) (N. 8.) 68; Erie 128. § 108. OFFICERS — DIRECTORS. 105 See. 108 — Contracts with Corporation. If there be a quorum of other directors, and they act in good faith, they may enter into a contract for the corpora- tion with one of their own number. 1 And even though a majority of them be interested in the contract, it is not void per se, but only liable to be set aside in a proceed- ing brought for that purpose. 2 The better rule seems to be that such contracts will be upheld where it is shown that it is fair and just, and made for the benefit of the corporation ; but it will be more closely scrutinized than the ordinary contracts. 3 Indeed it may be said that such contracts will be very closely scrutinized before they will be enforced against the corporation. 4 " It is a general rule that a director, trustee, or executive officer of a corporation is without power to bind it or its shareholders by a contract authorized b} r or entered into with himself and for his individual benefit. But if the contract so entered into is in all respects just as between the parties, and all the shareholders and directors or trustees are competent to assert and with full knowledge of the terms of the contract, do assert and direct that it be made, v. Priest, 86 Mo. 475 ; affirming 10 Blaikie, 1 Macq. H. L. (Sc.) 461 ; Mo. App. 557; Bent v. Lewis, 15 s. c. 1 Pat. App. (Sc.) 119; Hoff- Mo. App. 40. 578 ; Eden v. Rids- man Steam Coal Co. v. Cumber- dales Ry. Land, etc., Co., Q. R., 23 land, etc., Co., 16 Md. 456 ; s. c. 77 L. B. Div. 368. Am. Dec. 311 ; Wilbur v. Lynde, 1 Smith v. Skeary, 47 Conn. 47 ; 49 Cal. 290 ; s. c. 19 Am. St. Rep. Barnes v. Brown, 80 N. Y. 527 ; 645. Pickett v. School District, 25 Pneumatic Gas Co v. Berry, 113 U. Wis. 551 ; s. c. 3 Am. Rep. 105. S. 322; Barr v. Pittsburgh Plate 3 Hallam v. Indianola Hotel Co., Glass Co., 51 Fed. Rep. 33 ; Ger- 56 la. 178 ; s. c. 9 N. W. Rep. Ill ; man American Seminary v. Kiefer, Combination Trust Co. v. Weed, 2 43 Mich. 105. Fed. Rep. 24 ; Rogers v. Danby 2 Bassett v. Monte Cristo, etc., Universalist Society, 19 Vt. 187 ; Co., 15Nev. 293; Thomas v.Brown- Appeal of Hammond, 123 Pa. St. ville, etc., R. R. Co., 109 U. S. 522 ; 503 ; s. c. 16 Atl. Rep. 419 ; Thomas reversing, 2 Fed. Rep. 877. v. Sweet, 37 Kan. 183 ; s. c. 14 Pac. Tbere are a line of cases which Rep. 545. holds that all contracts of a direc- 4 Choteau v. Allen, 70 Mo. 290 ; tor with his corporation are abso- Conyngham's Appeal, 57 Pa. St. lutely void ; but the weight of 474 ; Trust Co. v. Weed, 14 Phila. authority in this country is the 422. other way. Aberdeen R. R. Co. v. 106 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. it is binding on the corporation, and cannot be avoided by its shareholders or by persons who subsequently become its creditors." 1 Nor can a director be a secret partner in con- tracts between his corporation and a third person. 2 A di- rector may loan money to his corporation, even though it be in failing circumstances, and may take from it security, even a mortgage on its property ; but such transactions are always open to close scrutiny when an attempt is made to recover the money loaned, or the contract is otherwise drawn in question. 3 If the directors, in order to secure needed money for the corporation, guarantee the note of the corporation, they may secure themselves against loss by taking a mortgage on the corporate property. 4 If they ad- vance money to pay expense bona fide incurred by them, they are entitled to be reimbursed for the outlay, 5 even often in preference to preferred creditors or stockholders. 6 So, if everything be paid, a director may purchase of his corpora- tion property owned by it ; 7 but when assailed he has the 1 Welch v. Importers' etc., Na- Farmers', etc.. Bank v. Downey, 53 fcional Bank, 122 N. Y. 177; s. c. 25 X. E. Rep. 269 ; 33 N. Y. St. Rep. 452 ; 8 Rail. & Corp. L. J. 475 ; Batelle v. N. W. Cement, etc., Co., 37 Minn. 89 ; S. c. 33 N. W. Rep. 327 : Stewart v. St. Louis, etc., R. R. Co., 41 Fed. Rep. 736 ; Skinner v. Smith, 134 N. Y. 249 ; S. C. 31 N. E. R p. '.ill ; affirming, iO N. Y. St. Rep. 81 ; S. C. 56 Hun, 437. 2 European, etc., R. R. Co. v. Poor, 59 Mo. 277 ; Thomas v. Brownsville, etc., R. R. Co., 2 Fed. Rep. 877 ; S. C. 1 McCray, 392 ; Weston's Case, L. R. LO Ch. Div. 579; Gilman, etc., R. R. Co. v. Kelly, 77 Dl. 136 ; Pod v. Russell, 36 End. 60 ; s. c in Am. Rep. 5. ; 1 1 ill. mi v. [ndianola, 1 1 < >( < 1 Co., . L78 ; 8. C. 9 N. W. Rep. Ill : I, r. Milh-r, 130 III. 162 : 8. C. E. Rep. U64 \ i; \m. St. Rep. 291; Mullanphy Savings Banh v. Schott, 185 III. 685 ; 8. C. N. E. Rep. ; 25 Am. SI. Rep. 401 ; Cal. 466 ; s. C. 31 Am. Rep. 62 ; Ward v. Salem St. R. R. Co., 108 Mass. 332 ; Baker v. Harpster, 42 Can. 511 ; s. C. 22 Pac. Rep. 415 ; McMurrtry v. Montgomery Masonic Temple Co., 86 Ky. 206'. s. c. 5 S. W. Rep. 570; Gorder v. Platts- mouth Canning Co., 36 Neb. 548; s. c. 54 N. W. Rep. 830. 4 Hopson v. ^Etna Axle and Spring Co., 50 Conn. 597; Taylor County Court v. Baltimore etc., R. R. Co., 35 Fed. Rep. 101 ; Addi- son v. Lewis, 75 Va. 701 ; Graves v. Mono Lake Hydraulic Mining Co., 81 Cal. 303 ; s. c. 22 Pac. Rep. 665 ; Richardson v. Green, 133 U. S. 30. /// re German Mining Co.. 4 De Gex. M. & G. 19; s. c. 27 E. L. & Eq. 158. 6 Ulster R. R. Co. v. Banbridge R. R. Co.,L. R. 2Ir. Eq. 190. 7 Beach v. Muller, 2:5 111. App. L51 ; Little Rock, etc., R. R. Co. v. Page, 85 Ark. 304 Buell v. Buck- § 109. OFFICERS — DIRECTORS. 107 burden to show that he paid a fair price for it, 1 though, in a case where he purchased its debentures, it was held. that he need not pay the par value, only the market value. 2 He cannot purchase at his own execution sale against the corpo- rate property, 3 but he may at the sale of an executive audi- tor, 4 subject to the right of the corporation to demand that the sale be set aside and a resale held. 5 The corporation may, however, demand that such director be held as a trustee of the property purchased for its beneiit on reim- bursing him for the money he has paid. 6 Sec. 109 — Liability of Director. It is the duty of a director to act with diligence and in good faith ; and if he do not, and loss be occasioned to his association, he will be personally liable for the damage in- curred. 7 They are not, however, liable for mere errors of judgment involving the exercise of a discretional power or authority ; and in respect of their ministerial duties, they are responsible only for gross negligence, non-attendance, and fraud whereby frauds have been perpetuated on the cor- poration or its property wasted or embezzled. 8 The measure ingham, 16 la. 284 ; s. c. 83 Am. Co. v. Poor, 59 Me. 277. That the Dec. 516. director must show he bid full 1 Ashurst Appeal, 60 Pa. St. 290; value for the property, see In r< Crescent City Brewing Co. v. Flan- Iron Clay Brich Mf. Co. supra, ner, 44 La. Ann. 22 ; s. c. 10 So. and Wilkinson v. Bauerle, 41 N. J. 384 ; Hannerty v. Standard Theatre Eq. 635 ; s. c. 7 Atl. Rep. 514. Co., 109 Mo. 297; s. c. 19 S. W. « Raleigh v. Fitzpatrick, 43 N. J. Rep. 82. Eq. 501 ; McAllen v. Woodcock, GO 2 Campbell's Case, L. R. 4 Ch. Mo. 174; Brewster v. Stratman, 4 Div. 470. Mo. App. 41. 3 Cumberland, etc., R. R. Co. v. These rules are not applicable to Sherman, 30 Barb. 553; Williams a mere stockholder of a company. v. McKay, 47 N. J. Eq. 25 ; s. c. 18 Mickles v. Rochester City Bank. 1 1 Atl. Rep. 824; In re Iron Clay Paige, 118; s. c. 42 Am. Dec. 103; Brick Mf. Co., 19 Ont. Rep. 113; Culbertson v. Wabash Navigatiun s. c. 33 Am. & Eng. Corp. Cas. Co., 4 McLean, 544. 277. 7 Hodges v. N. E. Screw Co., 1 * Saltmarsh v. Spaulding, 147 R. I. 312; s. c. 53 Am. Dec. 624; Mass. 224 ; s. c. 17 N. E. Rep. 316. Bargate v. Shortridge, 5 H. L. Cas. sHoyle v. Pittsburgh, etc., R. 297; s. c. 24 L. J. Ch. 457. R. Co., 54 N. Y. 314 ; s. c. 13 Am. 8 Colt r. Woollaston, 2 P. Wms. Rep. 595; European, etc., R. R. 154; Godbold v. Bank of Mobile, 108 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. of a director's skill, care and diligence is such as a prudent man exercises in the conduct of his own money affairs, to be determined in view of all the circumstances. 1 . Directors are liable, however, for suffering the corporate funds or property to be wasted or lost by gross negligence or inattention to their business. 2 They may submit the affairs of the associa- tion to proper officers if they exercise a reasonable super- vision over them. 3 But if they turn over the whole control of the affairs of their association to its officers, and abandon all supervision over them, they will be liable for losses re- sulting from the negligence of such officers ; for the\ T cannot thus abandon the affairs of their corporations. 4 They must devote so much of their time to the affairs of the corporation as is customarily done, and the} 7 may submit such affairs to proper officers as is the custom without incurring liability. 5 If by inattention they fail to discover false entries made in their books by the secretary, and fictitious mortgages, run- ning through several years, they will be personally liable for all losses for money secretly withdrawn and converted 11 Ala. 191 ; s. c. 46 Am. Dec. 211 ; Sperring's Appeal. 71 Pa. St. 11; s. c. 10 Am. Rep. 684; Henry v. Jackson, 37 Vt. 4:J1 ; Percy v. Millaudon, 8 Mart. (N. S.) 68 : Steamboat New World v. King, it; Bow. 4(iit ; Wallaces. Lincoln Savings Bank, 89 Tenn. 630: s. c. L5S. \Y. Rep. 448; 24 Am. Si. Rep. 625; 1 Banking L.J. 249; 9 Rail & Corp. L. J. 482. 1 Scott v. Depeyster, 1 Edw. Ch. 513; Corbetl v. Woodward, 5 Sawy. 403; Delar i >, 121 111. 241 ; s. c. 12 N. E. Rep. 676; 2 Am. St. Rep. 81 : 17 III. A pp. 531 ; Savings Bank v. Caperton,87 Ky. 306; s.c. 8 s. \v. Rep. 885 ; 12 Am. St. Rep. 188 ; Bank r. Bill, 56 Me. 885; s.c 96 \m. Dec. 470 : Marshall v. Far- mers, etc., Bank, 85 Va. 676 ; 8. c. 17 Am. St. Rep. 84; 8 S. E. Rep. Hun v. Cary, 82 N. Y. 65; s. c. 37 Am. Rep. 546 ; affirming, 59 How. Pr. 428 ; Wallace v. Lin- coln Savings Bank, 89 Tenn. 630 ; s. c. 15 S. W. Rep. 448 ; 24 Am. St. Rep. 625; Overend and Gurney Co. v. Gibb L. R., 5 H. L. 494*; Turquand v. Marshall L. R. 4 Ch. 376. 2 Horn Silver Mining Co. v. Ryan, 212 Minn. 196 ; s. C. 44 N. W. Rep. 56 ; Hern v. Cary, supra. 3 Briggs v. Spaulding, 141 U. S. 132. They are not liable for the secret frauds of such officers. hi. 4 Wallace v. Lincoln Savings Bank, supra.; Trustees v. Bos- seiux, 3 Fed. Pep. S17; s. c. 4 1 [ughes, 387 ; Ouderkirk v. Central National Bank, 119 N. Y. 263; s.c. 23 N. E. Rep. 875 ; 29 N. Y. St. Rep. 573. ■■ hi. § 110. OFFICERS — DIRECTORS. 109 thereby. 1 They must, also, follow the charter or statutes applicable to their association, and also its bylaws; and it' they conduct a business outside of their provisions and Loss be thereby occasioned, they will be liable for it, 2 unless they have acted in good faith and upon their best judgment for the interests of the association. 3 But an attempt to trans the assets of the corporation to another corporation will render them liable, because plainly ultra vires, even though they acted upon the advice of legal counsel. 4 Those who do not, however, participate in the proceedings are not liable. 5 So when they were impowered to make loans in an amount equal to only one half of the value of the real estate to be mortgaged, and loaned an amount clearly in excess of one half of its value, they were held liable for the loan, they knowing that the loan was excessive. 6 If the stockholders, at a stockholder's meeting, approve the illegal action of the directors, the latter will be released from liability to the corporation ; 7 and so the stockholders may release the direc- tors from liability by mere acquiescence in their acts, they having full knowledge and information of their illegal trans- actions or neglect. 8 Sec. 110— Liability in Particular Instances of Building Associations. A rule of a building society providing that a director should not be answerable for, and might reimburse himself 1 Williams v. McKay, 46 N. J. 5 Movius v. Lee, 30 Fed. Rep. 298 ; Eq. 52 ; s. c. 18 Atl. Rep. 824. sub nom. 141 U. S. 132 ; 24 Blatch. 2 Citizens' Loan Association v. 291 ; Witters v. Sowles, 31 Fed. Logan, 29 N. J. Eq. 110 ; Williams Rep. 1 ; s. c. 24 Blatch. 332. v. McKay, siqjra. ; Bargate v. e Williams v. McDonald, 42 N. J. Shortridge, 5 H. L. Cas. 297 ; s. C. Eq. 392 ; Stephens v. Overstolz, 43 24 L. J. Ch. (N. S.) 457; Moses v. Fed. Rep. 771. Ocoll Bank, 1 Lea, 498 ; Brinker- ~ Trisconi v. Winship, 43 La. hoff v. Bostrich, 88 N. Y. 52. Ann. 45 ; S. c. 9 So. Rep. 29 ; 9 3 Watts Appeal, 78 Pa. St. 370 ; R a ii & Corp. L. J. 469. Scott v. Depeyster, 1 Edw. CI. 513. s Watts Appeal, 78 Pa. St. 370 ; See, however, Williams v. Mc- Henry v. Jackson, 37 Vt. 431 ; Un- Kay, supra, and Dodd v. Wilkin- Jerhill v. Santa Barbara, etc., Co., son, 42 N. J. Eq. 647 ; s. c. 9 Atl. 93 Cal. 300 ; s. C. 28 Pac. Rep. Rep. 685. 1049 ; People v. Ballard, 3 N. Y. 4 Pierson v. Cronk, 26 Abb. N. gt. Rep. 845. Cas. 25. 110 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. for, any loss which might happen in the execution of the powers given him by the rules of the society, was held not to apply to acts ultra vires and beyond the powers which the society itself could confer. 1 The directors of a building association, having a large discretion vested in them as con- fidential agents, may properly make advance on classes of securities forbidden to ordinary trustees, and are not pre- cluded from making advances on securities of a speculative character so as to render themselves personally liable if loss occur. 2 Directors of a building society passed a resolution authorizing advances to members on the securities of their shares. An advance was accordingly made to a member, and the society incurred a loss thereby. It was held that a director who concurred in the resolution, but was not a party to the making of the advance, could not be held liable to the society for the loss, on the ground that the advance was ultra vires, and was not attributable to the illegal resolution which authorized it ; for the cause of the loss was the wrong- ful act of those directors only who made the advance. 3 "With the knowledge and consent of the directors of a build- ing society, advertisements were issued by the secretary inviting the public to lend money to the society. The money advanced to the society was paid to the secretary, who then gave an acknowledgment of the payment, and subsequently a receipt was given, signed by two of the directors on behalf of the society. The secretary in many cases filled up the amount on the counterfoil of the receipt book as considerably less than the amount actually received, though the receipt itself contained the right amount. By means of this and other falsifications of the books of the society, the secretary was enabled to appropriate to his own use a Large sum of money, and upon his absconding it was • Cullerne v. London and Suburb- s. c. 59 L. J. Ch. 34; 66 L. T. 678; an Building Society L. R. 25 Q. 6 T. L. Rep. 25. B. Div. 185; 8. C. 59 L. J. L. B. s Cullerne v. London and Sub- 525; 68 L. T. 511 ; 39 W. R. 88; 6 urban Building Society L. R. 25 T. L. R. 149; 55 J. P. 1 18. Q. B. 485; s. c. 59 L. J. Q. B. 525; ffieldand South Yorkshire 63 L. T. 511 ; 39 W. R. 88; 6T. L> Permanent Building Society v. Rep. 214, 449. Aizlewood, L. R. 44 Ch. Div. 412; § 110. OFFICERS — DIRECTORS. Ill found that the society had borrowed a sum considerably in excess of the amount allowed by its rules. It was held that the directors were personally liable for the amounts ad- vanced by the society in excess of its borrowing powers, as they were cognizant of the course of business pursued by its secretary, and held him out to the public as their agent, although they were ignorant of the frauds perpetrated by him. 1 When a building association was insolvent, its direc- tors, knowing its condition, declared a dividend out of the capital stock. One of the directors made a loan to the association. It was held that he could not receive anything from the association, in the hands of the assignee, until all the stockholders were paid ; and the stockholders making deposits both before and after the fraudulent dividend was declared and paid, were entitled to be paid before the direc- tor. 2 The directors cannot speculate with the funds or credit of the association, and appropriate to themselves the profit of such speculation. ISTor can they in making sales or purchases for the company take advantage of their posi- tion as directors, and either directly or indirectly speculate upon the company. 3 They are not personally liable for losses resulting from an honest mistake in estimating the value of a stockholder's lands on which he obtains a loan, nor for a defect in the acknowledgment of a mortgage, which renders it worthless. But they are liable for losses on loans made on personal security of the stockholder, in violation of a by-law limiting the amount of such loan. 4 They may properly rely upon the advice of their attorney on the legality of the mortgagee ; and if he were derelict in his duty in that matter and they were ignorant of it, they are not chargeable with losses resulting from his derelic- tion. 5 " It is quite clear," said the court on another ques- i Cross v. Fisher, 65 L. T. Rep. 2 Kisterbock's Appeal, 51 Pa. St. 114 ; [1892], 1 Q. B. 467 ; 61 L. J. 483. Q. B. 609 ; 66 L. T. 4-18 ; 40 W. R. a Redmond v, Dickerson, 9 N. J. 365; 56 J. P. 372. A statute Eq. 507.. made them personally liable for 4 Citizens' Building Loan and the amount of loans or deposits Savings Association, v. Cornel, 34 received in excess of a prescribed N. J. Eq. 383. limit. 5 Id. 112 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. ticm, " that the defendants ought not to be held liable merely on the ground that in lending the money of the asso- ciation on bonds and its stock, they were acting in violation of the constitution, and so exceeded their powers, provided they had observed the provisions of the by-laws on that head. The b} T -law itself is in violation of the constitution ; but the practice, the by-law, the acquiescence, and also what was equivalent to the advice of counsel, ha.ve excused them from the consequences of their mistake as to their powers." 1 Speaking farther upon the liability of directors, the court said : " These directors served without pay. They were selected by their fellow stockholders to manage gratuitously the affairs of the association in which they and the other stockholders were jointly interested. To apply to them the strict rules which are applicable to trustees who assume the discharge of the duties of private trusts, would be unjust. In the absence of fraud, and where they have neither derived nor expected to derive any profit, benefit or advantage from their management Avhich was not common to the other stockholders ; when they have acted fairly, and have not been guilty of gross neglect or gross inattention, they should not be held liable. The rule applicable to mandatories is sufficiently stringent for such cases, and is a reasonable one. They should be held liable only in case of fraud, gross neg- ligence or misuse." 2 Directors of a building society had 1 Id. tors before the suit was begun 2 Citizens' Building and Loan cannot be made parties. Rolph v. ociation v. Corriell, 34 N. J. Upper Canada Building Society, Eq. 383, 392. In this case it was 11 Grant Ch. 275. held tliat the company could resort That a loan in excess of a by- t<> a <•■ .M 1 1 of equity in order to law will make them liable if loss compel its 'li rectors to account for occur. See Looker v. Wingley L. a waste or misappropriation of its R. 9 Q. B. Div. 397. funds, even though it were con- For an instance where the es- ceded thai an adequate remedy at tate of a deceased defaulting sec- law existed. Id. retary was held liable, and his so- A stockholder may maintain a ciety preferred over the general suit againsl the directors for such creditors, see Moors v. Marriott L. lo i on behalf of himself and all K., 7 Ch. Div. 543; s. c. 47 L.J. the other stockholders; but per- Ch. 331 ; 26 W. R. 626. : ..n v. ho have ccascil to !»■ ililcc- § 110. OFFICERS — DIRECTORS, 113 power to invest unemployed moneys in the purchase of free- holds. Having only £621 in hand they contracted for the purchase of an estate for £2,300, payable in instalments. In the negotiations for the sale, they held themselves out as a land society, and they paid £800 on account, in chocks signed, by their order, by the trustees, who were not direc- tors. It was held that the directors had committed a breach of trust, and were liable to replace the £800 ; that the vendor was under no liability ; and that the trustees who had acted ministerially, under the directors, were not liable, notwith- standing there was some informality in the authority given them by the directors. 1 A person lent £70 to a building society, and received a receipt signed by two of its directors, certifying that he had deposited £700 with the society for three months certain, to be repaid with interest after four- teen days' notice. The society had no power to borrow money, and the lender being unable to get her money back from the society, sued the two directors. It was held that they were liable to the lender in damages for a breach of warranty of authority, they having, by signing the receipt, in effect represented that they had authority to make a binding contract of loan on behalf of the society, and so induced her to part with her money. 2 A. was a surveyor of a building society, the object of which was to advance money to its members to enable them to buy or build houses, but not itself to buy or build. By one of the rules of the society, the surveyor was to look only to the funds of the society for his compensation. By resolutions at general meetings, at which the directors were present, the surveyor was dir- ected to prepare plans for houses which the society was building, the compensation being a percentage upon the outlay. Upon the society becoming insolvent, the surveyor sued one of the directors. It was held that such surveyor was bound by the rules of the society to seek compensa- tion from the funds of the society solely. 3 1 Grimes v. Harrison, 26 Beav. R. 6 Q. B. 276 ; 40 L. J. Q. B. 145. 435 ; s. C. 5 Jur. (N. S.) 528 ; 28 L. 3 Alexander v. Worman. 3 L. T. J. Ch. 823. (N. S.) 477 ; s. C. 6 H. & N. 100 ; 2 Richardson v. Williamson L. 30 L. J. Exch. 198. 114 BUILDING AND LOAN ASSOCIATIONS. Cll. VI. See. Ill— Association may Sue its Directors for Losses Incurred. For losses occasioned by the directors, and for which they are liable, the association may sue its directors, either by an action at law or suit in equity, as the facts may- re- quire for appropriate redress. 1 If the unfaithful directors be still in control, then any stockholder may bring suit asrainst them in his own name for the use of all the stock- holders. 2 So the receiver of the corporation may sue them, especially if it be insolvent. 3 So may an assignee of the association. 4 The statute of limitations is a good defense ; 5 but the statute does not begin to run as against a right to recover secret profits made out of a corrupt bargain until the corporation or its representative has received knowl- edge thereof. 6 Sec. 112 — Liability of Directors to Creditors. If there is a de facto corporation, the directors are not personally liable to the creditors by reason of the fact of irregularities in its organization; 7 but if the conditions pre- cedent have not taken place or arrived which are necessary before the corporation has been formed, when the directors undertake to act on its behalf, they will be personally liable on all engagements entered into on behalf of the associ- ation ; 8 and so if directors of an inchoate association enter 1 Simons v. Vulcan Oil & Mining Y. 114; Hayes v. Kenyon, 7 R. I. Co.. 61 Pa. St. 202 ; S. C. 100 Am. 136. Dec. 628; Ryan v. Leavenworth, * Shultz v. Christman, 6 Mo. etc., R. R. Co., 21 Kan. 365; Born App. 338; Grocers' National Bank Silver Mining Co. v. Ryan, 42 v. Clark, 48 Barb. 26. Minn. 196; II N.W. Rep. 56 ; Smith ■'• Williams v. Halliard, 38 N. J. v. Eurd, 12 Met. 371 ; S. C. 46 Am. Eq. 373. Contra, Ellis v. Ward, Dec. H'.mi. 137 III. 509; s. c. 25 N. E. Rep. 2 Craig v. Gregg, 83 Pa. St. L9 ; 530 ; 33 Am. &Eng. Corp. Cas. 200. Evans v. Brandon, 53 Tex. 56. 6 Bent v. Priest, 86 Mo. 475 ; af- Moviufi v. Lee, 80 Fed. Rep. 298; firming 10 Mo. A.pp. 543. Howeu Barney, t5Fed. Rep. 668; 7 Bartholomew v. Bentley, 1 Stephens v. < >verstolz, 18 Fed. Rep. Ohio St. :)l. 171; Gilletl v. Moody, 8 N. F.479; B Trust Co. v. Floyd, 47 Ohio St. Butterwortb v. O'Brien, 24 Sow. 525 ; S. c. 26 N. E. Rep. 110; 12 L. I-,-. 188; Gilletl v. Phillips, L8 N. R. A.. 346; 21 Am. St. Rep. 846. § 112. OFFICERS — DIRECTORS. 115 into an engagement on behalf of the association, and its in- corporation is never completed, they will be liable for such engagement. 1 So if they enter into a personal obligation, forced on behalf of the association, they will be personally liable. 2 So if the board of directors assume to act clearly beyond their powers, and represent that they have a in pic authority so to do, they will be personally Liable; as if they assume to borrow money, representing that they are authorized to do so, and can bind the association when they have not such authority, they will be personally liable. 3 And so they will be liable if they borrow in excess of the power of the association to borrow. 4 But the directors are not liable to creditors of the association on the ground that they have mismanaged its business, 5 even though they have been guilty of gross neglect of the corporate affairs and business, whereby it was wrecked. 6 So if they fraudulently represent that property is unincumbered in order to secure a loan upon it, they will be personally liable, even if the records of the county recorder's office show a prior incum- brance. 7 So they are personally liable for false represen- tations, knowingly made, inserted in prospectuses of as- sociations, made to induce persons to join the association. Such conduct on their part is a fraud, 8 and persons have 1 Doubleday v. Muskett, 4 Moore Peters, 44 Fed. Rep. 13 ; s. c. 4 & P. 750. Bank. L. J. 48. Not even to a 2 Pickering's Claim L. R. 6 Ch. general depositor of the director's 525 bank. Zinn v. Mendel, 9 W. Va. 3 Richardson v. Williamson L. 580. But see where the directors R. 6 Q. B. 276. of a savings bank were held liable 4 Weeks v. Propert, L. R. 8 C. P. to the depositors for neglect. Mar- 427 ; Solomon v. Penoyar, 89 Mich, shall v. Farmers', etc., Bank, 85 11 : s. c. 50 N. W. Rep. 644. Va. 676 ; s. c. 8 S. E. Rep. 586 ; 17 But see Frost Mf. Co. v. Foster, Am. St. Rep. 84. 76 la. 535 ; S. C. 41 N. W. Rep. 212; i Clark v. Edgar, 84 Mo. 106 ; s. C. and Sandford v. McArthur, 18 B. 54 Am. Rep. 84 ; 12 Mo. App. 345. Mon. 411. See Mullanphy Bank v. Schott, 135 5 Frost Mf. Co. v. Foster, supra, 111. 655 ; s. c. 26 N. E. Rep. 640 ; 25 Priest v. White, 89 Mo. 609 ; Win- Am. St. Rep. 401. ter v. Baker, 34 How. Pr. 183 ; s. C. 8 Arnison v. Smith L. R., 41 Ch. 50 Barb. 432; Branch v. Roberts, Div. 348; Hubbard v. Weare, 79 50 Bab. 435. la. 678; s. C. 44 N. W. Rep. 915 ; 6 National Exchange Bank v. Kinkier v. Junica, 84 Tex. 116 ; 116 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. a right to rely upon their representations without making further inquiry. 1 Before, however, the person suffering a damage can recover, he must show that the representations were known to the directors making them to have been fraudulent at the time they were made. 2 But where the plaintiff seeks to be relieved of a contract with the associ- ation, which was induced by the representations of the di- rectors, he need not show that they knew them to be false ; for the mere fact that they were material and moving will be sufficient to annul the contract they induced the plaintiff to enter upon. 3 So directors may be liable if they fraudulently waste the assets of the corporation, not leaving a sufficient amount to pay its creditors ; or if they withdraw its funds for their own private benefit, not giving a suffi- cient security for their return. 4 So if they declare dividends Avhen there are no surplus assets, the directors are liable for the amount they receive, even though it be only a credit on their stock. 5 And if a director has connived at a sale of stock to an infant, or to any persons incapable of binding themselves by contract, without taking proper security for paying assessments made thereon, such director will be liable to any creditor who has not been able to collect the amount of his debt from the corporation, to the extent of the amount necessary to pay his debt, if that amount does not exceed the amount due on such stock. 6 s. c. 19 S. W. Rep. 359 ; Wester- 2 Cowley v. Smyth, 46 N. J. L. velt v. Damerest, 46 N. J. L. 37 ; 380 ; s. c. 50 Am. Rep. 432. s. c 50 Am. Rep. 400. 3 Smith v. Reese River Co. L. R., iCottrill v. Crum, 100 Mo. 397; 2 Eq. Cas. 264; Routh v. Webster, B. C. 13 S. W. Rep. 753 ; 18 Am. St. 10 Beav. 561; s. c. 11 Jur. 701; Rep. 549. See also Salmon v. State Bank v. Andrews, 18 N. Y. Richardson, 30 Conn. 360 ; S. C. 79 St. Rep. 167. Am. Dec. 355; National Bank v. 4 Bank of St. Mary's v. St. John, Texas Investment Co., 74 Tex. 421; 25 Ala. 566; Maisch v. Saving s. c. 12 S. W. Rep. 1D1 ; South Cov- Fund, 5 Pliila. 30. iii-)..n, etc., R. R. Co. v. Gest, 34 6 Gratz v. Redd, 4 B. Mon. 178 ; Fed. Rep. <;~'* ; Burns r. Beck, 83 Lexington, etc., R. R. Co. v. <;.,. 171 | s. <\ ID S. E. Rep. 121 ; Bridges, 7 B. Mon. 566; s. C. 46 Brewster '•. Hatch, 122 N. Y. 349 ; Am. Dec. 428. I. Rep. 505; '■> Kail. & Corp. « Ex parte Wilson L. R. 8 Ch. L. Jr. 5 . 88 N. Y. St. Repr. 527 ; 19 45 ; s. 0. 42 L. J. Ch. 81 ; 27 L. T. Am. St. Rep. 408. (N. S.)597. 8 113. OFFICERS — DIRECTORS. 117 Sec. 113— Directors' Compensation. Unless the charter, some statute, a by-law, a resolution or a contract give a director compensation for his services, he is not entitled to any. 1 In building associations they usually serve without compensation. The law does not raise an implied promise to pay for the services of a director in any kind of a corporation. 2 The board of directors cannot fix their own salaries, either by resolution or a by-law ; that must be done by the shareholders at a stockholders' meeting, unless a statute or the charter provide otherwise. 3 A resolution of the board fixing their salaries is void. 4 and riot even admissible in evidence in an action to recover for services rendered. 5 This is especially true where the resolu- tion has been adopted after the services have been rendered. 6 If a director be paid a salary for his services, he cannot recover for any work performed which is purely incidental to his office." To recover for such services he must show S. c. 53 N. W. Rep. 218 ; 17 L. R. A. 412 ; Mallory v. Mallory Wheeler Co., 61 Conn. 131 ; s. C. 23 Atl. Rep. 1 American, etc., R. R. Co. v. Miles, 52 111. 174 ; Eakins v. Amer- ican White Bronze Co., 75 Mich. 568; s. c. 42 N. W. Rep. 982; Burns v. Beck, 83 Ga. 471 ; s. c. 10 S. E. Rep. 121 ; Mart in dale v. Wil- son—Cass. Co., 134 Pa. St. 348 ; s. c. 19 Atl. Rep. 680 ; 19 Am. St. Rep. 706 : Wood v. Lost Lake, etc.. Co., 23 Ore. 20 ; s. C. 23 Pac. Rep. 848 ; 37 Am. St. Rep. 651 ; Brown v. Re- publican Mountain Silver Mines, 17 Col. 421 ; s. c. 30 Pac. Rep. 66 ; S. C 16 L. R. A. 426. 2 Loan Association v. Stonemetz, 29 Pa. St. 534 ; Pew v. First Na- tional Bank, 130 Mass. 391 ; Fitz- gerald, etc., Co. v. Fitzgerald, 137 U. S. 98. 3 Gardner v. Butler, 30 N. J. Eq. 702 ; Ward v. Davidson, 89 Mo. 445 ; Butts v. Wood, 37 N. Y. 317 ; s. c. 38 Barb. 181 ; Maux Ferry Gravel Road Co. v. Branegan, 40 Ind. 361 ; Wickersham v. Crittenden, 93 Cal. 17 ; s. C. 28 Pac. Rep. 788 ; Miner v. Belle Isle Ice Co., 93 Mich. 97 ; 4 Loan Association v. Stonemetz, 29 Pa. St. 534. 5 Shattuck v. Oakland Smelting, etc., Co., 58 Cal. 550. By no subterfuge can this be overcome. Mallory v. Mallory — Wheeler Co., supra. ; Miner v. Belle Isle Ice Co., sujjra. 6 Holder v. Lafayette, etc., R. R. Co. 71 111. 106 ; s. C. 22 Am. Rep. 89; Kilpatrick v. Penrose, etc., Co., 49 Pa. St. 118; s. c. 88 Am. Dec. 497 ; State v. People's Mutual Benefit Association, 42 Ohio St. 579; New York, etc., R. R. Co. v. Ketchum, 27 Conn. 170 ; Ashton v. Dashaway Association, 84 Cal. 61 ; s. c. 22 Pac. Rep. 660 ; 7 L. R. A. 809. 7 Hodges v. Rutland, etc., R. R. Co., 29 Vt. 220; Cheeney v. La- fayette, etc., R. R. Co., 68 111. 570; S. C. 18 Am. Rep. 584. 118 BUILDING AND LOAN ASSOCIATIONS. Ch. VI. that they unquestionably are beyond the range of his duties as a director ; 1 and rendered under such circumstances that all persons well understood they were to be paid for. 2 Thus he cannot claim a reward offered by the association for the recovery of its property stolen from it ; for it is his duty to endeavor to recover it without a reward. 3 If compensation has been voted him for extra services he cannot recover any more than that voted, on the claim that his services were worth more than such sum. 4 If he performs services as president, secretary or treasurer of his corporation, his service for such service must be fixed before he enters upon the duties of such office. 5 But there is no doubt that he can recover for services rendered, that are clearly outside of his duties as director. 6 Such would be the case where he was appointed agent to secure subscriptions to stock ; " or served by appointment as the company's attorney. 8 Of course he may recover for services rendered before he became a director. 9 For services rendered in organizing the com- pany one who afterwards becomes a director on its organiza- tion cannot recover for such services, although he expected when rendering them that he would be paid. 10 If the directors iNew York, Co. v.., etc . R.R R. Co., 68 111. 570; S. c. 18 Am. Ketchum, 27 Conn. 170. Rep. 584. 2 Brown v. Republican Mountain 8 Rogers v. Hastings, etc., R. R. Silver Mines, 17 Colo. 421 ; s. C. 30 Co., 22 Minn. 25. Pac. Rep. 66. See Branch Bank v. 9 Branch Bank v. Collins, 7 Ala. Collins, 7 Ala. 95. 95. Stacy v. Bank of Illinois, 5 111. "New York, etc., R. R. Co. v. 91. Ketchum, 27 Conn. 170; Blatch- 1 Bodges v. Rutland, etc., R. R. ford v. Ross, 54 Barb. 42; S. c. 37 Co., 29 Vt. 220. How. Pr. 110; 5 Abb. Pr. (N. S.) ' Bolder v. Lafayette, etc., R. R. 434; Rockford, etc., R. R. Co. v. Co., 71 111. lite, ; 22s. C.Am. Rep. 89. Sage, 65 111. 328; S. c. 16 Am. Rep. 6 Santa Clara Mining Association 587; Franklin Fire Ins. Co. v. Hart, ,: Meredith, 19 Md. 389 ; s. c. 33 31 M«l. 59. Am. Rep. 264; Greensboro, etc., Contra, Bell's Gap R. R. Co. v. Turnpike Co. V. Stratton, 120 Ind. Christy, 79 Pa. St. 54 ; s. c. 21 Am. 194 ; s. c. 22 N. E. Rep. 247 ; Prilli- Rep. 39 ; but a single stockholder man r. M < -i ■ < I « • 1 1 1 i:i 1 1 , 120 Lad. 279; cannot bind the corporation. Tift B. C. 22 N. E. Rep. 247; National v. Quaker City National Bank, 141 Hank r. Elliott, 55 la. lol ; s. C. 89 I 'a. St. 550; s. c. 21 Atl. Rep. 660; A.m. Rep. 107. 9 Rail & Corp. L. Jr. 420. 7 Cheeney v. Lafayette, etc., R. § 114. OFFICERS — TRUSTEES. 119 illegally pay themselves, an action lies to recover back the amount paid, * and any stockholder, on refusal of the board, may maintain the action for himself and all the other stock- holders. 2 If the officer is under bond to account for all funds of the association that come to his possession, he will be liable on such bond for the amount he has thus illegally received. 3 TRUSTEES. Sec. 114 — Nature of Office. Trustees are sometimes appointed for a building society ; but it is unnecessary to have such officers. Their function is to hold the title to such real estate or other property as the association may own, to act as mortgagees first, and to convey or release the same by the orders of the board of directors. They existed formerly in England to a very con- siderable extent, but now have been dispensed with. They act only ministerially. 4 If one die, his interest rests in his successor when appointed and not in his surviving fellow trustees. 5 1 Smith v. Putman, 61 N. H. 632. 3 Jemiery v. Olmstead, 105 N. Y. 2 Butts v. Wood, 38 Barb. 181 ; 654. s. C. 37 N. Y. 317; McNaughton v. 4 Grimes v. Harrison, 26 Beav. Osgood, 41 Hun, 109 ; s. c. 3 N. Y. 435 ; s. C. 5 Jur. (N. S.) 528 ; 33 L. St. Rep. 795 ; Jones v. Morrison. 31 T. Rep. 115 ; 28 L. J. Ch. 823. Minn. 140 ; Wickersham v. Crit- 5 Walker v. Giles, 6 C. B. 622 ; 13 tenden, 93 Cal. 17 ; s. C. 28 Pac. Jur. 588 ; 18 L. J. C. P. 323. Rep. 788. CHAPTER YII. BY-LAWS, RULES AND REGULATIONS. Sec. 115. Definition of a By-law. 116. Differs from a Resolution. 117. Differs from a Regulation or Rule. 118. A Law for the Members of the Association. 119. By-laws are a Contract between a Building Association and its Members. 120. Members Conclusively Presumed to Know By-laws. 121. Formalities Required in Enactment. 122. Waiver of By-laws. 123. Retroactive By-laws. 124. Construction or Interpretation. 125. Proof of By-laws. 126. Inherent Powers to Enact By-laws. 127. Who Adopt, 128. Must Conform to the Charter. 129. Must not be Contrary to the Common Law, a Statute or the Constitution. 130. Must Operate Equally. 131. Cannot Disturb Vested Rights — Amendments. 132. Signing By-laws — Amendment. 133. Notice to Members of Amendments made. 134. Mode of Amendment — Who may Make. 1 :;">. Unreasonable — Oppressive — Extortionate. 136. Transfer of Shares. of Stock. 137. Releasing Shareholder from Liability". 138. Restricting Right to Sue. 13!). Arbitration. 1 10. Forfeiture of Property— Fines. ill. Fine Must be Certain. 1 I'J. < 'units Seldom Interfere with By-laws. 1 1:;. Void in Pari Valid in Part. 144. Regulating Corporate Elections. Sec 115— Definition of a By-law. A by-law may be defined as a rule or law of a corporation for its government, or for the government of its members 120 § 117. BY-LAWS, — IiULES — REGULATIONS. 121 and officers, in the management of its affairs. It is a legis- lative act of the corporation. In its enactment the corpora- tion must observe the restrictions imposed upon it by the charter or by a governing statute, just as the legislature of a state must observe the restrictions placed upon it, in the enactment of laws, by the state constitution. 1 The term " by-laws " is used to designate " the orders and regulations which a corporation, as one of the legal incidents, has power to make, and which is usually exercised to regulate its own actions and concerns, and the rights and duties of its mem- bers among themselves." 2 Sec. 116 — Differs from a Resolution. A resolution is directed to a particular object, and is not necessarily a by-law, although the latter take the form of a resolution. 3 The difference is very well illustrated by a statute which declares that a by-law may be adopted declar- ing a forfeiture for non-payment of assessments on shares of stock: in such a case a resolution cannot be adopted declar- ing that a particular individual has forfeited his share because of the non-payment of a particular assessment. 4 Another illustration is where a statute provides for the exclusion of an officer of the corporation guilty of certain conduct. This must be done by a by-law, general in its terms, and not by a resolution. 5 Sec. 117 — Differs from a Regulation or Rule. A by-law also differs from a rule of action or regulation. Thus a by-law is more properly for the internal affairs of a corporation, for its members, even for its officers ; while a regulation or rule of action is for the conduct of the busi- ness with those not members, or with the general public. 6 1 Drake v. Hudson River R. R. 3 Drake v. Hudson River R. R. Co., 7 Barb. 508. Co., 7 Barb. 508. 2 Commonwealth v. Turner, 1 4 Budd v. Multnomah St. R. R. Cush. 493. Co., 15 Ore. 413 ; s. e. 15 Pac. Rep. A by-law of a private corpora- 655 ; 3 Am. St. Rep. 169. tion resembles an ordinance of a 5 People v. Throop, I 2Wend. 183. city or town. Robinson v. Mayor, 1 6 Baltimore, etc., R. R. Co. v. Humph, 156; s. c. 34 Am. Dec. Wilkinson, 30 Md. 224, by way of 625. illustration only. State v. Over- 122 BUILDING AND LOAN ASSOCIATIONS. Cll. VII. Sec. 118 — A Law for the Members of the Association. A by-law, not in conflict with the charter of the associa- tion or with a statute of the state or of the United States, or Avith the state or Federal constitution, is as binding upon members of the association as if it had been enacted by the Legislature of the state. * And so is the association bound by its by-laws. As between itself and its members, a course of dealing at variance with its by-laws, for whatever length of time it may be pursued or acquiesced in, is of no validity. 2 But a member of a mutual insurance company cannot question the validity of the by-laws under which he becomes a mem- ber, 3 and the same rule prevails when a member of a building- association has received a benefit under an invalid by-law. 4 Sec. 119 — By-laws as a Contract between a Building Association and its Members. The by-laws of a building association is a contract be- tween it and its members, whatever may be said of the by- laws of other kinds of corporations. 5 " The office of a by- law is to regulate the conduct and define the duties of the members towards the corporation and between themselves. So far as its provisions are in the nature of a contract, the parties thereto are the members of the association, as be- tween themselves; or the corporation upon the one side, and its individual members upon the other." 6 ton, 24 N. J. L. 43:3 ; s. Q. 61 Am. 52 Pac. Rep. 328. Dec. 671. 2 Watson v. Bendigo Permanent In England and Australia the Loan and Building Society L. R. by-laws el' a building association Eq., 10 Vict. (Australia) 26. are called its •• rules." Sec Rosen- 3 [Mister v. Gerwig, 122 Ind. 567 ; berg vs. Northumberland Building s. c. 23 N. E. Rep. 1041. oiation I.. I;.. '."J Q. B. Div. * Building Association, v. Min- 373; s. C. 60 L. T. 558; 37 W. R. nick. I Kulp. 513 ; Victoria Build- 368; 5T. L. R. 265. ing Association v. Arbeiter Bund., " Gosling r. Veley, 7 Ad. & El. 6 Wkly L. Bull. 823. (N. S.) 406; s. c. 19 L. J. Q. B. 135; 6 Tn re West Riding of Yorkshire Cummings v. Webster, 43 Me. 192 ; Permanent Benefit Building Soci- Harrington r. Workingmen's Be- ety L. R., 45 Ch. Div. 463; s. e. 59 nevolent Association, 70 Ga. 340; L. J. Ch. 823; 63 L. T. 453; 39 W. McDermotl v. Board of Police, 5 R.74; Wolfe v. Asso.,etc, 5S N. Y. A.bb. I'r. 122 ; Mechanics' etc., Rep. 656. . v. Vierling, 66 III. App. 621. 8 Flinl v. Pierce, 99 Mass. 68 ; s. c. Trowbridge v. Hamilton (Wash.) 96 Am. Dec. 691. § 122. BY-LAWS, — RULES — REGULATIONS. 123 See. 1*20 — Members Conclusively Presumed to Know By-laws. When a person becomes a member of a corporation he is chargeable with a knowledge of all the by-laws, and it is conclusively presumed that he has such a knowledge. Con- sequently it is not necessary to prove that he had such knowledge when it is sought to enforce a contract against him which he has entered into with the corporation. 1 Though a member of a benevolent society is induced to join it by an erroneouc publication of its by-laws in relation to the benefits to be paid by it, he is not entitled, by estoppel, to benefits in accordance with the by-laws as published, but is limited to his rights under the by-laws as they actually are. 2 Sec. 212— Formalities Required in Enactment. If a statute or the charter of the association prescribe the method of enacting by-laws, then that method in their enact- ment must.be pursued in order to render them valid. 3 If no formalities be prescribed, then a by-law may be adopted by acts as well as by words; such as a uniform course of conduct. 4 It is not necessary to show that the by-law was enacted in writing ; that may be inferred from facts proved.' Sec. 122— Waiver of By-laws. The by-laws of a building association are in the nature of a contract between the members of the association, and the officers of the association, in dealing with its members, have no power to waive any of their provisions, unless power to do so has been expressly conferred upon them. 6 1 Bauer v. Samson Lodge, 102 digo Permanent Loan and Building Ind. 262; s. C. 1 N. E. Rep. 571; Society L. R„ Eq., 10 Vict. (Austra- 13 Am. & Eng. Coop. Cas„ 618 ; lia) 26. Presbyterian, etc., Fund v. Allen, 3 Dunston v. Imperial Gaslight 106 Ind. 593 ; s. C. 7 N. E. Rep. 317; Co., 3 Barn. & Ad. 125. Buffalo u.Webster, 10 Wend. 99; 4 Id.; Langsdale v. Bonton, 12 Arapahoe Cattle, etc., Co. v. Ind. 467. Stevens, 13 Colo. 534 ; Susque- 5 Lockwood v. Mechanics Na- hanna Insurance Co. v. Perrine, tional Bank, 9 R. I. 308 ; s. c. 11 7 Watts. & S. 348. Am. Rep. 253. 2 Hirsch v. Grand Lodge, etc., 56 6 Mulrey v. Shawmut Mutual Mo. App. 101. See Watson v. Ben- Fire Insurance Co., 4 Allen, 116; 124 BUILDING AND LOAN ASSOCIATIONS. Cll. VII. Sec. 123— Retroaction By-laws. " A by-law or regulation means a rule for future action. Ex post facto laws are no more lawful for corporations than for states ; all old by-laws, contrary to the general principle of the common law, or the policy of the state, are void." l - The by-laws of a corporation are only rules and regulations as to the manner in which the corporate powers shall be exercised. Any attempt on the part of the defendant, by by- laws or otherwise, to deprive an unconsenting stockholder of a right secured to him by the corporate articles, is in excess of defendant's authority, or, in legal parlance, ultra vires." 2 Sec. 124 — Construction, or Interpretation. The same rules applicable to the construction of contracts, or to other private instruments, or to a statute, are appli- cable to the construction or interpretation of by-laws of a corporation. 3 They must be given a reasonable interpre- tation. 4 They will be upheld rather than overturned. 5 But if they inflict a penalty or a forfeiture they will "be strictly construed; 6 and if their validity be doubtful, they will Mich. 458 ; Howard v. Savannah. S. C. 81 Am. Dec. 689; Behler v. German, etc, Insurance Co., 68 Ind. 347 ; Union Mutual Insurance Co. v. Keyser, 32 N. H. 313 5 s. C. ill Am. Dee. 4-1; Clark v. N. E. Mutual Fire Ins. Co., 6 Cusli. 342; 53 Am. Dec 11: Westchester Fire Ins. Co. v. Earle, 33 Mich. ; 13. Provisions of a contract prevail over tli" by-laws usually , especially when no attention was called to them. Fitzgerald v. Equitable Re- serve Fund Life Association, 3 N. Y. Supp. 21 1 . Davidsou V. Old Peoples Mutual Society. 39 Minn. 303; s. c. 39 N W Bep N't;; So especially where the association has received the benefit of I be contract. CMalley >■. People's, etc., Associal ton, 35 N. Y. Supp. 11 ; B. c. 18 Misc. Rep. 1 People v. I 'ire I teparl ment, :'>! T. U. P. Charlt. 173. 2 Bergman v. St. Paul, etc. Asso- ciation, 29 Minn. 275 ; S. C. 13 N. \Y Rep. 120. By statute, prohibited to change effect of a loan. Hodgins v. On- tario Loan and Debenture Co., 7 Ontario App. 202. 8 Poulter's Co., v. Phillips, 6 Bing. N. C. 614; Hibernia Fire Engine Co. v. Com., 93 Pa. St. 26 1 : State v. Conklin, 34 Wis. 1 ; In re Dunkerson, 4 Biss. 227. 4 Osceola Tribe v. Rost. 15 Md. 295 ; Higgins v. McCrea, 116 U. S. 671 , O'Malley v. People, etc., Am. 92 Hun, 572 ; s. C. 72 N. Y. St. Rep. 289 ; 36 N. Y. Supp. 1016. ■ r> Vinter's Co. v. Passey, 1 Burr. 235. 6 Gouchenour v. Sullivan Build- ing and Loan Association, 119 Ind. 441; S. C. N. E. Rep. § 126. BY-LAWS, — RULES — REGULATIONS. 125 rather be held void than valid. 1 "Where the corporation and its members have given its ambiguous by-laws a uniform and practical construction, that construction, as applied to con- tracts between the corporation and its members, will be applied by the court. 2 If the bylaws be ambiguous they Avill be construed in favor of" the members, when it inflicts a line or penalty. 3 Sec. 125 — Proof of By-laws. ( Jourts will not take judicial notice of the by-laws of a corporation, and they must be proven. 4 That proof maybe made by the production of the originals. 5 But it has been said that, "We think it is not necessary to prove the adop- tion of by-law x s by a parol vote of the members or directors. The adoption of by-laws is sufficiently proved by showing that they appear upon the records of the corporation, and have been uniformly acted upon and enforced as the by-laws of the corporation." 6 If no minute of their passage has been made in the books of the corporation, parol proof is admissible to show their adoption. 7 Sec. 126 — Inherent Power to Enact By-laws. All corporations, unless expressly prohibited by a statute, have the inherent power to adopt and promulgate by-laws for their government and operation. The mere grant of power to form a corporation carries with it this power. 8 It 1 Mayor of Oxford v. Wildgoose, 4 Haven v. N. H. Asylum, 13 N. 3 Lev. 294. H. 532; s. c. 38 Am. Dec. 512; 2 McDonough v. Hennepin County Lucas v. San Francisco, 7 Cal. 463. Catholic Building and Loan Asso- 5 Sandhurst Benefit Building and ciation, 62 Minn. 122 ; s. C. 64 N. Improvement Society v. Delaney, W. Rep. 106. L. R. 3 Vict. L. (Australia) 234. But a course of dealing cannot 6 Hagerman v. Ohio Building change the interpretation of a con- Savings Association, 25 Ohio St. tract where there is no doubt about 186 ; Lockwood v. Merchants' Na- the construction. Watson v. Ben- tional Bank, 9 R. I. 308 ; s. c. 11 digo Permanent Loan and Build- Am. Rep. 253. ing Society L. R. Eq., 10 Vict. 7 Harmony Building Association (Australia) 26 ; Hirsch v. Grand v. Goldbeck, 13 W. N. Cas. 24 ; s. c. Lodge, etc., 56 Mo. App. 101. 40 Leg. Int. 172 ; 30 Pitts. L. Jr. 467. 3 In re Tierney's Estate, 8 Ir. R. 8 Rex v. Westwood, 2 Dow & CI. Eg. 1. 21 ; Martin v. Nashville Building 126 BUILDING AND LOAN ASSOCIATIONS. Cll. VII. is not necessary to include in the charter power to enact by-laws ; but if such power is inserted in that instrument, then the corporation will have no power to enact by-laws except such as is given by the charter. 1 Sec. 127— Who Adopt. Unless some statute authorizes a different body to adopt by-laws, only the stockholders can adopt them ; for the stockholders are really the corporation, and it is the corpo- ration, and not its officers or directors, that can adopt them. 2 A by-law adopted by a board of directors when no statute or other like governing provision gives them power so to do is not even admissible in evidence. 3 Statutes often confer upon boards of directors power to adopt by-laws, not incon- sistent with the general law of the state, nor inconsistent with its charter ; 4 in which instance, a majority of the quorum present at a proper meeting may do so. 5 A power, however, given to the board of directors to adopt b} T -laws does not pro- hibit the stockholders at a proper meeting from also adopt- ing by-laws on the same subject, unless the statute conferring the power expressly gives the board exclusive power over the subject. 6 The power to adopt also covers the power to amend or repeal. 7 Association, 2 Coldw. 418 ; People 17 Mass. 1; Martin v. Nachille v. Medical Society, 34 Barb. o74 ; Building Association, 2 Coldw. 418 ; J hake v. Hudson River R. R. Co., 7 Bank of Holly Springs v. Pinson, Barb. 508; London City v. Van- 58 Miss. 421. acker, Carth. 480 ; Mechanics', etc., 8 Watson v. Sidney, etc., Co. Bank v. Smith, 19 Johns. 115. supra. ■ Mechanics' etc., Bank v. Smith. 4 See Perpetual Insurance Co. v. supra, Child v. Hudson's Bay Co., Goodfellow, 9 Mo. 149. 2 P. Wms. 207 ; State v. Ferguson, 6 Cahill v. Kalamazoo Mutual In- :;:; X. II. 424; State v. Mayor, 33 surance Co., 2 Doug. (Mich.) 124; X. .1. I>. 57. s. c. 43 Am. Dec. 457; Ex parte, -' i:. ■< v. Westwood, 2 Dow] & Willcocks, 7 Cow. 402. CI. 21 : .Morton Gravel Road Co. v. c Rex v. Westwood,2 Dow. & CI. 51 End. I. Watson v. Sid- 21 . ; Peoples. Sterling Manf. Co., 82 n< r. Woody Printing ( !o., 56 Mo. III. 457. App. L45 ; Carroll v. Mullanphy T Schrick v. St. Louis Mutual Bank, 8 Mo. App. 249; House Building Co., 34 Mo. 423. Salem Bank v. Gloucester Bank, § 128. BY-LAWS, — RULES— REGULATIONS. 127 Sec. 128 — Must Conform to the Charter. A by-law to be valid must not be contrary to the charter of the association ; for the latter is the constitution, as it were, of such association. If the by-law does contravene that instrument it will be void. 1 " A by-law may subject persons to penalties, but it cannot make an act void which is warranted by the original constitution." 2 Nor can a by-law enlarge the powers of the corporation, no more than a fountain can rise of its own accord above its source. 3 Thus if the charter give the stockholders power to elect the direc- tors of the corporation, a by-law depriving them of that power is void. 4 So if the charter fix the salaries of certain officers, the corporation cannot change the amount of such salaries by by-laws, although the charter contain a clause authorizing the corporation to fix salaries, the latter clause referring to those salaries not fixed by the charter. 5 The bylaws must also conform to the purpose for which the cor- poration was formed ; G and if their practical effect is to bring about a result at variance with the object of the cor- poration, although in seeming conformity thereto, they will be declared void. 7 1 Kentr. Quicksilver Mining Co., 5 Carr v. City of St. Louis, 9 Mo. 78 N. Y. 159 ; Brewster v. Hartley, 191. 37 Gal. 15 ; s. c. 99 Am. Dec. 237 ; 6 Martin v. Nashville Building Presbyterian, etc., Find v. Allen, Association, 2 Coldw. 418 ; Booz's 106 Ind. 593 ; S. C. 7 N. E. Rep. 317 ; Appeal, 109 Pa. St. 592 ; Parker v. State v. Curtis, 9 Nev. 325 ; Kear- Fulton Loan and Building Associa- ney v. Andrews, 10 N. J. Eq. 70; tion, 46 Ga. 166. Bergmen v. St. Paul Mutual Build- 7 Martin v. Nashville, etc., Assoc, ing Association, 29 Minn. 275. supra ; Herbert v. Kenton Build- 2 De Hascot's Case, Comb. 202; ing and Savings Association, 11 Rex v. Cutbust, 4 Burr. 2204. Bush. 296; Gordon v. Winchester 3 Kolff, St. Paul Fund Exchange, Building and Accumulating Fund 48 Minn. 215 ; s. c. 50 N. W. Rep. Association, 12 Bush. 110 ; Mills v. 1036; Huston v. Reutlinger, 91 Ky. Salisbury Building and Loan As- 333; s. c. 15 S. W. Rep. 867; sociation, 75 N. C. 292 ; Orangeville Brewster v. Hartley, supra; Rail- Mutual Savings Fund tc-t imoiiv covering the ne- chaser. Bank v. Lannier, 11 Wall. cessity for such a rule, sec Illinois 869. Central !>'. I.'.. Co. V. Whittemore, ° Sargent v. Franklin Insurance 48 III. 120. Co., 8 Pick. 90; s. c. 19 Am. Dec. Mechanics' Hank r. Merchants' 30(5; Sargent v. Essex Corporation, Bank, 15 Mo., 518; B.C. LOO Am. 9 Pick. 202. Dec. :;hs ; Pendergast v. Bank of § 139. BY-LAWS, — IiULES — REGULATIONS. 135 Sec. 137 — Releasing Shareholders from Liability. A by-law releasing a shareholder from liability for the payment of his stock in full and providing that the pay- ment of a certain percentage less than the whole shall be deemed a payment of the entire amount due thereon is invalid as against creditors of the association ; for the capital stock is a trust fund for the creditors which the association can- not give away so as to deprive the creditors from resorting to it to collect their debts. 1 Sec. 138— Restricting Right to Sue. A by-law restricting the right of a member to bring suit against the association does not deprive him from resorting to a court of justice to secure his rights. 2 But a by-law re- quiring a member to take certain steps with the association in order to secure an adjustment of his claim before resort- ing to a suit is valid, that not depriving him of the right to resort to the courts to secure his rights. 3 So a by-law re- quiring a member to bring suit within a reasonable time after the cause of action arises is valid, though much shorter than the time specified by the statute of limitations. 4 Sec. 139— Arbitration. A by-law, not in pursuance of a statute providing for it, compelling a member having a dispute with the association 1 Slee v. Bloom, 19 Johns, 456 ; contract may not pursue the s. c. 10 Am. Dec. 273. remedies provided by law to col- The statement in this section is lect it is not a good custom, subject, however, to the power of Spears v. Ward, 48 Ind. 541. the association to effect a valid 3 Harrington v. Workingmen's, compromise if there be a dispute etc., Association, 70 Ga. 340 ; touching the liability of the share- Bauer v. Samson, Lodge, 102 Ind. holder arising out of his having 262 ; s. C. 1 N. E. Rep. 571 ; 13 Am. taken a loan to which his stock is & Eng. Corp. Cas. 618 ; Lafond v. applicable in satisfying it. Deems, 81 N. Y. 508. 2 Supreme Council v. Garrigus, 4 Amesbury v. Bowditch, etc., 104 Ind. 133; s. C. 3 N. E. Rep. Insurance Co., 6 Gray, 596; Wil- 818; People v. National Home son v. ^Etna Insurance Co., 27 Vt. Building and Loan Association, 7 98; Gray v. Hartford Fire Ins Co., Chicago L. Jr. 193. A custom that 1 Blatchf . 280. a party having a claim due upon a 136 BUILDING AND LOAN ASSOCIATIONS. CI). VII. to submit his controversy to arbitration, is void ; because it deprives a member of bis right to resort to the courts and deprives such courts of the jurisdiction over the contro- versy. 1 And an agreement on the part of the member on joining the association to submit all controversies to arbi- tration is not binding, being capable of being broken the same as any other contract. 2 But where a borrower agreed that in case of default, or if the association decided to dis- solve, it should receive from him out of the proceeds of the sale of his property such a sum as referees chosen by both parties should determine, it was held that the agreement was valid. 3 Sec. 140— Forfeiture of Property — Fines. Although a corporation may assess a certain and reason- able fine for a violation of its by-laws and collect it, 4 yet a by-law cannot be enforced by a forfeiture of the property of a defaulting member. 5 But an agreement of a member with his association that unless certain payments shall be made within a certain time after they are due that he shall for- feit all rights in the association is valid ; the right resting upon an agreement and not upon a by-law, and being brought about by his own voluntary act. 6 Such a forfeit- ure cannot, however, aside from an agreement, be inflicted by a by-law for a default in the payment of calls made on stock. 7 But this power may be conferred by a statute. Sec. 141 — Fine Must be Certain. The amount of the fine to be inflicted for a violation of a 1 State v. Merchants' Exchange, 1324; Leathby v. Webster, Sayer, Mo. A.pp. '.Hi; Middleton's Case 252. Dyer, 333a. * Kirk v. Nowill, 1 T. R. 118; - Beath v. N. Y. Gold Exchange, London Tobacco Pipe Makers Co. 1 A 1,1,. Pr. (N. V.) 251 ; 8. C. 38 v. Woodroffe, 7 B. & C. 838. I low. Vr. 168. 6 Cahill v. Kalamazoo Mutual ; White r. Mechanics' Building Insurance Co., supra; Beadle v. iciation, 22 Gratt. 283. Ghenango, etc., Insurance Co., 3 • I Jahill v. Kalamazoo Mutual In- Hill, L61. surance Co., 2 Doug. (Mich.) 124; 7 In re Long Island R. R. Co., 19 0. i:: \m. I).--. 457; Bosworth Wend. 87; S. C. 82 Am. Dec. 429; ?•. Burgen, 7 Mod. 459; S. «'. Lutu, Master Stevedore's Association v. § 143. BY-LAWS, — RULES — REGULATIONS. 137 by-law must be certain and so fixed by the by-law ; 2 but there is no objection to providing that it shall not exceed a certain amount, or shall not be less nor more than certain named sums. 2 The corporation, within the limits of such a by-law, may fix and determine the amount of the fine and then collect it in a court of law. 3 Sec. 142 — Courts Seldom Interfere with By-laws. So long as a by-law is not in contravention of some ex- press legal prohibition, or contrary to public policy, courts will not interfere, or, at least, do so with great reluctance ; for they regard them in the same light as private contracts. 4 Sec. 143— Void in Part, Valid in Part. Just like a statute, and under the same rules and limita- tions, a by-law may be valid in part and void in part. 5 The rule for holding that a part may be bad and the remainder stand has been stated as follows : " Where a by-law is entire, each part having a general influence over the rest, if one part is void, the whole is void ; but where a by-law consists of several distinct and independent parts, though one or more of them is void, the rest are valid. And the rule is applicable to the different clauses of the same by-law ; for where it consists of several particulars, it is, to all pur- poses, as several by-laws, though the provisions are thrown together under the form of one." 6 "Walsh, 2 Daly, 1 ; Rosenbach v. Cotton Exchange v. State, 54 Ga. Salt Springs Nat. Bank, 53 Barb. 668; Dawkins v. Antrobus L. R., 495. 17 Cli. Div. 615 ; s. c. 44 L. T. N. S. iHuntsville v. Phelps, 27 Ala. 557: 29 W. R. 511; Lambert v. 55 ; In re Tierney's Estate, 8 Irish Addison, 46 L. T. N. S. 20 ; Hnssey L. T. Rep. 29. v. Gallagher, 61 Ga. 86 ; People v. 2 Piper v. Chappell, 14 Mees. & St. George's Society, 28 Mich. 261 ; Wels. 624. Weatherly v. Medical, etc., So- 3 Master Stevedores' Association ciety. 76 Ala. 567. v. Walsh, 2 Daly, 1. & Shelton v. Mobile. 30 Ala. 540 ; 4 See Loubat v. Leroy, 15 Abb. s. c. 68 Am. Dec. 143 ; Rogers v. N. C. 1 ; Olery v. Brown, 51 How. Jones, 1 Wend. 237 ; Amesbury v. Pr. 92; People v. Board of Trade, Bowditch Mutual Insurance Co.. 6 80 111. 134 ; Lafondv. Deems, 81 N. Gray. 596. S. 507, reversing, 1 Abb. N. C. 318 ; 6 Amesbury v. Bowditch Mutual s. c. 52 How. Pr. 41 ; Savannah Fire Insurance Co., 6 Gray, 596. 138 BUILDING AND LOAN ASSOCIATIONS. Cll. VII. Sec. 144— Regulating Corporate Elections. We have already seen that a by-law declaring what shall constitute a quorum of the directors is valid. 1 So a by-law authorizing the president of the society to appoint inspectors at a general corporate election; and providing that no ticket shall be counted containing any marks or device upon it, is valid. 2 So a by-law authorizing a stockholder to vote by proxy is valid. 3 1 Hoyt v. Sheldon, 3 Bosw. 267 ; that a statute is necessary to au- Hoyt v. Thompson, 19 N. Y. 207. thorize the adoption of such a by- 2 Commonwealth v. Woelper, 3 law. People v. Twaddle, 18 Hun, S. & R. 29 ; s. c. 8 Am. Dec. 628. 427 ; Philips v. Wickham, 1 Paige, 3 State v. Tudor, 5 Day, 329; s. c. 590 ; Taylor v. Griswold, 14 N. J. 5 Am. Dec. 162 ; Peoples. Crossley, L. 222. 69 111. 195. But it has been held CHAPTER VIII. STOCK OF BUILDING ASSOCIATIONS. Sec. 145. Definition and Description of Stock. 146. Building Association's Peculiar Stock. 147. Advanced Payments on Stock. 148. Prepaid Stock. 149. Preferred Stock. 150. Preferred Stock Applicable to Building Associations. 151. Acquisition of Stock. 152. All Stock must be taken before Business can be trans- acted — Waiver. 153. Effect of Fraud on Subscription. 154. Increasing Stock. 155. Transfer of Stock. 156. Lien of Corporation on Shares. 157. Effects Upon Rights of Owners by Creation of Lien. 158. Nature of Certificate of Shares of Stock. 159. Formalities of Transfer and Registration. 160. Action to Compel a Transfer. 161. Action at Law for Refusal to Transfer. 162. Measure of Damages for Refusing to Transfer. 163. Lost Certificate. 164. Liability of Company for Transferring on Forged Power of Attorney. 165. Liability of Company to Innocent Purchaser under Forged Power of Attorney. 166. Pledge of Shares. 167. Enforcing Stock Payments by Suit. 168. Payment of Dues on Stock not a Payment on Owner's Debt to Building Association. 169. Application of Stock Payments to Extinguishment of Borrower's Debt. 170. Borrower Having Assigned his Stock. 171. Stranger Cannot Compel Application of Stock Payments to Debt. 172. Surety's Right to Stock. 173. Attachment or Levy upon Building Association Stock. 174. Value of Stock when Applied to Borrower's Debt. 175. Right to Membership after Foreclosure and Sale of Mort- gaged Security. 139 140 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. 176. Forfeiture of Stock— Notice— "Waiver. 177. Canceling Stock, Association Cannot. 17S. Building Association Purchasing its own Shares. 179. Number of Shares a Member may Hold. 180. Fee for Transferring Stock. 181. Dividends. 182. Maturity of Stock Cancels Loan — Return of Securities. 183. Loan of Pass-book. 184. Rebate of Interest. Sec. 145 — Definition and Description of Stock. " Strictly the capital stock of a corporation is the money contributed by the corporators to the stock on the initiation of the corporate enterprise." x Shares of stock are personal property, whether so declared by a statute or not. 2 But they are not goods, wares, or merchandise, within the meaning of the seventeenth section of the English statute of frauds, which requires a memorandum in writing of the sale of goods, wares or merchandise, when they exceed a certain amount in value. 3 They may be regarded as choses in action ; 4 but it has been held that they are not " moneys " within the meaning of a will creating a specific bequest. 5 Sec. 146 — Building Association's Peculiar Stock. It must be borne in mind, however, that there is a radi- 1 Christensen v. Eno, 106 N. Y. Co., 76 Cal. 537; S. c. 9 Am. St. 97 : S. C. 12 N. E. Rep. 648 ; 60 Am. Rep. 245 ; 18Pac. Rep. 658 ; Seward Rep. 429. The court took occasion v. Rising Sun, 79 Ind. 351 ; Johns to Bay that "The word 'capital' v. Johns, 1 Ohio St. 359; Tippets .-ipjilied to corporations, is often v. Walker, 4 Mass. 595; Allen v. 1 interchangedly with the Pegram, 16 la. 163. words -capital stock,' and both s Humble V. Mitchell, 11 Ad. & frequently used to express the El. 205; Bowlby v. Bell, 3 C. B. • thing -the property and as- 284; Duncuft v. Albrecht. 12 Sim. of the corporation." See also 189; Watson v. Spratley, 10 Exch. Burrall v. Bushwick, R. R. Co., 75 222. But see Fine v. Hornsly, 2 N. Y. '.Ml. and Fox's Appeal, 112 Mo. App. 61. Pa. St. 887. [t is improper to call *Stanwood v. Stanwood, 17 men- authorized slock capital Mass. 57 ; Arnold v. Buggies, 1 R. tock or stock until it is subscribed I. 165; Denton v. Livingston, 9 for l>y individuals. Sturges v. Johns. 96. on, 1 I'.iss. 246. '' Collins v. Collins, L. R., 12 Eq. a class r. Hope, 16 Granl ( !h. 455. 420 ; Tregear v. Etiwanda Water § 146. STOCK OR SHARES. 141 cal difference in many of their characteristics between the stocks of an ordinary corporation and a building association or society, which arises from the inherent difference of the plans of the two corporations and the objects to be at- tained. It is true there must be a subscription of stock to both, and in this they arealike; but in the manner of as- sessments and paying for the stock they are totally unlike. In an ordinary corporation the stock is either paid for in a lump sum or at some specified time thereafter, or at some time thereafter to be designated by the board of directors, or it is payable in aliquot parts thereof in such amounts and at such times as the directors may fix and determine. These are called assessments. But in building associations such is not the case. The object in the formation of such associations (though often perverted) is to enable men of small means, usually wage earners to pay for stock therein that they may subscribe for in small amounts, at fixed and determined dates or times, and that the amounts thus paid in shall at once be taken up by the association and put to earning interest for the benefit of all the membership, in- cluding those thus paying it. These periods run through several years, in some instances as far as six and in others as long as fourteen, according to the plan of organization. These debts are determined beforehand, and a stockholder knows when he subscribes just when he must pay, how much, and how long his payments must continue. If he continues faithfully to the end, he will receive the full amount of his stock, providing the association be a financial success. Any association that would require payment in full for the stock subscribed at the time of the subscriptions could scarcely be called a building association ; for it would be an entire perversion of the original object of such asso- ciations. But it happens more often than not that a stock- holder becomes a borrower to the extent of the stock he has subscribed for ; and in such an instance the character- istics of a building association are more clearly brought out, and the difference between it and an ordinary corpora- tion more effectually demonstrated. In such an instance the stockholder receives the par value of his stock, as it 142 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. would be when it matured on all payments completed thereon, in advance of that period, less the amount of any premium or bonus he may be willing to pay for the prefer- ence. But he continues just the same to pay the amounts periodically falling due on such stock, just as if no loan had been made to him ; and when his stock has matured it is equal in value to the amount of his loan, and it is applied to the cancellation of such indebtedness. He receives nothing npon his stock at its maturity or the dissolution of the corporation, for it has been paid in advance. And herein there is a radical difference between the workings of a building association with reference to a stockholder and an ordinary corporation with reference to the stock- holder. If, in an ordinary corporation, a stockholder, the owner of five hundred dollars of its stock, worth that at its par value, should borrow that sum from it, to be repaid when the association was dissolved, without interest, the transaction would somewhat resemble a like transaction between a building association and one of its stockholders borrowing from it ; for the debt he owed the corporation could be set off by it against the value of his stock, and the latter would be cancelled or merged in such indebtedness. 1 Sec. 147— Advanced Payment on Stock. It is no uncommon thing for a member to make stock payments on his share not yet due, if the association will permit it. If all the stockholders were to do this at the sin ne time in the case of a terminating society it would at once terminate the society. No doubt exists of the right of the association to do this, and it may, and often does, 1 Mercer v. Amber Building and 384 ; Cason v. Seldner, 77 Va. 293 ; Loan Association, 48 Leg. Int. 277; Peters v. Association, 12 Pa. C. C. s . c. LO Pa. C. C. 51 ; Montgomery, 102 ; State v. Redwood Falls, etc., etc., Association v. Robinson, 69 Association, 45 Minn, 154 ; s. C. 47 AJa. U3. N. W. Rep. 540; 10 L. R. A. 752 ; "The owner of aseriesof slock 85 Amer. & Eng. Corp. Cas. 244; in a building and loan association Latimer v. Equitable Loan, etc., ftre i,, all intents and purposes Co., 81 Fed. Rep. 776; Wierman partners." Maloney v. Real Es- v. International, etc., Union, 67 taic. etc., Association, SI Mo. App. ill. A.pp. 550. § 148. STOCK OR SHARES. 143 allow a moderate rate of interest upon such advanced pay- ments, and it may even secure a repayment, if the enter- prise should fail, of such proportion of the prepayment as may not have accrued at the time of such failure. 1 In an instance of this kind where a member, according to a by- law, made an advanced payment with a view to receiving interest thereon and being secured by a deposit of certain securities of the association with a trust company, it was held, upon winding up the association in the hands of a receiver, that such stockholder could reclaim the amount advanced before the other members, and to the extent of such amount he was entitled to the proceeds of the securi- ties against such receiver. 2 Sec. 148 — Prepaid Stock. It is no uncommon thing for an association to issue paid- up or prepaid stock ; by which is meant stock paid for in full when it is issued, just like stock in an ordinary corpora- tion paid for in full when issued to the holder. The statute may provide for this, or if it do not, then the association may do so under its general power to enact by-laws. When issued, it is in fact matured stock, to be treated just as any other matured stock. Not infrequently the by-laws of an association provide for a particular kind of prepaid stock by allowing a member holding ordinary or common stock to return his stock after a certain time, and get a new certificate for a less number of shares. In that event the money paid 1 See, generally, In re Guardian a resolution permitting members Permanent Benefit Building So- who were debtors to cancel their ciety L. R., 23 Ch. Div. 440 ; and obligations by paying monthly People v. Preston, 140 N. Y. 549 ; dues in advance a certain number s. c. 35 N. E. Rep. 979 ; Watkins v. of months, and also all arrears, of Workingmen's, etc., Association, which permission its borrower had 97 Pa. St. 514; s. c. 38 Leg. Int. not availed himself. It was held 333 ; 10 W. N. Cas. 414. that he could not derive any bene- 2 Munhall v. Bcedecker, 44 111. fit or advantage from the resolu- App. 131. tion. Watkins v. Workingmen's In an action to recover the Building and Loan Association, 97 amount of a loan made to a mem- Pa. St. 514; s. c. 38 Leg. Int. •">•">". : ber of the association it appeared 10 W. N. Cas. 414. that the association had adopted 14-4 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. on the old shares is applied to the new, and no more money is required until the money already paid in is exhausted. Such an arrangement is valid. 1 A prepaid shareholder is as much a member of the association as any other member. 2 If insolvency intervene, however, a member who holds paid-up stock is not entitled to be classed as a creditor and thus have preference over the other stockholders. 3 Sec. 149— Preferred Stock. " Shares conferring on their holders preferential or ad- ditional rights not enjoyed by the holders of other shares are called preference shares or preferred shares. They can only be created when the authority to create them is given by statute or charter, or by agreement be- tween all parties interested." 4 Unless there be some law authorizing it, the power to issue preferred stock rests upon universal consent on the part of all stockholders ; but this universal consent may be contained in the articles of asso- ciation providing for the issuance of such shares, adopted when the association was formed. 5 Aside from a statute, a corporation cannot issue preferred stock to persons loaning money to it, in order to secure such loans, either as an in- ducement to the making of the loan or to secure it after it is made. 6 While a corporation may, at the outset, before any stock is issued, provide by a by-law for the issuance of preferred stock, 7 even where no statute provide for such stock, yet it cannot, after such subscriptions are made, divide its stock into two classes and give to one class a preference over the other, without unanimous consent of all shareholders. 8 Xor can such power be exercised under a 1 Fulton v. American Building N. E. Rep. 853 ; reversing, 23 J. & and Loan Association, 4G Minn. S. 562 ; s. C. 3 N. Y. Supp. 822 ; In 190; s. c. 48 X. W. Rep. 781. re Bridge water Navigation Co. L. 2 Lister v. Log Cabin, etc., Asso- R., 39 Ch. Div. 1. ciation, 88 Md. 115. 6 Kent v. Quicksilver MiningCo., :; I [ohenshell v. Home Savings, 78 N. Y. 159. Contra, Westclies- etc, Assn. 110 Mo., 5(>(i ; 11 S. W. ter, etc., R. R. Co. v. Jackson, 77 Rep. 948. Pa. St. 321. 1 Lindley's Company Law, 896. 7 Kent v. Quicksilver Mining Co. B See Camp) tell i\ American Zy- supra. lonite Co., 122 N. Y. 455; s. 0. 25 8 Id. § 150. STOCK OK SHAKES. 145 general power conferred by statute to make, alter, or repeal its by-laws. 1 A preferred stockholder is not entitled to preference over the general creditors of the association, but holds his stock subordinate to their claims. 2 So a preferred shareholder, by the very terms of the contract providing for its issuance, may be deprived of the right to vote, and the acceptance of the stock will bar him of such right. 3 Sec. 150— Preferred Stock Applicable to Building Association. There are few reasons why a building association may not issue preferred stock, if the proper steps, as in ordinary corporations, have been taken to enable it to do so. In speaking upon this subject, with reference to such an as- sociation issuing preferred stock, Sir George Jessel, M. E., said : " Is it contrary to the nature of these societies so that it is impossible to make a society with this kind of shares consistent with the law and conduct of the societ} 7 ? On that point I do not think it is the province of the judi- cature to find out things to be inconsistent with the ordinary requirements of mankind, which the people them- selves have not found out. It is all very easy for people to say it is against policy, or against the meaning of the socie- ties ; but when you see that people who have established the society do not think so, and have acted on a contrary view, it is very improbable that it is contrary to the nature of the society, and contrary to the object the members have in view. But, besides that, I cannot see any reason why it should be so. * * * The investing members become so for the purpose of getting more interest than they can get in the usual way. Why may they not stipulate for some security ? "Why may they not say, as between them- selves and the other members, ' If this society comes to 1 Id. Hohenshall v. Home Savings, etc., 2 Warren v. King, 108 U. S. 389 ; etc., Ass'n 140 Mo. 566 ; 41 S. W. S. c. 2 Fed. Rep. 36 ; St. John v. 948. Erie R. R. Co., 22 Wall. 136 ; s. C. 3 Miller v. Ratterman, 47 Ohio 10 Blatchf. 271 ; In re London In- St. 141 ; s. C. 23 Oh. L. Jr. 416 ; 24 dia Rubber Co. L. C. 5 Eq. 519 ; N. E. Rep. 496. io 146 BUILDING AND LOAN ASSOCIATIONS. Cb. VIII. grief, recollect that we shall be paid first. It is only in that case. If this society is prosperous, everybody is paid, and paid handsomely.' "Why shall they not say, ' We will put our money down ; we will start your society, and get you money which shall be advanced to your building members or buying members who want house property, on these terms ; viz., if we put our money down in hard cash, if the society does not turn out prosperously we shall be repaid I ' There does not appear to me to be anything against the constitution of the society in such an agreement ; on the contrary, it may enable societies to be established which otherwise could not be set going at all. Again, is it con- trary to the constitution of such society that members shall pay the instalments in advance % I say clearly not. The more money you get from the investing members the more money you have ready to advance to the borrowing mem- bers, and the more rapidly you would bring your society to an end, if the society is established without a fixed pe- riod. It seems to me there is no reason why the judicature should say that these arrangements * * * are illegal because they are contrary to the policy on which these so- cieties are founded." 1 A similar result was reached in New York. No statute of that State required the stock to be paid for in instalments as they fell due, but there was a statutory requirement that the certificate should set forth " the amount of each share " and " the monthly or weekly dues per share." There was no statutory provision for paid- up or preferred stock, but a statute directed that certain unit ins should be inserted in the certificate of incorpora- tion. This certificate might also, besides the directory pro- visions, contain kw such other provisions not inconsistent with law as shall be necessary for the convenient and effective transaction of its business." A mandate was brought to compel an officer to approve :i certificate of incorporation providing for preferred and income stock, as well as 1 In re Guardian Permanent Ben- Murray v. Scott L. R.,9App. Gas. Lefil Building Society I.. K. 28 Ch 519; s. c. 53 L. J. Ch. 745; 5] L. hiv. 440; s. c. 52 L .1. <'l,.s;,; ; is. T. 462; 33 W. R. 173. L. T. i::i ; 82 W. R. 178. See also § 150. STOCK OR SHARES. 147 for instalment stock. The court declared, as did the Engl ish court, from which we have just made a quotation, that "a certificate which did not provide for the- payment of monthly or weekly dues by any member of the cor- poration who wanted to pay in that way would undoubtedly be a departure from the law." The court also declared that no provision ought to be inserted in the certifier I <• which would prevent persons of limited means from acquir- ing homes and accumulating savings thereunder. After making these declarations the court proceeded to say : " This certificate provides for shares of $100 each, and for monthly dues of fifty cents on each share. The general scheme is that the dues, fees, penalties, and all other income of the corporation shall go into a common fund, and from this fund annual dividends are to be made, which are to be applied upon the shares of stock until they are fully paid for. Dues may be paid in advance with the assent of the directors, and upon such advance payments the directors may allow a rebate or discount at such rate per annum, for the payment in advance, as they shall from time to time prescribe. Such payments, instead of being contrary to the purpose of such corporations, may be promotive of that purpose. If a wage earner has the money, it may be well to permit him to make the advance payments, and thus to save his money ; and in this way, too, money is accumulated by the corporation more rapidly for loan to its members. So, the law is not violated by these advance payments upon instalment stock, and no injustice is done to any of the members thereby. The certificate provides that upon pre- ferred stock there shall be paid at the time of subscription, dues to the amount of sixty dollars, and the holder thereof shall be entitled to receive, out of the profits apportioned thereto, semi-annual dividends in cash, up to the rate of six per cent, per annum. The profits apportioned to such stock, over and above such dividends, shall be credited thereto and be payable with the stock at its maturity. The character of such stock must be determined at the time of the subscription. What harm can come from the creation of such stock? It allows a member who has money enough 148 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. to pay his dues for ten years in advance ; and why is that not wise policy ? Having thus paid in advance his divi- dends are not needed to carry his stock to maturity, and hence he may draw his dividends up to six per cent., and the balance of his dividends over that sum are applied to carry his stock to maturity. He has no advantage over the holders of instalment stock. Their dividends are ap- plied to carry their stock to maturity, and they then have the same benefit that they would have if the dividends were first paid to them, and then by them paid upon their stock. All dividends are required to be made upon the net sums to the credit of the shares, and not upon the par value of the shares ; and hence the holders of prepaid shares get precisely the same dividends proportioned to the amount standing to the credit of their shares, as are paid to other stockholders, and no more. It is impossible for us to perceive how this scheme violates the law or any public policy. It does not prevent or defeat equality or mutuality among the members. And if the prepaid stock is to be condemned, then it is not perceived how prepayment of instalments upon instalment stock can be upheld. Money must come into the treasury of one of these corporations, from the small monthly dues, very slowly, and members desiring to borrow money for the purchase or im- provement of homes must wait a long time before they can be accommodated with loans from money thus contributed ; but, if prepayment of dues is permitted, the ability of the corporation to aid its members by loans is greatly facili- tated, and the main purpose of their creation is thus pro- moted. The income stock upon which the members are also required to pay in advance $60 per share, differs from the preferred stock only in the fact that the holder of such stock may receive dividends in cash up to eight percent., and in case tin 1 dividends are more, such dividends are ap- portioned among the holders of other kinds of stock; and what we have said about tin; prepaid stock applies to this slock. The corporation has protection against the prepaid and income slock, as it is provided in the certificate that tin; directors may at any time refuse to issue such stock, § 150. STOCK OR SHAKES. 149 and may at any time, upon thirty days' notice, retire such stock by paying the book value thereof. But it is said that there is no requirement that the prepaid and income stock shall be carried to maturity, so as to be full paid. We are not sure of this. As the shares are fixed at $100, and are not mature until they reach that sum, it may be that these shares shall, at the proper time, be brought to maturity on an equality with the other shares. But even if this be not so, no injustice can come from this situation, because in no event can the holder of these shares draw more than the amount that has been credited upon them, nor can they draw dividends on more than such amounts." 1 These pre- ferred shares produce unique results often in instances of insolvency. Thus a building society issued paid-up prefer- ence shares at a guaranteed rate of interest, the holders not being liable for losses, nor to participate in profits. The ordinary members were liable under the rules, whether on withdrawing their shares, or on redeeming their securities, for a fair proportion of the losses, expenses, bad debts, and other charges of the society. In winding up the association it was found that there was a deficiency of assets, and the court held the ordinary members liable for the full amount due on the preferred shares, including the interest thereon from the date of the winding-up order ; and that those members who had received advances on their shares must satisfy this liability by payment, and the other members by submitting to a deduction from their claims against the as- sets. 2 In Illinois it is held that a building association has no power to issue paid-up shares of stock, or preferred shares, or to agree to pay the par value of a share, one hundred dollars, on the payment of seventy-five cents per month for six years, under a statute requiring subscrip- tions to stock to be paid in periodical instalments which should continue until such payments and the earnings equal 1 People v. Preston, 140 N. Y. 2 hire Reliance Permanent Ben- 549 ; s. c. 35 N. E. Rep. 979 ; 46 efit Building Society, 61 L. J. Ch. Amer. & Eng. Corp. Cas., 494; 24 453 ; s. C. 66 L. T. 823 ; 8 T, L, L. R. A. 57. Rep. 525. 150 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. the face value of the stock. 1 Bat the holder of such stock cannot insist that the contract is void in order to have him- self declared a creditor of the association when insolv- ency intervenes. 2 Where a statute, however, provided for the payment of the capital stock in instalments as the by-laws should provide, but authorized the directors in their discretion, to allow interest not exceeding eight per cent. " on such instalments as are paid in advance," it was held that an association had authority to receive full pay- ment in advance, and issue paid-up stock bearing seven per cent, interest. 3 Sec. 151 — Acquisition of Stock. The acquisition of stock in a building association does not differ from the acquisition of stock in any other corpo- ration. If the charter provides that all the stock must be subscribed for by a certain time or the organization will fail, then a failure to secure subscriptions for the full amount of the stock by that time will release those that have subscribed, and they cannot be held by an amend- ment of the charter obtained after their subscription, ex- tending the time, unless they assent thereto. 4 If there is a written subscription with a parol condition, the latter is void and cannot be enforced ; because it is a variance of the written terms of the contract of subscriptions. 5 So if the subscribers all agree among themselves that they are 1 King v. International, etc., 5 Evansville, etc., R. R. Co. v. Union, 170 111. 135 ; 48 N. E. Rep. Possey, 12 Ind. 3G3 ; Clem v. New 077; reversing, 68 111. 640 ; Gibson Castle, etc., R. R. Co., 9 Ind. 488; ^.Safety, etc, Ass'n, 170 111. 44 ; 18 s. c. 68 Am. Dec. 653 ; Connecticut, N. B. Rep. 580 ; Loan and Protec- etc., R. R. Co. v. Bailey, 24 Vt. 465 ; ti 0I] \-,- M r . Eolland, 63 111. App. s. c. 58 Am. Dec. 181; Dill v. Wierman v. International, etc., Wabash, etc.. R. R. Co., 21 111. 91 ; \ i, (,; in. \|,|,. :,;,(». Topeka Mf. Co. v. Hale, 39 Kan. . on '-. Safety, etc., A.ss'n, 23; Robinson v. Pittsburgh, etc., 69 III. \|.|>. 185; Towle v. Ameri- Co., 32 Pa. St. 334; s. c. 72 Am. can, etc., Iss'n, 75 Fed. Rep. 938. Dec. 792; Wight v. Shelby R. R. i Latimerv. Equitable Loan, etc., Co., 16 B. Mon. 4;s.c. 63 Am. \ ,, 81 Fed. Rep. 770. Dec. 522. 1 Union Hotel Co. v. Hersee, 15 Bun, 871. § 152. STOCK OH SHARES. 151 not to be liable unless upon the happening of a certain event, and this conditional agreement be in parol, while the contract of subscription is in writing-, such condition cannot be shown as a defence in a suit to enforce an assessment. 1 It is no de- fence in a subscriber that he became such, merely for the pur- posed' inducing others to subscribe, and that there was an un- derstanding that he was not to be held as a subscriber, such an understanding being void. 2 The general rule is that all stock must be paid for in money ; and this is especially true of building associations, the agents of such institutions hav- ing no authority to accept anything else in payment than money. Then, where an agent established local boards, solic- ited stock, negotiated loans, and collected the price of pre- paid stock, all with the acquiescence of the association, it was held to have no authority to accept stock of another association in payment for prepaid stock he sold. 3 Sec. 152 — All Stock must be Taken before Business can be Transacted — Waiver. Unless the articles of association, the charter or a statute provide differently, all the stock provided for, on the or- ganization of the association, must be subscribed for before any business can be transacted and the subscriber be bound on his contract of subscription. 4 But this condition may be waived by the subscribers, and this waiver may be either express or implied. Thus, if they know the whole capital stock has not been taken and after having such knowledge 1 White Hall, etc., R. R. Co. v. drew it out the next day after the Meyers, 16 Abb. Pr. (N. S.) 34. loan was made, has a valid lien by 2 Downie v. White, 12 Wis. 176 ; such mortgage. Such a loan was s. c. 78 Am. Dec. 731 ; White held unauthorized. Lockwood v. Mountains R. R. Co. v. Eastman, Robbins, 1 Clev. Rep. 101. 34 N. H. 124 ; Pickering v. Tern- s German American Building pleton, 2 Mo. App. 425. Association v. Droge, 14 Ind. App. A building association, forbidden 691 ; S. C. 43 N. E. Rep. 475. by its charter to loan to any ex- * Cabot, etc., Bridge v. Chapin, cept members or depositors, mak- 6 Cnsh. 50 ; Hager v. Cleveland, ing a loan to one who before the 36 Md. 476 ; Morrison v. Dorsey. 4s loan was fully consummated by the Md. 461 ; Massey v. Citizens' Build- delivery of the mortgage note, ing and Savings Association, 22 made a small deposit — $25 — and Kan. 624. 152 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. they attend meetings of the association, vote, and take part in the meetings, assent to the making of contracts, and the like, they will be held to have "waived the condition that all the stock must be subscribed for before they shall be bound by their contract of subscription. 1 And in building associations it is almost the universal rule that provision is made, either by statute or in the incorporating articles to bep;in business when so much stock shall be taken. Sec. 153 — Effects of Fraud on Subscription. A contract of subscription for stock, induced b} r fraudu- lent representations of the corporation or its agents, may be avoided by the subscriber. 2 Of course, the representation of one not the agent of the society, will not bind such soci- ety. 3 But a subscriber, in order to avoid his contract of subscription, must be diligent in discovering the fraud ; and if knowingly afforded the means of making the discovery, and fail to avail himself of it, he will be bound by his con- tract. 4 But when an officer or agent makes the fraudulent representations, the subscriber has a right to rely upon them; and he is not bound to go out and make inquiry, although he could thereby easily have ascertained the truth. 5 After being informed of the fraud, the subscriber may waive his right to insist upon an annulment of the contract, by taking part in the corporate business, or by some affirmation, act or express declaration of waiver. 6 The 1 Hager v. Cleveland. 36 Md. 476. 2 Vreeland v. New Jersey Stone Co., 29 N. J. Eq. 1U0 ; Walker v. Mobile, etc., R. R. Co., 34 Miss. 245; Custer v. Titusville, etc., R. ];. Co., 63 Pa. St. 381 ; Robinson v. Pittsburgh, etc., R. R. Co., 32 Pa. St. 334 ; 8.C.72 Am. Dec. 792. See r. Turquand, L. R., 2 H. L. Neuman v. N. Y.. etc., Ass'n, •II N. Y. Supp. 896; S. C. L7 Ipp. Div. 72. « Walker v. Mobile, etc., R. R. upra. mneci icul . etc., R. R. ( !o. v, Bailey, 24 Vt. 465; S. c. 58 Am. Dec. 181 ; American Building and Loan Association v. Rainbolt 48 Neb. 434, 476 ; s. c. 67 N. W. Rep. 493 ; Baker v. Leighton Lea Ass'n. 46 N. Y. Supp. 35. r ' Smith r. Reese River Co., L.R., 2 Eq. 264 ; s. c. L. R. 4 H. L. 64 ; Union National Bank v. Hunt, 76 Mo. 439, reversing 7 Mo. App. 42 ; I >irectors v. Kisch, L. R., 2 H. L. 99. 6 City Bank v. Bartlett, 71 Ga. 7i)7 ; Centre, etc., Co. v. McConaby, 16 S. & R. 140; National Park Bank v. Nichols, 2 Biss. 146. § 153. STOCK OR SHARES. 153 fraud that will enable a subscriber to avoid a contract of subscription, must be such as was a material inducement to the contract. 1 The fraudulent representations must have been made for the purpose of inducing' the person com- plaining to subscribe; and if made to a third person for a like purpose, and the person complaining of them relied upon them without the company knowing it, he cannot set up as a defense that he was misled. 2 An intent, however, to deceive the public generally will be sufficient to secure the loan, if acted upon. 3 Nor is it necessary that the fraudu- lent representations should have been wilfully made. It is sufficient that they were carelessly made, without due regard for the truth. 4 More puffing, however, will not be suffi- cient to enable the subscriber to avoid the contract, for that is expected, 6 nor will the holding out of an inducement of something that is unlawful, and the same is true of state- ments of matters of opinion or belief. 7 If a subscriber waive the fraud perpetrated upon him in securing his own sub- scription, he will also waive his right to rescind subscrip- tions made by others, induced by fraudulent representations, of which he has become the assignee. 8 1 Pulsford v. Richards, 22 L. J. 8 American Building & Loan As- Ch. 569 : s. C. 17 Jur. 865 ; 19 E. C. sociation v. Rainbolt, 48 Neb. 434 ; L. & Eq. 387. s. c. 67 N. W. Rep. 4'.):;. 2 Ex parte Worth, 4 Drew. 529 ; False representations by tbe offi- Ex parte Brigg, L. R., 1 Eq. 483. cers of an association, that its 3 Ayre's Case, 25Beav. 513 ; Peck profits were 15 to 20 per cent, every v. Gurney, L. R. 6 H. L. 377. year, whereby a person was in- 4 Crump v. United States Mining duced to become a member, and Co., 7 Gratt. 353; s. c. 56 Am. to borrow money on his shares, Dec. 116; Glamorganshire Iron was held ground for a rescission of Co. v. Irvine, 4 F. & F. 947. the contract on payment of the 5 Kisch v. Central Railroad, 34 loan with legal interest. Neuman L. J. Ch. 545; Thornburg v. New v. N. Y., etc., Ass'n, 44N. Y. Supp. Castle, etc., R. R. Co., 14 Ind. 499. 896 ; s. c. 17 App. Div. 72. 6 Upton v. Tribilcock, 91 U. S. An agent of an association solic- 50; Wight v. Shelby, R. R. Co., 16 iting stock and loans may agree B. Mon. 4 ; s. c. 63 Am. Dec. 522. with a first mortgagee that if he 7 Armstrong v. Karshner, 47 would waive his prior lien on the Ohio St. 276 ; s. c. 24 N. E. Rep. mortgaged premises in favor of a 897 ; Henderson v. Railroad Co., second mortgage running to the 17 Tex. 560 ; s. c. 67 Am. Dec. 675. association, he (the agent) would, 154 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. Sec. 154— Increase of Stock. By an increase of the stock of a corporation is not meant the issuance of a new " series," such as is peculiar to build- ing associations ; but an increase over the amount fixed by the original articles of association. When the stock is in- creased, if a charter or statute does not authorize them to do so, the board of directors cannot do it ; for that event must be brought about by the act of the corporation. Speaking of the increase of stock of an ordinary corporation, the Supreme Court of the United States has used the following language : " The general power to perform all corporate acts refers to the ordinary business transactions of the corpora- tion, and does not extend to a reconstruction of the body itself or to an enlargement of the capital stock. A corpo- ration, like a partnership, is an association of natural per- sons who contribute a joint capital for a common purpose ; and although the shares may be assigned to new individuals in perpetual succession, yet the number of shares and amount of capital cannot be increased except in the manner expressly authorized by the charter or articles of association. Author- it v to increase the capital stock of a corporation may un- doubtedly be conferred by a law passed subsequent to the charter ; but such a law shall regularly be accepted by the stockholders. Such assent might be inferred b} T subsequent acquiescence ; but in some form or other it must be given to render tin- increase valid and binding on them. Change in the purpose and object of an association, or in the extent of its constituency or membership, involving the amount of the capital stock, are necessarily fundamental in their character, ;iii<| cannot, on general principles, be made without the express or implied consenl of the members. The reason is on behalf of the association, see to a certain series. Prairie State, thai the money advanced was used etc., Ass'n v. Gorrie, 167 III. 414; in the improvement of the mort- s. c. 47 N. E. Rep. 739; affirming Ipremises. Wayne Interna- 64 111. App. 325. tional, etc., Ass'n v. Moats, 149 Ind. A Imildin^ association may be 123; s. c. 18 V E. Rep. "•'■*'■'■ bound by the fraudulent represen- \ Imildiii^ association is lioinnl tat ions of its promoters. Buker V. I,, the representations of itssecre- Leighton Lea Ass'n, 46 N. Y. Supp. lock thai it belongs 35 ; s. c. 18 App. Div. 548. § 154. STOCK OR SHARES. 155 obvious. First, as it respects the purpose and object. This may be said to be the final cause of the association, for the sake of which it was brought into existence. To change this without the consent of the associates would be to com- mit them to an enterprise which they never embraced, and would be manifestly unjust. Secondly, as it respects the constituency or capital and membership. This is the next most important and fundamental point in the constitution of a body corporate. To change it without the consent of the stockholders would be to make them members of an association in which they never consented to become such. It would change the relative influence, control, and profit of each member. If the directors alone con id do it, they could always perpetuate their own power. Their agency does not extend to such act, unless so expressed in the char- ter or subsequent enabling act ; and such subsequent act, as before said, would net bind the stockholders without their acceptance of it, or assent to it in some form. Even when the additional stock is distributed to each stockholder pro rata, it would often work injustice, because many of the stockholders might be unable to take their respective shares, and might thus lose their relative interest and influence in the corporate concerns. These conclusions flow naturally from the character of such associations. Of course the associates themselves may adopt or assent to a different rule. If the charter provides that the capital stock may be increased, or that new business may be adopted by the cor- poration, that is undoubtedly an authority for the corpora- tion (that is, the stockholders) to make such a change by a stockholders' vote, in the regular way. Perhaps a subse- quent ratification, or assent to a change already made, would be equally effective. It is unnecessary to decide the point at this time. But if it is desired to confer such a power on the directors so as to make their acts binding and final, it should be expressly conferred." * "Where the stock ex- pressly allowed by charter has not been all subscribed, the power of the directors to receive subscriptions for the balance may stand on a different footing. Such an act i Railway Co. v. Allerton, 18 Wall. 233. 156 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. might, perhaps, be considered as merely getting in the capi- tal already provided for the operation and necessities of the company, and, therefore, as belonging to the orderly and proper administration of the company's affairs. Even in such case, however prudent and fair, directors would prefer to have the sanction of the stockholders to their acts." 1 But even the stockholders cannot increase the capital stock un- less the charter or a statute authorize them so to do ; 2 nor can they decrease it, except under like provisions. 3 All the stock increased beyond the limit allowed by the charter, or the corporation's constitution, is void ; 4 and if a subscriber has paid any instalment on such illegal stock he may recover it back, for the consideration for the payment has failed. 5 But unanimous consent of all the stockholders of the corpo- ration will make the increase binding upon them, though not made with the statutory formalities. 6 Acquiescence on the part of the stockholders will also cure mere irregulari- ties ; 7 especially where no objection be made until after insolvencv of the corporation intervenes. 8 If a corporation is authorized by a statute to increase its stock, then the assent of a stockholder to an increase is not necessary ; and he will be bound by an increase properly made. 9 If the stock be increased, the existing stockholders have the right to subscribe for such increase in the ratio their stock bears 1 Id. In this case it was held G Pool v. West Point, etc., 30 that a dissenting stockholder Fed. Rep. 513; Bailey v. Cham- could maintain a suit in equity plain, etc., Co., 77 Wis. 453 ; s. C. us! the directors to prevent 40 N. W. Rep. 539. making an unauthorized increase 7 Payson v. Stoevev, 2 Dill. 428 of the capital stock. Stutz v. Hendley, 41 Fed. Rep. 531; 2 Sutherland v. Olcott, 95 N. Y. s. c. 139 U. S. 417; Byers v. Rol- 93; reversing 29 Bun, L61 ; Me- lins, 13 Colo. 22 ; s. c. 21 Pac. Rep. chanics' Banls v. New York, etc., 894; Kansas City Hotel Co. v. R, l.\ Co., I- N. Y. 599; Winters Hunt, 57 Mo. 120. v. Armstrong, 37 Fed. Rep. 508; 8 Railway Co. v. Allerton, 18 Grangers Life, etc., Co. •y.Kamper, Wall. 233; Upton v. Jackson, 1 73 ,\la. 825. Flipp, 413; Clarke v. Thomas, 34 ■ Seiznourel v. Borne Insurance OhioSt.46. ( (... 2 I Fed. Rep. 882. 9 Port Edwards, etc., R. R. Co. v. • Scovill r. Thayer, L05XJ. 8. 148. Arpin, so Wis. 214; s. c. 49 N. W. • Knowlton v. Congress Spring Rep. 828. Co.. ii Blatchf. 864. § 155. STOCK OR SHARES. 157 to the amount of the increase, to the exclusion of all other persons ; and an effort to permit outsiders to take such stock will be unavailing against a dissenting stockholder, 1 unless some provision of the statute provide a different rule. 2 If the corporation unlawfully deprives a stockholder of his right to subscribe for stock, it will be liable to him for damages. 3 lie cannot be charged a bonus for this privi- lege ; 4 but if paid it cannot be recovered back, even if paid under protest. 5 Set*. 155 — Transfer of Stock. A member has the right to sell and transfer his shares, and the object of the purchase, in the absence of a charge of fraud, cannot be inquired into in order to prevent a sale. 6 A temporary transfer, however, will not bestow upon the transferee the same rights as if it were a permanent one. 7 A contract to sell and transfer in the future is valid and not against public policy. 8 Shares of an unincorporated asso- ciation may be transferred so as to give the transfer a right to maintain a suit in equity against his fellows. 9 The trans- feree takes the stock of a building association subject to all the liabilities of the transferer, among which is that of pay- ing up any arrears of monthly dues. 10 1 Jones v. Morrison, 31 Minn. 9 Ry. & Corp. L. Jr. 462 ; 12 L. R. 140; Gray v. Portland Bank, 3 A. 781 ; In re Cawley L. R., 42 Ch. Mass. 364; s. c. 3 Am. Dec. 156; Div. 209 ; S. c. 31 Am. & Eng. Corp. State v. Smith, 48 Vt. 266 ; Hum- Cas. 425. A stranger to thebuild- boklt Driving Park Association, 34 ing association may purchase it. Neb. 528; 52 N. W. Rep. 568; 33 Parker v. Fulton, etc., Association, Am. St. Rep. 654. 46 Ga. 166. 2 Ohio Insurance Co. v. Nunne- 7 Baker's Appeal, 108 Pa. St. 510 ; macher, 15 Ind. 294. S. c. 56 Am. Rep. 231. 3 Gray v. Portland Bank, supra. 8 Smith v. Nashville, etc., R. R. * Cunningham's Appeal, 108 Pa. Co., 91 Tenn. 221 ; s. C. 18 S. W. St. 546. Rep. 546. 5 De la Cuesta v. Insurance Co., 9 Durkee v. Stringham, 8 Wis. 1. 136 Pa. St. 62, 658 ; s. c. 26 W. N. 10 Union Building Loan Associa- Cas. 337 ; 47 Leg. Int. 466 ; 20 Atl. tion v. Masonic Hall, etc., Associa- Rep. 505 ; 9 L. R. A. 631. tion, 29 N. J. Eq. 389. But the as- 6 Carson v. Iowa City Gaslight signee takes it free from latent Co., 80 la. 638 ; s. c. 45 N. W. Rep. equities between the parties. Bal- 1068 ; In re Argus Printing Co., 1 lou v. Manhattan, etc., Co. 19 Misc. N. D. 434 ; s. C. 48 N. W. Rep. 347 ; Rep. 698 ; s. C. 45 N. Y. Supp. 109. 158 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. Sec. 156 — Liens of Corporation on Shares. Unless some statute authorize it, an association cannot claim a lien on stock for dues or money the owner owes it. 1 The right to have such a lien, however, may be established by an agreement inserted in the articles of association with- out a statute providing for it. 2 A power given to a corpo- ration to " regulate " the transfer of stock is amply sufficient to enable it to adopt a by-law creating a lien on all his stock where the owner is indebted to the association. 3 So a lien for such indebtedness may be created by contract between the owner and the corporation by inserting language to that effect in the certificate issued to the holder ; and the pur- chaser of such certificate will be chargeable with notice of the amount of the lien. 4 For what kind of indebtedness the lien is created depends upon the language of the statute or article of association creating it. 5 If a valid lien has been created, a purchaser of the shares takes them subject to the lien, and a sale under the lien to satisfy such indebtedness Where Building Association stock is transferred to the association as collateral security the association is invested with its membership for all purposes of dominion of the debl secured. Schlesinger's Estate, 1 Law Times (N. S.) 15. The regularity of a transfer of stock sold by a building associa- tion, after having been surrendered to it by a former owner, cannot be questioned when sued for its withdrawal value as belonging to a certain series, it having recog- nized t he t ransfer as being proper, by being ready and willing to pay ,i : , a le b valuable series. Prairie Stat.-, etc., Ass'n r. Conic Ho III. Ill: s. c. 47 N. E. Rep. 739; af- ttrming, ''.l III. Ipp. 325. ' Gemmell '•. Davis, ;:> Md. 546; 32 \mi. si. Rep. II'.' ; Bell's Appeal, L15 Pa. St. 88; s.c. 2 \.m. . p. 582 : Farmers', etc., Bank v. Wasson, 48 la. 386 ; s. c. 30 Am. Rep. 398. 2 Hague v. Dandeson, 2 Exch. 740; New London, etc,, Bank v. Brocklebank, L. R., 21 Ch. Div. 302 ; Arnold v. Suffolk Bank, 27 Barb. 424. 3 Cunningham v. Alabama Life Insurance Co., 4 Ala. 652 ; St. Louis Perpetual Insurance Co. v. Good- fellow, 9 Mo. 149 ; Pendergast v. Bank, 2 Sawy. 108; Carroll v. Mullanphy Savings Bank, 8 Mo. Ap|>. 249. 4 Vansands v. Middlesex County Bank, 26 Conn. 144; Jennings v. Bank of California, 79 Cal. 323; s. c. 21 Pac. Rep. 852; 12 Am. St. Rep. 145; Cent. L. Jr. 150. ■'■ /// re Cawley, L. R. Q. Ch. Div. 209 ; 8. C. "I Am. & Eng. Corp. Cas. 425 ; Schmidt v. Hennepin County Barrel Co., 35 Minn. 511; s. .'. 29 N. W. Rep. 200; Mobile § 156. STOCK OR SHARES. 159 will divest the purchaser of his title to the stock. 1 So if the lien has been created by a by-law adopted by virtue of a clause in the charter authorizing the creation of the lien by a by-law ; and a statute provides that there shall be no transfer until such transfer is made on the books of the cor- poration, a purchaser of the stock is chargeable with notice of the amount of the indebtedness that is a lien thereon. 2 But if no such a provision is inserted in the charter, and the lien is created by a by-law, then a purchaser will take it free of any lien that may exist, unless he had knowledge of the by-law before he purchased. 3 The corporation may waive its lien by permitting the stock to be assigned on the books, through its proper officers, without asserting its right thereto. 4 A by-law of a building association providing that no share shall be transferred while any debt, penalty, or due of any kind against the owner thereof shall remain unpaid, creates a lien on the share, as against the shareholder, for a debt due by him to the association, and the assignee in insolvency of such shareholder takes the shares subject to such lien. 5 The foreclosure of the association's lien on the member's stock, and the sale of such stock, terminates his liability for stock assessments. 6 A by-law of a building society required that a shareholder should have satisfied all his obligations to the society before he should be at liberty to transfer his shares. One P., a director, in contravention of the by-law, induced the secretary to countersign a transfer of his shares Mutual Insurance Co. v Cullom, 4 Hodges v. Planters' Bank, 7 49 Ala. 558. Gill & J. 306. 1 Union Bank v. Laird, 2 "Wheat. 5 Thirty-first Street Building and 390 ; West Branch Bank v. Arm- Loan Association v. Wetherell, 43 strong, 40 Pa. St. 278 ; State Sav- 111. App. 509 ; affirmed, 153 111. 361 ; ing Association v. Nixon — Jones s. c. 39 N. E. Rep. 143. Printing Co., 25 Mo. App. 642. 6 Building and Loan Association 2 Jennings v. California Bank, of Dakota v. Logan (Tex. Civ. supra. App.); 33 S. W. Rep. 1088. In See Union Building Loan Asso- this case it was held that in a suit ciation v. Masonic Hall, etc. , Asso- to enjoin a sale under a deed of ciation, 29 N. J. Eq. 389. trust given to secure a Loan, the 3 Tuttle v. "Walton, 1 Ga. 43; defendant association is entitled to Bank of Holly Springs v. Pinson, foreclose its lien on the stock for 58 Miss. 421 ; s. c. 38 Am. Rep. 330. dues and fines. 1G0 BUILDING AND LOAN ASSOCIATIONS. CI). VIII. to a bank as collateral security for an amount he borrowed from the bank, and it was not until P.'s abandonment or assignment for the benefit of his creditors that the other directors knew of the transfer to the bank, although at the time of his assignment P. was indebted to the society in a sum of $3,744, for which, under the by-law, his share was charged as between P. and the society. The society imme- diately paid the bank the amount due by P. and took an assignment of the share and of P.'s debt. The shares being worth more than the amount due the bank, the curators to the insolvent estate of P. brought an action claiming the shares as forming part of the insolvent's estate and with the action tendered the amount due by P. to the bank. The society claimed the shares were pledged to them for the whole amount of P.'s indebtedness to them under the by-laws. It was held that the shares in question should be held as having always been charged under the by-laws with the amount of P.'s indebtedness to the society, and that his creditors had only the same rights in respect of these shares as P. himself had when he made the abandonment of his property, namely, to get the shares upon payment of P.'s indebtedness to the society. 1 Sec. 157 — Effect upon Rights of Owner by Creation of Lien. On speaking of the rights and status of an owner of stock upon which a lien had been created, the following language has been used: "It is true that a chattel mortgage, after forfeiture 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 associa- tion as collateral security for the payment of the loans. Bui t he shareholder is not deprived of his title to the stock. lie still continues to be a member with all the rights of i La Societe Canadienne-Fran- 449; reversing, Montreal Law Rep., caise <\<-. Construct ion de Montreal 7 Q. B. 417. v. I >aveluy, 20 I Ian. Sup. ( 't. Rep. § 158. STOCK OR SHARES. 161 membership. He is by the constitution regarded as a stock- holder. As such, he is required to pay his monthly instal- ments 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 trans- fer of the shares to the association is in the nature of a pledge rather than of a chattel mortgage. The shares re- main the property of the shareholder for every purpose, excepting that of defeating the liens of the association. The shareholder may exercise 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 rules of the common law, a pledge could not be taken in execution in the hands of the pledgee. Neither could an equity of redemption in land, nor goods which had been leased, or levied upon by prior execution, nor book-notes, nor stocks, be levied upon, in regard to which the strictness of the ancient rule has been quietly re- laxed by judicial decision and by statute. I doubt exceed- ingly whether the doctrine is applicable to the peculiar nature of the pledge. But, admitting it to be so, the doc- trine 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 consent, or upon satisfaction of his claim. * * * And if the pledgee consents, no third party can object." 1 Sec. 158 — Nature of Certificate of Shares of Stock. A certificate issued by a corporation to a holder of a share of its stock is only a muniment of title and not the property in the share ; it is simply evidence of ownership. As a con- sequence, as is often the case, an individual may own stock, 1 Mechanics' Building and Loan and secure a foreclosure of its lien Association v. Conover, 14 N. J. upon such stock. Building and Eq. 219. Loan Association of Dakota vs. In a suit to enjoin the sale of Logan, (Tex Civ. App.); 33 S. W. shares of stock under a deed of Rep. 1088. trust, the association may claim 11 162 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. to which he has no certificate, and be liable to pay his as- sessments thereon and for the debts of creditors of the asso- ciation the same as if he held that usual evidence of owner- ship. 1 This appears clearly when it is recollected that writing, by the owner, across the face of the certificate, words of cancellation and a returning it to the secretary of the corporation will not release such owner from the liabil- ity incident to the ownership of such stock. 2 But if the officers of a corporation issue certificates of stock not au- thorized by the corporation or in excess of its charter, yet the corporation may be liable for the act to an innocent in- vestor, not to him as a member, but as to one defrauded by it. Thus if he has accepted the certificate as representatives of stock and has loaned many on their faith, the corporation will be liable to him for the amount loaned with interest. 3 The officers so issuing such stock are also personally liable. 4 Everv shareholder is entitled to a certificate, as evidence of his ownership of his stock. 5 Sec. 159 — Formalities of Transfer and Registration. If the charter or a statute prescribe what is necessary to secure the transfer of shares of stock, then the course pre- scribed must be followed ; but if neither of those instruments prescribe the course to be pursued, then the corporation may prescribe by a by-law the course that must be followed, or, in the absence of a by-law, the method may be prescribed 1 Rio Grande Cattle Co. v. Burns, 540 ; New York, etc., R. R. Co v. 82 Tex. 50; S. C. 17 S. \V. Rep. Schuyler, 34 N. Y. 30; Jarvis v. 1043; Agricultural Bank v. Burr, Manhattan Beach Co., 53 Hun, 24 Me. 256 ; Pacific National Bank 362 ; s. c. 25 N. Y. St. Rep. 1 ; 6 N. v. Eaton, 111 (J. S. 227; S. c. 11 Y. Supp. 703; 6 Rail. & Corp. L. Sup. ". Co., 13 N. Y.626; B Johnsons. Albany, etc., R. R. Ukins v. Gamble, 12 Cal. 86 ; B.C. Co. 40 How. Pr. 193 ; James v. Cin- 10 \iu. Rep. 282. < mnati, etc., R. R. Co., 2 Disney, I hoteau v. Dean, 7 Mo. App. 210. '.'f'.l •. Kent v. Quicksilver Mining »Tome '•■ Parkersburgh R. R. Co.,78 N. Y. 159. Co., 89 Md. 86; s. o. IT Am. Rep. § 159. STOCK OK SHAKES. 163 in the certificate itself. 1 The certificate may contain a formal assignment, with the name of the transferee left out, but some one named as attorney to make the transfer on the books of the company; in that event the certificate may pass from hand to hand, until it reach some one who desires to own the stock, and the persons appointed attorney may transfer the stock to him on the books of the corporation. 2 A by-law may require the signature of the owner assigning the certificate to be witnessed by al Least two witnesses or by the cashier ; and it will be valid. 3 An assignment need not be under seal. 4 Usually the transfer should be entered upon the stock ledger ; but if some be kept by the company, then it may be made upon the books of the company contain- ing evidence of the ownership of such stock, even upon the subscription list 5 or on the certificate book, 6 or on the stock book. 7 If the stock ledger does not correspond with the transfer book, then the latter must control ; for it contains the act of the transferee and the other contains the act of the corporate officers. 8 It is usual to take up the old certificate and issue a new one to the transferee, but that is not neces- sary ; for the certificate is not essential to the ownership of the stock. 9 The company may require the surrender of the old certificate before it issue a new one, and should do so ; for if it permit a transfer of the stock to be made upon its books without first requiring a surrender of the certificate 1 State v. Mclver, 2 S. C. 25 ; ing Co., 1 Wash. 521 ; s. C. 20 Pac. Mechanics' Banking Association v. Rep. 605. Mariposa Co., 3 Robt. 395. The 6 American National Bank v. officer of a corporation does not Oriental Mills, 17 R. I. 74 ; s. C. 23 bear the relation of trustee to a Atl. Rep. 795. shareholder seeking to sell his 7 Moore v. Marshalltown, etc., stock to him. Cook v. Henderson, Co., 81 la. 45 ; s. c. 46 N. W. Rep. 8 Amer. L. Rec. 429. 750. 2 Kortright v. Buffalo Commer- 8 Downing v. Potts, 23 N. J. L. cial Bank, 20 Wend. 91 ; s. c. 34 66. Am. Dec. 317; Dunn v. Commer- 'Agricultural Bank r. Burr, 42 cial Bank, 11 Barb. 580. Me. 256 ; Keyser v. Hitz, 133 U. S. 3 Dane v. Young 61 Me. 160. 138 ; Choteau Spring Co. v. Harris, 4 Atkinson v. Atkinson, 8 Allen, 20 Mo. 382; Davenport Bank v. 15. Gifford, 47 la. 5T5. 5 Stewart v. Walla Walla Print- 164 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. representing such stock, and an innocent person should pur- chase such stock, relying upon such certificate, the compan} 7 would be liable to him, not as a member of the corporation (for he would not be), but for such damages as he has sus- tained by such purchase. 1 So if the company make a trans- fer in reliance upon a certificate not properly indorsed, it will be liable to the original owner, if he had not authorized or executed such indorsement. 2 As between the assignor and assignee of the certificate, it is not necessary that the transfer of the stock be registered or entered upon the com- pany's books. 3 A gift of the stock may be made without a formal transfer of the stock upon the company's books, by simply delivering the certificate to the donee accompanied by proper words or acts evidencing a gift. 4 Sec. 160 — Action to Compel a Transfer. If a person who has purchased shares of stock from the holder and has taken the proper steps required to secure a transfer thereof to himself, and the company has refused or neglected to make the transfer, he may maintain a suit in equity to compel the company to recognize him as a stock- holder and make the proper transfer. 5 Such corporate meetings will be restrained until the transfer be made. 6 But if the holder has been guilty of laches in asserting his rights a court of equity will not aid him ; 7 nor will it compel a 1 Supply Ditch Co. v. Elliott, 10 4 Commonwealth v. Crompton, Colo. 327 ; s. c. 3 Am. St. Rep. 587. 137 Pa. 138 ; s. c. 20 Atl. Rep. 417 ; See Nollotli v. Simplified Perma- Walsh v. Sexton, 55 Barb. 472. nent Benefit, etc., Society, 34 W. 5 Tanner v. Gregory, 71 Wis. 490 ; Iron R. R. Co. v. Fink, 41 Ohio St. 2Taftt>. Presidio R. R. Co., 84 Cal. 321; S. C. 52 Am. Rep. 84; Cush- 131 : S. o. 22 Pac. Rep. 485; 18 man v. Thayer Mf. Co., 76 N. Y. Am. St. Rep. 166. 365 ; S. c. 32 Am. Rep. 315. 8 Johnson v. Underhill, 52 N. Y. ° Archer v. American Water 203; West. mi v. Bear Itiver, etc., Works, 50 N.J. Eq. 33; s. c. 24 Co., 5 Cal. 186 ; S. C. 63 Am. Dec. Atl. Rep. 508. 117; Sargent v. Franklin Insur- 7 Newberry v. Detroit, etc., R. ance Co., 8 Pick. 90 ; s. 0. 19 Am. R. Co., 17 Mich. 141 ; Wonson v. Dec. 806; Bruce v. Smith, 44 Ind. Fenno, 129 Mass. 405; York v. ., Duke v. Catawba, etc., Co., 10 Passaic, etc., Co., 30 Fed. Rep. 471. Ala. 82 j s. c. 44 Am. Dec. 317. § 161. STOCK OR SHARES. 165 transfer of stock issued ultra vires the corporation. 1 In such an action the first owner is not a necessary party. 2 Mandamus is not a proper action to compel a transfer. 3 Sec. 161 — Action of Law for Refusal to Transfer. A refusal by the corporation to make a transfer of stock when a proper demand, at least, is made, is Equivalent to a conversion of such stock by the company, and the owner may maintain an action against the company for damages. 4 If the company has notice that there is a controversy over the ownership of certain shares, but it assumes to decide who is the actual owner and transfers them to him, and it turn out that the other claimant is the true owner, it will be liable to the latter the same as if it had refused to make a proper transfer to him. 5 Trover lies for a conversion of the stock by the company in favor of the owner. 6 So trover lies for a conversion of the stock certificate. 7 The person bringing the suit must have the right to the immediate possession of the stock ; 8 and a demand and refusal must precede the bringing of the action. 9 If the company have a lien on the stock, the amount of such lien must first be tendered. 10 1 People v. Sterling Mf. Co., 82 tificate. Rio Grande Cattle Co. v. 111. 457. Burns, 82 Tex. 50 ; S. C. 17 S. W. 2 Tregear v. Etiwanda Water Co., Rep. 1043. 76 Cal. 537 ; s. c. 9 Am. St. Rep. 245. 6 Hawes v. Gas Consumers' Ben- 3 Kimball v. Union Water Co., efit Co., 9 N. Y. Supp. 490. 44 Cal. 173 ; s. c. 13 Am. Rep. 157 ; 6 Ayres v. French, 41 Conn. 142 ; Tobey v. Hakes, 54 Conn. 274; 1 Daggett v. Davis, 53 Mich. 35 ;S. C. Am. St. Rep. 114 ; Baker v. Mar- 18 N. W. Rep. 548 ; 51 Am. Rep. shall, 15 Minn. 177 ; State v. Peo- 91 ; McAllister v. Kuhn, 96 U. S. pie's Building and Loan Associa- 87 ; Payne v. Elliott, 54 Cal. 339. tion, 43 N. J. L. 389. » Anderson v. Nicholas. 28 N. Y. 4 Sargent v. Franklin Insurance 600 : Atkins v. Gamble, 42 Cal. 86 ; Co., 8 Pick. 90; s. C. 19 Am. Dec. s. C. 10 Am. Rep. 282; Morton v. 306 ; North American Building Preston, 18 Mich. 60 ; s. C. 100 Am. Association v. Sutton, 35 Pa. St. Dec. 146. 463 ; s. c. 78 Am. Dec. 349. This 8 Ayres v. French, supra. remedy has been extended to the 9 Daggett v. Davis, supra. subscriber for the stock to whom 10 Pierson v. Bank, 3 Cranch C. the company refuse to issue a cer- C. 363. 166 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. Sec. 162— Measure of Damages for Refusing to Transfer. la an action, for damages for a refusal to transfer stock, the measure of damages is the value of the stock at the time the refusal is made, 1 with interest to the date of trial, 2 and also all dividends accrued at the time of the demand with like interest. But there is another view that the amount of damages is the highest market value of such share between the time of the refusal to transfer and the time of the trial. 3 In an action for the conversion of the certificate, a like rule of damages prevails. 4 In an action against a building society for unjustly refusing to permit a transfer of certain shares of stock by the plaintiff, the latter was held entitled to recover the amount paid on the stock, as dues, with interest thereon from the time of payments. 5 Sec. 163— Lost Certificate. If a shareholder lose his certificate he does not lose his right to his stock ; and even though he has indorsed it in blank and it has come into the hands of an innocent pur- chaser, he may still claim the stock, 6 and may maintain an action against the company and the claimant under each lost certificate to establish his right to the stock. 7 In case of a lost certificate the company should not issue a second certificate to the owner until he indemnify them against loss occasioned by its being issued to him when not the owner of the stock. 8 If the original owner falsely assert 1 German Union Building and Mich. 35 ; s. c. 18 N. W. Rep. 548 ; Savin;; Fund Association v. Send- 51 Am. Rep. 91. ni> vi r. 50 Pa. St. <>7 ; Parsons v. 8 North American Building As- Martin, 11 Gray, 111; Baltimore sociation v. Sutton, 35 Pa. St. 4G3 ; City Pass. R. R. Co. v. Sewell. 35 s. c. 78 Am. Dec. 349. Mil. 238 ; S. C. •'» Am. Rep. 402. 6 East Birmingham Land Co. v. - Baltimore City Pass. R. R. Co. Dennis, 85 Ala. 565; s. c. 5 So. v. Sewell, supra. Rep. 317 ; 2 L. R. A. 836 ; 28 Cent. ■■ .Wilir r. Eeiley, 69 Pa. St. 403. L. J. 402. See also Tomkinson v. Balkis, etc., 7 Wells v. Smith, 7 Abb. Pr. 261. Co.,2Q. B. 614 B Cleveland, etc., R. R. Co. v. *Connorv. Hill, ll Rich. (S. C.) Robbins, 35 Ohio St. 483 ; Guilford 193; Morion r. Preston, 18 Mich. v. Western Union Tel. Co., 43 60; LOO Am. Dec. L46. Actualloss Minn. 434; s. c. 46 N. W. Rep. 70. I,, nil. i ■.. Daggel t v. Davis, 58 § 164. STOCK OR SHARES. 167 that he has lost the stock and present a proper bond and obtain a certificate, yet if the true owner afterwards appear and demand a transfer of such stock, the company will be liable if it refuse to make it. 1 Sec. 164 — Liability of Company for Transferring or Forged Tower of Attorney. If the power of attorney, executed in blank, as stated in a previous section, has been forged, and the company, relying upon its validity, transfer the share to a person not entitled to it, such company will be liable to the true owner for a conversion of such share, for it was his property and not the property of the one to whom it was transferred. 2 But in such case the true owner must not have been guilty of such negligence, or in the creation of such a state of affairs as enabled the fraudulent transferee or some other designing person, to take advantage of the conditions care- lessly created by the owner and thereby deceive or mislead the officers of the association ; for if his negligence contrib- uted to a deception of the officers he cannot recover damages for the illegal transfer. 3 Thus, if the owner should own ten shares and he should receive dividends on only six instead of ten shares, and a supposed owner should present the forged power of attorney thereafter, and claim to own the remaining four shares, the company would be justified in acting upon the appearance of things, unless they had knowledge to the contrary, or knew such facts as would put a prudent man upon inquiry before acting. 4 And so where the owner of shares intrusted them with signed blanks of powers of attorney, to his own agent for safe keeping, and the latter filled them up with the name of an ostensible owner who then transferred them to an innocent third person, it was held that the company was not liable to the 1 Greenleaf v. Ludington, 15 Dec. 701 ; Telegraph Co. v. Daven- Wis. 558 ; S. c. 83 Am. Dec. 698. port, 97 U. S. 369. 2 Pratt v. Boston, etc., R. R. Co., 3 Sewall v. Boston Water Power 126 Mass. 443; Pratt v. Taunton, Co., supra. 123 Mass. 110 ; S. c. 25 Am. Rep. 4 Coles v. Bank of England, 10 37 ; Sewall v. Boston Water Power Ad. & El. 4:37 ; Bank of Ireland v. Co., 4 Allen, 277; S. C. 81 Am. Evans' Charities, 5 H. L. Cas. 389. 168 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. true owner. 1 If the original owner has not been guilty of neglect, he may maintain an action against the company, in equity, to compel it to issue to him a new certificate. 2 Sec. 165— Liability of Company to Innocent Purchaser under Forged Power of Attorney. If a company register shares in the name of a transferee of a forged certificate, and such forged transferee is an innocent purchaser of the share, having no notice of the forgery and having paid value therefor, it will be liable to him the same as if he were the true owner of the share, although it may, at the same time, be compelled to recog- nize the original owner as the true holder of the stock. 3 The company is liable to pay dividends, accruing on such stock, to the innocent purchaser whom it has recognized as the actual and true owner. 4 Sec. 166— Pledge of Shares. It is no uncommon thing to pledge shares of stock to secure the performance of some condition or the payment of money ; and this can be lawfully done. 5 The usual way is to deliver to the pledgee the certificate representing the stock, either assigned or unassigned ; 6 but by such an act the property in the stock still remains in the pledgor. 7 It is not necessary to the validity of the pledge that the stock be transferred to the pledgee upon the company's books, for the transaction as between the pledgor and pledgee is valid; 8 i Pennsylvania R. R. Co.'s Ap- Rep. 868; Shaw v. Port Phillips, peal, 86 Pa. St. 80. Contra. Tay- etc., L. R., 13 Q. B. Div. 107. lor v. Greal India Peninsular R. 6 Brownell v. Hawkins, 4 Barb. R. Co., 4 De Gex & J. 559. See 491 ; Lewis v. Graham, 4 Abb. Pr. Swan v. North British Australian 100. Co., 3 Hurl. & Colt. 175. 6 McNeil v. Tenth National Bank, •HiMyanl v. South S«-;i Co.. 2 55 Barb. 59. I". Wins. 76; Telegraph Co. v. 7 Wilson v. Little, 2 N. Y. 443 ; Davenport, 97U. S. 369; Brown v. s - <'• r >t Am. Dec 807. Howard Insurance Co., 42 Md. K Smith v. Crescent City, etc., 884 ; s. i . 20 Am. Rep. 90. Slaughter House Co., 30 La. Ann. In ,;■ U;,|,i:,, n t City, etc., Co. v. Deblieux, Bing. 898; Eisterbook's Appeal, U) La - Ann - 155 i s - c - 3 So. Rep. 1 J7 Pa. st. 601 ; s. o. U Am. St. 726. § 167. STOCK OR SHARES. 169 but he should notify the company of the transaction in order to preserve his rights in case it be wound up. 1 The pledge must be in writing, although, as stated, that writing need not be an assignment or transfer of the stock. 2 But if there be an absolute assignment of the stock, the pledgor on bringing an action to redeem, may show that the transfer was made only by way of a pledge. 3 I i v pledging his stock a member does not forfeit his membership in the corpora- tion ; 4 but if the stock has been regularly transferred to the pledgee on the corporation's books the latter may exercise all the rights of the actual owner, although, in a proper case, equity will compel him to give the pledgor a proxy. 5 The pledgee takes the stock subject to all the liabilities of the owner, among which is that of paying up any arrears of dues and fines in the case of building associations. 6 Sec. 167 — Enforcing Stock Payments by Suit. Although a member of a building association is liable to a fine for a failure or neglect to pay his dues at the stated time (of which he is not entitled to any notice) ; 7 yet he is liable in an action of assumpsit to the association for the amount of his delinquent dues, 9 and so separate actions may be main- tained for the amount falling due at each stated period. 9 Sec. 168 — Payment of Dues on Stock Not a Payment, on Owner's Debt to Building Association. If the owner become a borrower and assign his stock, in addition to the mortgage he may give, to his building associa- tion, a payment of the dues on his stock will not be a payment, 1 Bank of Commerce's Appeal, 6 Union Building Loan Associa- 73 Pa. St. 59. tion v. Masonic Hall, etc., Associa- 2 Brewster v. Hartley, 37 Cal. tion, 29 N. J. Eq. 389. See also 15 ; s. c. 99 Am. Dec. 237. Jenning v. Bank of California, 7!) 3 Newton v. Fay, 10 Allen, 505. Cal. 323 ; s. c. 21 Pac. Rep. 852 ; 12 4 Mechanics' Building and Loan Am. St. Rep. 145. Association V. Conover, 14 N. J. 7 Morrison v. Dorsey, 48 Md. 461. Eq. 219. 8 Association v. Kribs, 7 Leg. 5 In re Argus Printing Co., 1 N. and Ins. Rep. (Pa.) 21. D. 434 ; s. c. 48 N. W. Rep. 437 ; 9 Building Association v. Hop- 12 L. R. A. 781 ; 26 Am. Rep. 639. pie, 12 W. N. Cas. 222. 170 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. pro tanto, on his debt. This is very well stated in a New Jer- sey case, where it was claimed that certain shares of stock pledged for a loan had been assessed for taxes too high, for the reason that all payments theretofore made upon it had been applied to the extinguishment, pro tanto, of his debt, and the stock therefore had little value. In passing on this question the court said : " The unsoundness of the argu- ment in support of this denial 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 rela- tion borne to the company, on the one hand by its stock- holder, and on the other by its borrower. A connection is. sought to be established between the stock held by the stockholder and the bond held b} T the company, b\ T 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 ex- change 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 is named for the payment of the principal, because if the borrower, in addition to inter- est, 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 provided in the condition of the bond. But until so exchanged, they are distinct in legal contemplation :is well as in form. The stock is a collateral security for, and not a credit on, the bond." 1 Following ii]) I he rule Laid down in this quotation, it seems settled that :i payment of dues upon stock is not, ■ij>sofa< , to,& payment on the mortgaged or bonded debt of the owner. 2 For this i Statev. Hornbacker, 42N. J. I... Spring Garden Association v. affirming s. C. 41 N. J. L. 519. Tradesmen's Association, 46 Pa. • North American Building As- St. ■!*.•:: ; WYiss's Appeal, 5 W.N. BociatioD v. Sutton, 85 Pa. St. 468; Cas. 128; Early's Appeal, 89 Pa. St. 168. STOCK Oil SHAKES. 171 reason such payments on stock cannot be regarded as pai tial payments on the debt, and do not draw interest. 3 411 ; Selden v. Reliable Savings and Building Association, 32 P. F. Smith, 336; Germania Building Association v. Neill, 93 Pa. St. 322 ; Springville Building Association v. Raber, 33 Leg. Int. 329 ; s. C. 24 Pitts. L. Jr. 23; King-sessing Build- ing Association v. Roan, 9 W. N. Cas. 15; Link v. Germantown Building Association, 89 Pa. St. 15 ; Pioneer Savings & Loan Co. v. Everhart (Tex.), 44 S. W. Rep. 885 ; Building Association v. Eshelbach, 7 Phila. 189 ; Kreamer v. Building Association, 6 W. N. Cas. 207 ; Building Association v. Wall, 7 Phila. 240 ; Watkins v. Working- men's Building Association, 97 Pa. St. 514 ; 38 Leg. Int. 333 ; 10 W. N. Cas. 414 ; In Ohio, a borrowing member who makes payments in advance on the amount borrowed is not entitled to dividends on such payment, or any dues, except such as accrued as stated above at the times for semi-annual dividends ; but he is entitled to credit on his premium in so far as his payments cancel the loan. Turner Ban Ver- ein v. Woodburn, 27 Wkly. L. Bull. 409. See People's Building and Loan Association v. Furey, 47 X. J. Eq., 410 ; S. C. 20 Atl. Rep. 890 ; Murphy v. Goodland, etc., Associa- tion. 2 App. Kan. 330 ; s. C. 43Pac. Rep. 8C3 : Building and Loan As- sociation of Dakota v. Logan (Tex.), 33 S. W. Rep. 1088. 1 Seibel v. Victoria Building As- sociation, 43 Ohio St. 371 ; S. C. 2 N. E. Rep. 417 ; 1 West. Rep. 340 ; 10 Amer. & Eng. Corp. Cas. 460 ; Tilley v. American Building and Loan Association, 52 Fed. Rep. 618 ; s. c. 40 Am. & Eng. Corp. Cas. 375. Therefore a statutory rule for computing interest on part hi ments lias no applicability to pay- ments on such slock, and such in- terest is not allowed. Reeve /•. Ladies' Building Association, 5 ■'< Ark. 335; s. C. 19 S. W. Rep. 917 ; 18 L. R. A. 129; Hughes v. La Compagnie des Villa-. 5 .Montreal Sup. Ct. 129. In North Carolina, the transac- tion between the society and bor- rower is treated as an ordinary case, and the payment on his stock is considered as partial payments onhisdebt. Overbyr. Fayetteville Building and Loan Association, 81 N. C. 50. The same rule was applied in the early Pennsylvania cases. Kupfert v. Guttenberg Building Association, 30 Pa. 465; Philanthropic Building As- sociation v. McKnight, 35 Pa. St. 470; Hughes Appeal, 30 Pa. S . 471 ; Savings Fund v. Murray. 1 1 Leg. Int. 133; Building Associa- tion v. Reid, :; Phila. 345 ; T'.uild- ing Association v. Timmins, •"! Phila. 209; Building Association v. Howe. 15 Leg. Int. 45; Building Association v. Dobbins, 15 Leg. Int. 45. The burden is on the defendant borrower to show the value of the stock or the amount he is enl it led to credit on his loan. Laurel Run Building Association r. Bayley, 1 Kulp. 215: Watkins v. Working- men's, etc., Association, 97 Pa. St. 514 ; s. C. 38 Leg. Int. 337 ; 10 W. N. Cas. 414. Where an association agrees to accept the stock of a defaulting borrower upon condition that he be credited with the amount paid thereon, he is not entitled to re- 172 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. Sec. 169— Application of Stock Payments to Extin- guishment of Borrower's Debt. Whatever may be said with reference to a payment on his stock not being a payment on the borrower's indebt- edness to the association, it is quite clear that he has a right, under his contract with the association, to have such payments applied to the extinguishment of his in- debtedness, pro tanto • and the association, if it hold a lien on such share, has the right to make the same applica- tion. 1 This right, of course, extends to his assignee in insolvency. If he insist upon this course, his stock becomes extinguished and his membership destroyed. But he may pursue another course, — he may pay the full indebtedness and retain his stock and membership, and thence on he will be a non-borrowing member, unless he should secure an- other loan. 2 If the stock has been pledged to the associa- tion as a collateral security for the debt, as is almost uni- versally the case, the association has the right to apply the payments thereon &spro tanto payments upon the borrower's debt. 3 A borrowing member cannot, in the absence of an ceive any credit therefor, if the 186 ; S. c. 62 N. W. Rep. 373 ; amount paid thereon has been pre- Wadlinger v. Washington German viously deducted from his debt. Building and Loan Association, 153 Mutual Building and Loan Asso- Pa. St. 622 ; s. c. 26 Atl. Rep. 647 ; ciationv. Tascott, 143111. 305 ; s. C. La Societe Canadienne-Frangaise 32 N. E. Rep. 376; 40 Am. & Eng. v. Daveluy, 20 Can. S. Ct. 449; Corp. Cas. 361. Watkins v. Workingmen's Build- 1 Spring Garden Association v. ing and Loan Association, 93 Pa. Tradesmen's Building Association, St. 514; s. c. 38 Leg. Int. 337; 10 ;; Pa. St. L93 ; North American W. N. Cas. 414 ; Seibel v. Building ling Association v. Sutton, 35 Association, 43 Ohio St. 371 ; s. c. Pa. St. 463; s. C. 78 Am. Dec. 349 10 Am. & Eng. Corp. Cas. 460 ; re- Early's Appeal, 89 Pa. St. 411. versing, 13 Wkly L. Bull. 265. - hi. See also Watkinsv. Work- That a borrowing member of a ingmen's Building Association, 97 building and loan association may I'm. si. 51 I : s. c. 38 Leg. Int. '■'•'■'>'■'< ; elecl to have payments on account in W, N. C. 111. Springville of stock applied on his indebted- Building Association v. Raber, 24 ness to the association, see Randall Pitts. L. .Jr. 2:>; s. c. '-'>'■'> Leg. Int. v. National Building, Loan and Protective Union, 43 Neb. 870; ■ /-/. People's Building and Loan B.C. 62 \. W. Rep. 252; Buist v. Association v. Hilling, 104 Mich. Bryan II S. C. 121 : 21 S. E. 537; § 169. STOCK OR SHARES. 173 agreement, have the payments on his unmatured stock applied on a loan from the association. 1 The mere fact of making" o payments, where there is no agreement touching their ap- plication, will not ipso facto make them payments on the indebtedness; 2 and the testimony of the officers of the association that they considered the payments as, in law, payments on the loan, is not evidence of an appropriation of them to that object. 3 A receipt book of the association, containing entries of payments, is evidence against it with- out calling the officer who made them ; and the} r cannot be rejected because they furnish evidence of other payments than those for which they are properly admissible in evi- dence. 4 A member is not entitled to have the payments on Randall v. National Building, Loan Protective Union, 42 Neb. 809; & s. C. 60 N. W. Rep. 1019 ; Ply- mouth Building Association v. Mangan, 2 Kulp. 210 ; Plymouth Building Association v. Rood, 2 Kulp. 246; Treffeirson's Estate, 3 Kulp. 308 ; Harris' Appeal, 18 W. N. Cas. 14 ; Oliver's Estate, 1 Del. (Pa.) 358; Kreamer v. Springville Saving Fund and Loan Associa- tion, 1 Chest. (Pa.) 353 ; s. C. 6 W. N. Cas. 267 ; Greenfield's Estate, 1 Chest. (Pa.) 356. 1 Sweeney v. El Paso Building and Loan Association (Tex. Civ. App.), 26 S. W. Rep. 290 ; Blakeley v. El Paso Building and Loan As- sociation (Tex. Civ. App.) 26 S. W. Rep. 292 ; Rogers v. Hargo, 92 Tenn. 35 ; s. C. 20 S. W. Rep. 430. A stockholder having made pay- ments, which had not been appro- priated to any portion of his sev- eral sources of indebtedness, on a bill to foreclose a mortgage given by him, the payments were di- rected to be appropriated ; first, in payment of the monthly fines ; then to the monthly instalments on subscription to stock, and the balance to the monthly interest. Clarksville Building and Loan As- sociation, v. Stephens, 26 N. J. Eq. 351. See Roberts v. American Building & Loan Ass'n, 62 Ark. 572; s. c. 36 S. W. Rep. 1080. Pioneer Savings & L. Co. v. Ever- hart (Tex), 44 S. W. Rep. 884; Pioneer Savings & L. Co. v. Kas- par Kan. ; 52 Pac. Rep. 023. 2 Economy Building Association v. Hungerbuehler, 93 Pa. St. 258 ; s. c. 10 W. N. Cas. 414 ; 38 Leg. Int. 333 ; Spring Garden Association v. Tradesmen's Loan Association, 46 Pa. St. 493 ; Whilden v. Broom- all, 1 Del. (Pa.) 142; Treffeirson's Estate, 3 Kulp. 308 ; Harris's Ap- peal, 18 W. N. Cas. 14; Randall y. National Building, Loan and Pro- tective Union, 43 Neb. 876 ; s. C. 62 N. W. Rep. 252. See interna- tional Building and Loan Associa- tion v. Mayers (Tex. Civ. App.); 25 S. W. Rep. 1132. s Id. 4 North American Building As- sociation v. Sutton, 35 Pa. St. 463 ; s. c. 78 Am. Dec. 349 ; Economy Building Association v. Hunger- buehler, supra ; Kreamer v. Spring 174 BUILDING AND LOAN ASSOCIATIONS. CI). VIII. shares in one series credited upon his indebtedness for money borrowed on shares in another series. 1 Nor can he insist upon credit being given him for stock of another assigned to him after the maturity of his loan. 2 The fact that the contract with the borrower provides for the for- feiture of his stock in case a payment is not made, does not affect his right to have all his stock payments applied in reduction of his loan, for that provision of the contract is void. 3 Where the agreement for the loan provides that on default in the payment of dues on the stock transferred as collateral security, the association may, at its option, de- clare the stock forfeited, and apply its withdrawal value on the debt, a formal foreclosure is not necessary to such appli- cation. 4 ville Saving Fund and Loan As- sociation, 1 Chest. (Pa. ) 353 ; s. c. 6 W. N. Cas. 267. AVhere no election by the debtor concerning the application of pay- ments has been made until the date of the trial, he is not entitled to credit as of the date the payments were actually made. Hazel Loan and Building Association v. Gross- beck, 41 Leg. Int. 16. See York Trust, etc., Co. v. Gallatin (Pa.) 40 Atl. Rep. 317. 1 Anthracite Saving Fund v. Cake, 2 Leg. Rec. Rep. 172. 2 Plymouth Building Association v. Rood, 2 Kulp. 246. Contra. Hennighausen v. Tisher. 50 Md. 583. ; Randall v. National Building, Loan and Protective Union, 42 Neb. 809; s. c. 60 N.W. Rep. 1019; People's Building and Loan Asso- ciation v. Billing 104 Mich. 186; 62 N. W. Rep. 373. But see Freeman v. Ottawa Building, Homestead - 1 Watkinsr. Workingmen's, etc., plicable to the discharge of the Association, 97 Pa. St. 514 ; s. c. 10 ordinary expenses of the associa- W. N. Cas. 414 ; 38 Leg. Int. 333 ; tion, and are not properly to be National Building Association v. considered a default of money, to Mangan, 2 Kulp. 19; Barker v. be afterwards allowed to the mem- Bigelow, 15 Gray, 130 ; Building bers upon any future loan." Id. Association v. Groesbeck, 41 Leg. But see Meroney v. Atlanta, etc., Int. 16; s. c. 17Phila. 242. Association, 116 N. C. 882; S. C. 2 Barker v. Bigelow, supra. He 2183 Rep. 924. was allowed no credit for his en- 180 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. from a voluntarily withdrawing member. The latter is at least, unless a by-law provides otherwise, entitled to a cer- tain proportion of the profits arising from the transactions of the society, but a defaulting member is not. 1 The with- drawal value, where a member has not made default, and continues until the association is wound up, may be made up in the first instance of the member's stock payments, of his payments of interest (or, as it is often called, of his redemption money), of the fines or fees he has paid, and of the share of the profits made upon all these payments mingled with the common fund. In the second instance he is entitled to a proportionate share of all the like revenues the society has had from other members, such as their stock payments, interest, fines, fees, and other charges, including forfeiture of stock and fortunate speculations realized by the investment of the corporate funds. And in a third instance, whatever the society has realized from the premi- ums received by it. But where the society has not reached the period of its existence, or where the series to which he belongs had not reached the period of its termination, he is not entitled to any of these amounts, except such as he has paid in on his stock or dues, unless the by-laws provide otherwise. 2 In no instance, however, whether a retiring member is a defaulter or not, is he entitled to interest upon the amounts he has paid upon his stock ; for the society never borrowed money from him, nor did it ever agree to pay interest upon such payments. 3 Where a defaulting bor-r *Watkins v. Workingmen's Where a by-law provided that Building and Loan Association, the legal representative of a de- supra ; Matterson v. Elderfield, L. ceased member might receive, up- R. 4 Ch. 207 ; S. c. 17 W. R. 422 ; on notice, the net value of his 20 L. T. (N. 8.) 503 ; 36 J. P 326. share, it was held that proper mode * Mechanics' Building and Loan of determining that value was to Association v. Conover, 14 N. J. ascertain the market value. Bab- Eq. 219 (not overruled this point in cock v. Middlesex, etc., Co., 28 17 N. J. Eq. 197). Conn. 302; Hensel v. International :< Citizens' Mutual Loan and Ac- Building and Loan Association cumulating Fund Association, 26 (Tex.) 20 S. W. Rep. 116. Barb. 268 ; Delano v. Wild, 6 Allen, 1 ; s. 0. 83 Am. Dec. 605. § 174. STOCK OR SHARES. 181 rowing member elects to deduct the amount. of payments made on his stock from the amount of his loan then due, all arrearages on such stock, as fines, must first be deducted. 1 Where the constitution of a building association provided that the profits that might accrue should be credited as so much paid on the shares not paid up in full, and paid in cash to those who had paid up their shares; and also that where the shares were paid up by instalments and divi- dends of profits the mortgaged property should be valued ; it was held that the profits credited to a borrower were not to be refunded by him, but were to go in part payment of the mortgage, where he brought an action charging that the association had taken from him usurious interest, and asking that his mortgage be cancelled on ascertaining and payment of the amount actually due. 2 It may be added that where the by-laws of an association providing for the declaration of quarterly or other periodical dividends, a defaulting member is entitled to have credit for all divi- dends declared up to and including the last quarter made upon his debt. 3 Upon the subject of this section generally we quote the following from a Pennsylvania case : 4 " 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 stock beyond this consisted mainly of the profits, in which a de- faulting borrower has no right to participate. This arises from two causes : 1st, The peculiar nature of the contract between building associations and their members ; and 2d, The difficulty, if not absolute impossibility, of ascertaining the profits until the association is ready to wind up. A venture in building associations is a peculiar investment. It is much to be feared that many persons ol slender means embark in such enterprises without a clear understanding 1 Plymouth Building Association 3 See Marks v. Monroe Co., etc., v. Rood, 2 Kulp. 246; Plymouth Association, 52 N. Y. St. Rep. 451. Building Association v. Mangan, 2 4 Watkins v. Workingmen's Kulp. 210. Building and Loan Association, 97 2 Border State Perpetual, etc., Pa. St. 514. Association v. Hayes, 61 Md. 597. 182 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. of their particular working. The present case furnishes an apt illustration of the result in one class of cases. The defendant received but $384, in cash, on his loan ; at the end of ST 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 $518.84. This disastrous result is the legitimate outgrowth of our building associa- tion 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 inabilitjr of the defendant to keep his contract with the association. Such investments are profitable or otherwise, according to circumstances. 'Where the associa- tion is prudently managed, and is wound up within the pre- scribed period, it is alwa} T s profitable to the non-borrowing members. They participate in the premiums which they do not pay. If the association was composed exclusively of borrowers, the gain of the individual member would depend 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 composed of both classes of members, the result of the borrowing member must depend, to a great extent, upon the relative proportion of the two classes, and upon the amount of premiums which he had paid. There are, of course, other matters which in a minor degree affect the result ; but the foregoing 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 of the way, there is nothing but disaster. The defendant dropped out of the way. There is nothing in the character of the asso- cial ion, or in his conl ract, to entitle him, at this stage, to a share of the profits. The law provides but for one such case, and that is a withdrawing member. * * * The defendant was not ;i withdrawing 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 § 174. STOCK OR SHARES. 183 stockholders, yet his claim far exceeds what the Act of Assembly gives to them. Withdrawing- stockholders can only claim of the profits such proportion as may be fixed by by-laws. Such proportion might readily be iixed by a by-law, so as not to work injustice to remaining stock- holders. At most it would be an approximation. Here the defendant claims an absolute right to participate 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 associa- tion's business? Its assets consist chiefly of judgments for money loaned, including some houses which were evi- dently 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 fact shown by the evidence, that a large number of mem- bers had ceased paying up their dues by reason of a sup- posed defect in the charter of the association, the difficul- ties of realizing the face of the judgments may be readily appreciated. The ascertainment of the real value of the stock can only be arrived at by closing up the affairs of the corporation. This the defendant has no right to demand. If, as was contended, he was entitled to it in this proceed- ing, the most that can be done would be to approximate it. The jury, and even the officers of the company, might place a much higher value upon the 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 pre- miums. They are made up in part of the premiums which the defendant agreed to pay. I say agreed to pay, for it is a mistake to suppose, as was claimed by the defend- ant, 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 expressly authorizes the plaintiff to recover the premium from a defaulting borrower, yet the defendant's proportion, if 184 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. sustained, would defeat his right in part. "We are of opinion that the right to apply the stock in such cases as this, means onl} T the right to apply the pa} T inents made thereon." 1 1 The following rule was adopted to find the present value of a share of stock, viz : Add together the amount of all the mortgages held by the association against the members, including its premiums therein, and add to this any delin- quent clues, and interest due from members, and cash on hand, and divide this aggregate by the num- ber of shares held by all the mem- bers of the association, and the result is taken as the value of each share. Licking County Saving Loan and Building Association v. Bebout, 29 Ohio St. 252. See Sei- bel v. Building Association, 43 Ohio St. 371 ; S. C. 10 Amer. & Eng. Corp. Cas. 460 ; 2 N. E. Rep. 417 ; reversing, 13 Wkly. L. Bull. 265. In another case it was said that the association might show that a computation of the value of a de- ceased member's share of stock inserted in his pass book was er- roneous and not founded upon the facts ; that where the value of the stock was to be determined by as- certaining the value of the assets. the inquiry should be as to their value upon a sale conducted fairly ii the usual manner of selling such property, neither forced at a time of unusual depression in the market, nor dependent in expecta- tion of an unusual rise. Babcock r. Middlesex, etc., Association, 28 . 302. Where, in an action between an [a1 ton, having made them one series of stock, and one of its share- holders, the issue was as to t la- value of his shares, and the evi- dence of experts in the business of such associations showed that the proper and equitable method of computing the value of such shares was to divide the annual profits among the shares in proportion to the amount paid on each, and that seventy-five per cent of such asso- ciations used such method, it was held that the referee properly adopted it in determining such value, instead of dividing the an- nual profits among all the shares, according to the method used by the association, in the absence of any law of the association requir- ing the use of the latter method. Charles Tyrell Loan and Building Association v. Haley, 163 Pa. St. 301 ; s. c. 30 Atl. Rep. 154 ; 35 W. N. Cas. 269. A provision in the constitution of such an association providing that " where it shall be ascertained " that the value of each share of stock amounts to a cer- tain sum, a meeting of the share- holders shall be convened, at which time a division shall take place," etc., does not obligate a share- holder to abide by any particular mode of computation, or the mode adopted and used by the associa- tion in determining the value of his shares. Id. The fact that other stockholders have made improper withdrawals cannot affect the right of another to have the value of his stock as- certained according to the by-laws Of the association. Building Asso- ciation v. Gallagher, 3 L. T. (Pa.) (N. S.) 101. § 175- STOCK OR SHARES. 185 Sec. 175— Right to Membership After Foreclosure and Sale of Mortgaged Security. Whether or not a borrowing member continues to be a member after foreclosure for a default in paying off his indebtedness and sale of the mortgaged security must depend upon the contract of borrowing between him and the association. If he did not assign his stock as collateral security for the loan, then his right to insist upon his mem- bership after the foreclosure and sale is quite clear ; for in such an instance he does not forfeit his membership, unless a valid by-law of the association provides otherwise. But if he has assigned his stock as collateral security, and in the foreclosure has received credit on his loan for the pay- ments made on his stock, and the decree of foreclosure fixes and determines the amount then due, after giving credit for the value of his stock, then his stock is gone, for he has received its value and paid back his loan, less such value. 1 On an accounting between a quasi building and loan association and its borrowing stockholders, he should be charged with all he re- ceived, with legal interest thereon, and should be credited with en- trance fee, stock dues, premiums, and interest on payments in ad- vance of legal interest, and should not be charged with fines for each non-compliance with provisions as to payment of premiums. Mer- oney v. Atlanta National Building and Loan Association, 116 N. C. 882 ; s. C. 21 S. E. Rep. 924. In Arkansas it is declared that the equitable rule for ascertaining the amount due on a building as- sociation loan, on default of the borrower and foreclosure and can- cellation of his stock, is to ascer- tain the amount of stated dues and interest which will become due in the future, to the time of the ma- turity of the stock, as estimated. The principal which, with interest for the supposed time, will amount to the dues and interest for the supposed time, will amount to the dues and interest so calculated, will be the present value of the anticipated payments ; and to this the arrearages due, and the fines for the time between the date of the default and the entry of the decree of sale, should be added. Roberts v. American B. & L. Ass'n. 62 Ark. 572 ; s. c. 36 S. W. Rep. 1080. 1 Bearing on this question, see Massey v. Citizen's Building and Savings Association. 22 Kas. 624 North American Building Associa tion v. Sutton, 35 Pa. St. 463 Overby v. Fayetteville Building and Loan Association, 81 N. C. 56 Rowland v. Old Dominion, etc., Association, N. C. ; S. C. 22 S. E. Rep. 8; Rowland v. Old Dominion, etc., Association, 115 N. C. S25 ; S. C. 18 S. E. Rep. 965. 186 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. " When he took the money he undertook to do the very thino- the judgment made him do, and he pledged to the association his stock as collateral security for the faithful performance of his undertaking, and when he performs it by pavment, as prescribed by section fourteen of the char- ter, this stock is released from the pledge, and he holds it as though he had never got an advance — which, in fact, he has not, for he will have returned it. There is nothing in any portion of the charter or by-laws which declares he is no longer a member. He is exactly in the situation of one who has discharged his property from the mortgage by section twenty-four of the by-laws. He pays back the money he got, with such an advance upon it as will enable the company, at the lower rates at which money is selling, to get the same monthly interest upon it as the defendant ought to pay at the rate he got it at. He pays up all arrears and dues, and he pays up all fines due the compan} r for his failure. Why should he not now be the owner of the stock? Why should he not stand exactly like a man who has got no advance? The company is, as to him, pre- cisely in the situation it is to a man who has got no ad- vance. Why should he not stand in the same way as to the company ? * " * As to the amount the defaulter is due, except as to the fines, that, we think, is very plain. The point is, what will make the company whole; what will put it precisely in the situation it would have been in had .1 idler never got any money, or promptly paid his dues, as he agreed to do? Obviously such a sum as at present rate, will produce to the company the same dues as he pays, the same number of dollars on each share. Money has fallen since he sold his interest or borrowed, the time of winding up has gol nearer, and it will take more money to be sold to pay $20.00 at $1.00 per share than it did when pi his advance. This he must make up." 3 If an asso- ln Virgina the shares by the mere 1 Ocmulge Building, etc., A.sso- act of assignment as collateral is ciation v. Thomson, 52 Ga. 427. i bed and sunk hi the as- See Somerset County Building, ition, Winchester Building Loan ami Saving Association v. ciation v. Gilbert, 28 Gratt. Cainman, II N. J. Eq. 382 ; Me- 787. chanios' Building and Loan Asso- § 175. STOCK OR SHAKES. 187 ciation receive clues on stock after a recovery of the moil- gage, it will be estopped to set up that the stock is extin- guished. 1 ciation v. Conover, 14 N. J. Eq. 219; Charles Tyrrell Loan and Building Association v. Haley, 139 Pa. St. 476 ; S. C. 27 W. N. Cas. 244 ; 48 Leg. Int. 345 ; O'Reilly v. Hey- don, 29 Atl. Rep. 1063 ; 14 N. S. Wales 283. 1 North American Building As- sociation v. Sutton, 35 Pa. St. 463 ; s. c. 78 Am. Dec. 349. Where a borrower gave to an association, his bond and mortgage for $2000 to secure a loan of $1500, and after suit brought they agreed in writing upon a settlement be tween them, that judgment should be entered for the amount actually loaned with legal interest, it was held that the payments made by the defendant upon his stock under the agreement were not payments on his bond ; for the effect of such payments would have been to ex- tinguish the stock, which by the agreement and settlement was not to be extinguished, but to remain. Kelly v. Perseverance Building Association, 39 Pa. St. 148. "For how could the defendant possibly have a credit for the stock, and yet retain it." Watkins v. Workingmen's Building and Loan Association, 97 Pa. St. 514 ; s. c. 38 Leg. Int. 333 ; 10 W. N. Cas. 414. A member of a building associa- tion gave a mortgage to it to secure the payments of his monthly dues, fines, etc. The mortgage contained a provision that in case of default the association might sell under the statute, and invest the surplus, if any, and draw for and apply it from time to time as required, to the payment of all accruing monthly dues, etc., until the ter- mination of the association. It was held that this provision was valid, and that the association w;;s entitled, on judgment of fore- closure, to have a provision inserted directing the surplus to he invested according to the mortgage pro- vision. Franklin Building Asso- ciation v. Mather, 4 Abb. Pr. L'?4. By a mortgage made with a Building Society to secure 700/, it was provided that the principal and interest should be paid off by monthly instalments. The mort- gagee was given power of entry sale, in the event of default in its payment of two months' instal- ments being made. The rule of the society provided, inter alia, that if a mortgagor wished to redeem be- fore the time limited for the pur- pose, the hoard might allow him to do so upon such terms as they might think reasonable. Default having been made, the society en- tered into possession of the mort- gaged premises, but did not exer- cise their power of sale. It was held that the mortgagor was not entitled to redeem before the due date of the mortgage without the board's permission ; but that an account would be ordered of what was then due between the mort- gagor and mortgagee, and that on payment of the amount due, the mortgagor would be entitled to re- cover possession of the premises. O'Reilly v. Heydon, 14 N. S. Wales, 283. A Building Association took from a borrowing member a judg- ment and conditioned, inter alia, 188 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. Sec. 176— Forfeiture of Stock — Notice — Waiver. Where a statute authorizes a forfeiture of a member's stock for a failure to pay his dues, interest and fines, a failure in this respect justifies a forfeiture made without notice first given ; and the courts will not relieve against such a forfeiture. 1 The entry of the word " forfeiture " l^ the secretary opposite the names of certain members, in the books of the society, is not sufficient evidence that such members received due notice that their shares would be forfeited if their arrears were not paid, — more especially where the entry was made long after the date of such alleged notice. In this case a statute required a declaration of the confiscation to be made, and it was held that such a decla- ration might be made b\ r resolution ; but if the resolution had not been adopted before the society went into liquida- tion, the liquidators had no authority to declare a forfeiture. 2 "Where the right to declare a forfeiture has accrued, but instead of declaring a forfeiture the association accept dues on the stock, it will waive by such acceptance its right to declare such forfeiture. 3 that the debtor should pay all fines imposed by the constitution and by-laws of the association and that if default should be made for six jutive months in the payment of instalments of interest, duos. . t premiums, then the princi- pal debt, tog i her with interest, dues, fines, and premiums should become due and payable and could be n covered. Itwas held thai fines for nonpay nt of instalments of st and premium, which fell due nj'ii r.si.r months default on t he pari of t he debtor, could not be re- covered, but t lint , as he elected to I eep his stock in existence and not to apply it to reducing t he debl . the lines for non-p;iyinent of t lie dues t hereon could becollected up to the date of the Bale of the debtor's real old on a judgmenl entered on the bond) and although the debt and interest were fully paid from the proceeds of sale, the judg- ment would still stand, and could be used for the collection of dues, and fines for nonpayment there- of, subsequently accruing. Hou- letto's Estate, 2 Chest. 511 ; Ever- ham v. Oriental S. & L. 47 Pa. 352. 1 Freeman v. Ottawa Building, etc., Association, 114 111. 182; S. C 28 N. E. Rep. Gil. 2 Higgins v. Power, 1 Montreal Sup. Ct. 268; S. C. 8 Leg. News. 197. 8 Lime City Building, Loan and Saving Association v. Black, 136 End. 544; s. c. 35 N. E. Rep. 829. If the association declare the stock of a borrowing member, up- on which he has secured a loan, forfeited, it canrecoveron his bond only the union id actually advanced with interest, deducting payments § 178. STOCK OE .SHAKES. 1.89 Sec. 177 — Canceling Stock, Association Cannot. A building association cannot cancel a member's stock without his consent where its by-laws provide that he shall be entitled to share in the profits when the association is wound up; and an attempt on its part to do so may be enjoined. A mere failure on his part to object to a void by-law canceling it until an attempt is made to enforce such by-law against him does not estop him to object to it. 1 So a stockholder may maintain suit for an injunction to prevent the directors closing out a series of shares before their maturity. 2 Sec. 178— Building Association Purchasing its own Shares. A building association cannot purchase its own shares ; but it may receive them as securit^y for a debt or other similar purpose. 3 But the inability of a building association to purchase its own stock does not prevent it from effecting a binding compromise with a shareholder, although the effect of the compromise is the retirement of his stock. 4 made on such loan. Bechtold v. Ehodes v. Missouri, etc., Co., 63 Brehm, 26 Pa. St. 269; Denny v. 111. App. 77. West Philadelphia, etc., Associa- 3 State v. Oberlin Building and tion, 39 Pa. St. 154; Premium Loan Association, 35 Ohio St. 258 ; Fund Association's Appeal, 39 Pa. Wangerien v. Aspell, 47 Ohio St. St. 156. 250 ; s. c. 24 N. E. Rep. 405 ; 23 i Bergman v. St. Paul, etc., As- Wkly. L. Bull. 380. sociation, 29 Minn. 282 ; s. C. 13 4 Id. ; Miller v. Jefferson Build- N. \V. Rep. 122 ; Kolff v. St. Paul ing Association, 50 Pa. St. 32. Fuel Exchange, 48 Minn. 215. "A purchase implies an acqui- In such an action the stockhold- sition of property, a change or er's certificate is not such a basis transfer of ownership. This was of the suit as to require it to be not within the contemplation of made an exhibit. Fisher v. Pat- the parties to the transaction ; it ton, 131 Mo. 32 ; 33 S. W. Rep. 451 ; was not intended that the shares S. C 34 S. W. Rep. 1096. should be kept alive (so to speak) 2 Fisher v. Patton, 134 Mo. 32 ; and remain the property of the S. c. 34 S. W. Rep. 1096. association ; on the contrary, the A decree of foreclosure may object sought was their extinguish- provide for the cancelation of so ment by retirement and cancela- much stock as has been credited tion, and we see no reason for im- with full withdrawal value in posing on the transaction any reduction of his indebtedness, other character than that intended 190 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. See. 179— Number of Shares a Member may hold. Unless some statute or the rules of the association forbid it there is no limit to the number of shares an individual may hold. 1 A holder of more shares than the statute allows is not liable for dues and assessments on the shares in excess of the number he may lawfully hold. 2 A statute limiting the number a member may hold is valid, and the association cannot authorize him to hold more than the statute permits. Therefore, a transfer of more than the statutory number cannot be compelled. 3 But if he hold more shares than the by-laws of the association permit, although fewer than the statute allows, he cannot set up that fact as a defence against any claim which the association may have against him on account of such shares. 4 Neither the borrower nor his cred- itors can defend against a mortgage on the ground that he borrowed on more shares than the law allowed him to hold. 5 Nor can any one giving a mortgage for the borrower's loan. 6 Sec. 180— Fee for Transferring Stock. A building association may provide by a by-law for the pay- by the parties themselves. Nor did the parties intend a division of the funds of the concern in ad- vance. The parties who went out expressly waived any right in the ultimate division contemplated by the constitution of the association, in consideration of receiving at the time, a sum agreed upon by the parties. Theobjecl of the as- sociation was to reduce the num- ber of shares anion-- which final divisions should be made when the funds should be sufficient to divide two hundred dollars per share, and this cancelation of stock was a means, as they sup- po ed, of ha itening that day." x 1 .Morrison r. ( Hover, 19 L. J. Exch. 20, 25 ; s. c. 4 Exch. 430 ; 14 L. T. (O. S.) 204 ; 14 J. P. 84. See also Murray v. Scott, 9 App. Cas. Ct. p. 548. 2 Simpson v. Building and Sav- ings Association, 38 Ohio St. 349. 3 State v. Greenville Building and Saving Association, 29 Ohio St. 92. 4 Hagerman v. Ohio Building and Saving Association, 25 Ohio St. 186. 5 Victoria Building Association v. The Arbiter Bund, 6 Wkly. L. Bull. 823 ; s. c. 10 Amer. L. Rec. 485. 6 Ohio Building Association v. Leyden, 1 Wkly. L. Bull. 126 ; S. C. 4 Amer. L. Rec. 765. LWangerien d. Asp.-n. 17 Ohio St. 250;24 X. E. Rep. 406; 23 Wkly. L. Bull. 389; 211 N. E. Hep. 405. § 181. STOCK OR SHARES. 191 merit of a fee for the transferring of stock. 1 But a rule providing that each member on transferring his shares to another shall pay the association a fee on each share trans- ferred has no application where a person who has subscribed for a number of shares in his own and others' names, seeks to exercise his right of withdrawal on all, and produces proper vouchers from others for payments. 2 Sec. 181 — Dividends. Not infrequently it is the plan of an association to provide for the payment of dividends upon the stock. Sometimes this is called a " bonus," especially in England. In some associations no dividends are declared ; but those who remain in until the series to which their stock belong 1 is terminated, or the association is terminated as in the case of terminating associations, receive their proportionate part of the profits the association has realized. But in any case before a building association can declare dividends, some statute must authorize it so to do. If a statute does author- ize a dividend to be declared, it cannot be declared out of the premiums bid for loans, for it cannot be known whether these will constitute profits until the transaction is closed. 8 If the constitution or by-laws provide that a dividend of the net profits shall be declared at each quarterly meeting, the directors have a discretion, to declare the dividend, not on the earnings of the quarter in which it is declared, but on those 1 McGannon v. Central, etc., Saving and Loan Association, 53 Association, 19 W. Va. 726, N. Y. St. Rep. 451. Contra, Boone 2 Northwestern Central Building v. Homestead Loan Association, 23 Association v. Henderson, 3 Wkly N. Y. Supp. 203. Nor can it be L. Bull. 386. declared out of what might be Where a receiver is appointed termed the capital. Kisterbock's for the association the court may Appeal, 51 Pa. St. 485. order that he shall be entitled to Dividends should be computed a fee for transferring the shares for the full amount of monthly on the books of the association, to contributions of the stockholders be paid by the person to whom tbe to the general fund, together with transfer is made. A fee of 25 cents interest according to the average per certificate was held to be rea- time of payment of contributions. sonable. Chapman v. Young, 65 Chapman v. Young, 65 111. App. 111. App. 181. 131. 3 Marks v. Monroe Permanent 192 BUILDING AND LOAN ASSOCIATIONS. Cll. VIII. of the previous quarter. They are not required to use all the profits earned at any time for the purpose of a dividend but the} r have power to retain such money as may be neces- sary to pay debts to become due as for other purposes of the business of the association. 1 "Where a director actively participated in declaring dividends, knowing at the time the association was insolvent, it was held that he could not recover any money from the association which he had loaned it until all the stockholders were fully paid, whether they had become members of the association before or after the declaration of the fraudulent dividends. 2 A withdraw- ing member is also entitled to whatever dividends have been declared before he gave notice of withdrawal, 3 and after he has given such notice the association cannot change the amount by lowering it. 4 A by-law allowing a voluntary withdrawing member a certain per cent, by way of profit, upon their payments, applies also to a borrowing member. 5 Earnings of an association made subsequent to the death of the holder of stock must be treated as income and be paid to the life tenant. 6 The proper method of apportioning the profits of a building association, having more than one series of stock, is to divide them equally among the shares in pro- portion to the amount paid in on each share; and to ascer- tain the value of any particular share at a given time there must be added to the amount paid on the share a propor- tion of the profits thus ascertained. The fact that a share- holder has acquiesced for a number of years in a different 1 Marks v. Monroe Permanent 4 Archer v. Harrison, 7 De Gex Saving and Loan Association, M. & G. 404; 3 Jur. (N. S.) 194; mpra. 29 L. T. Rep. 71; 21 J. P. 515; 2 Kisterbock's Appeal, supra. Smith v. Pilkington, 30 L. T. Rep. See also Sellout v. Conkey Ave., 196; s. c. 4 Jur. (N. S.) 58; 22 J. etc. Asso., 87 Hun, 568; s. c. 32 P. 5 ; on appeal, 1 De Gex F. & J. N. Y. Supp. 713; 71 Misc. Rep. 120 ; 29 L. J. Ch. 227 ; 24 J. P. 227. 151 : 66 N, Y. St. Rep. 66. ° Winterer v. Building Associa- Fleming v. Self, 8 Eq. Rep. 14 ; tion, 4 Leg. Int. 122 : s. c. 19Phila. 24 I.. T. Rep. lol ; 18J. P. 772 ; 8 426; Leister v. Log Cabin Building W. R. 80; 8 !>«• <:«-x, M. & <;. 997 : Association, 38 Md. 115. 1 -J iii. ( X. S. i 25 ; 24 L. J. Ch. 29 ; 6 Elton's Estate, 1 Pa. Dist. Rep. on appeal, 28 L. T. Rep. 68; 18 J. 458; s. c. 30 W. N. Cas. 275; 49 P. 296: Kay, 518. Leg. Int. 268. § 182. STOCK OR SHARES. 193 method adopted by the association, by which the profits were divided equally among all the shares without regard to the amount paid in, will not estop him from requiring that the method of ascertaining the value of his share be changed to the proper method. 1 Sec. 182 — Maturity of Stock Cancels on Return of Secu- rities. It should not be forgotten in this connection that the maturity of a borrowing member's stock is a cancelation of a loan made to him by reason of his ownership of such stock ; and he is entitled to a return of any securities he has given for the repayment of such loan. 2 " If the mortgagor performs his obligation as a stockholder of the corporation, no principal sum is to be repaid. The sum he receives from the corporation on the execution of the mortgage, is a payment by anticipation of what will be the value of his stock in the corporation on its dissolution and distribution of assets among the proprietors. Having received the ultimate value of his stock in advance of the other stock- holders, and long before the period fixed for the first distri- bution of assets, and being liable to pay monthly instal- ments on his subscription to the stock of the corporation, he executes a mortgage, not to secure the repayment of a loan, but the performance of his contract with his fellow 1 Charles Tyrell Loan and Build- the dividends of an association ing Association v. Haley, 163 Pa. can only be paid from the earnings, St. 301 ; 35 W. N. Cas. 269 ; 30 Atl. where a certificate is issued contain- Rep. 154. ing a fixed maturity period, such The value of a share may not be certificate is beyond the authority a proper basis for distribution of of the officers issuing it, and should earnings due such share ; but the be construed as naming an esti- amount of dues paid on such share mated period of maturity. O'Mal- and the other credits to the share ley v. People's Building. Loan and make such a basis, whether or not Savings Association, 36 N. Y. Supp. a loan has been awarded on such 1016. share. Seibel v. Building Associa- 2 Charles Tyrell Loan and Build- tion, 43 Ohio St. 371 ; s. c. lOAmer. ing Association v. Haley, 139 Pa. & Eng. Corp. Cas. 460 ; 2 N. E. St. 476 ; s. C. 20 Atl. Rep. 1063 ; 48 Rep. 417 ; reversing, 13 Wkly. L. Leg. Int. 345 ; reversing, 27 W. N. Bull. 265. Cas. 244; Under a statute providing that 13 194 BUILDING AND LOAN ASSOCIATIONS. Ch. VIII. stockholders." : After the maturity of the stock, without default having been made by the borrower, the association cannot recover a judgment for the amount of the loan. 2 Sec. 183— Loss of Pass-Book. A pass or receipt book is often given a stockholder in which entries of payments are made by the secretary with his signature. Not infrequently this book contains the certificate of membership and a statement of the number of shares held by the person entitled to it. When such a book is issued it becomes the primary evidence of the payments made by such member. If he has carelessly lost this book and claims credits not admitted by the association, he must produce convincing proof of their having been made. Un- certain, vague and indefinite statements will not suffice. 3 Sec. 184 — Rebate of Interest. A statute provided that " at the end of each year " the association should " make a rebate of interest on the amount of dues paid on loans awarded." In construing this clause the court said : " The legislative intent was to lessen the interest paid on such loans. The interest-bearing power of the loan is reduced year by year as dues are paid, which, at the final settlement, must be credited on the loan ; and so each year the interest earnings of the loan become less. The entire loan earns some interest, and the effect is the same as though the rate per cent, of interest were reduced each vcar. This is not a provision that dues when paid shall be credited on loans awarded; but the various items of dins paid and earnings credited — from first to last — are i Clarksville Building and Loan Building Association's Appeal, 33 \ ociation v. Stephens, 26 N. J. Pitts. L. Jr. 324. |.; (| 35i, 2 Charles Tyrell, Loan and Build- \ stockholder's share was ex- Lng Association v. Haley, supra. ; tinguished by errors Lnthe compu- Inter-state Savings, etc., Ass'n v. tation and apportionmenl ofprof- ('aims, 16 Wash. 215 ; s. c. 47 Pac. its among several series of stock. Rep. 215. and it washeld thai hecould main- : I ilarksville Building and Loan tain B bill fco correct such errors. Association v. Stephens, 26 N.J. Eq. 351. § 184. STOCK OR SHARES. 195 put into one amount, and so remain until the share is paid in full, and then such amount is applied to offset the loan, and the loan is settled, if premiums and interest are paid. Shares or stock subscribed must be paid in full. And when a loan is obtained upon a share, the share is taken out in advance, for which privilege premiums and interest are paid, and then the share may be of no value, but be a burden, and the shareholder must continue to pay his dues until the share is paid, and he must pay the premiums and interest until the loan is settled." 1 1 Seibel v. Building Association, Eng. Corp. 460 ; 2 N. E. Eep. 417 ; 43 Ohio St. 371 ; S. 0. 10 Amer. & reversing, 13 Law Bull. 265. CHAPTER IX. DUES ON STOCK-PAYMENTS. Sec. 185. Definition. 186. Duty of Member to Pay. 187. How and When Paid. 188. When Liability to Pay Begins. 189. Assumpsit for Dues — Notice. 190. Bringing of Suit; Effect on Payment of Dues. 191. Dues Secured by Mortgage Given on Securing an Advance or Loan. 192. Lien on Stock for Dues. 193. Forfeiture of Stock for Non-Payment of Dues. 194. When Liability for Dues Ceases. 195. Purchaser of Mortgaged Premises. 196. Number of Shares upon which Member Liable for Dues. 197. Proof of Payments on Stock. 198. Application of Payments made by a Borrower. Sec. 185— Definition. Dues are payments to be made by a member on the stock he owns. They may be payable weekly, monthly or at any other distinct periods of time. In an instance of prepaid stock there are no dues. 1 Sec. 186— Duty of Member to Pay. It is a member's duty to pay the dues on his stock, 1 A statute may change or in order to increase the amount broaden this definition. For in- of fines, see Shannon v. Mutual stance, where a stockholder be- Building Association, 36 Md. 383. comes a borrower, and he has been A purchaser of shares from paying weekly dues, the amount he another, on having them trans- will theie;iHer Imve to pay weekly ferred to himself, is entitled to will be increased by the amount of credit for the dues paid on the i 1 1 1 1 rest payable each week on his stock purchased, the same as if he loan ; and these two items are often had originally subscribed for them designated in statutes as "weekly and paid the dues thereon. Mu- dues " or " lines." tual Savings & L. Ass'n v. Owings That, dues cannot be subdivided (Ky.), 43 S. W. Rep. 422. 1% § 187. DUES ON STOCK-PAYMENTS. 197 whether he be a borrowing or non-borrowing member ; and he cannot urge as an excuse that another has not paid his dues. 1 The failure of the proper officer of the society to apply to him for his dues will not excuse him in not paying them ; 2 nor will the society be enjoined from collecting dues, on the ground of the fraud and official misconduct of its former officers. 3 Sec. 187— How and When Paid. Dues must be paid according to the provisions of the by- laws ; and if such by-laws make no provision how they shall be paid, they must be paid in cash. 4 If the by-laws re- quire them to be paid at stated meetings of the directors, and they are paid elsewhere to officers of the association who embezzle them and do not apply them to the stock, the payments will be invalid. 6 But if the as- sociation has permitted a different course to be pur- sued, then the payments to its officers, in pursuance of such practice, at a time and place not provided for in the by-laws, will be valid. 6 Payment to the secretary when payable to the treasurer will not bind the society. 7 Where the constitution and by-laws provided for stated meetings for the payment of dues, and that all money must be received by the board of directors in the presence of the first secretary, it was held that a shareholder was not en- titled to credit for payments unless made in accordance with such provisions, or unless the money actually came to the as- sociation, and that a shareholder making a claim for pay- ments had the burden of proof as to such facts, which was 1 Hoboken Building Association Mueller v. Cohen, 27 Ohio L. J. vs. Martin, 13 N. J. Eq. 428. 353. 2 Taylor v. Collins, 46 L. T. Rep. 5 Morrow v. James, 4 Mackey, 59. (N. S.) 168. See however Schutte v. California 3 Rowland vs. Workingmen's Building and Loan Association, Building and Loan Association, 1 146 Pa. St. 324 ; S. C. 23 Atl. Rep. Lack L. Rec. 456. 336. 4 People's Building and Loan As- 6 Haverson v. Cole, 6 W. R. 17. sociation v. Wroth, 43 N. J. L. 70 ; 7 Browne v. Sanders, 20 D. C. Mutual Building and Loan Asso- 455 ; S. C. 20 Wash. L. Rep. 277. ciation v. Hammel, 43 N. J. L. 71 ; 198 BTJTLDIXG AND LOAN ASSOCIATIONS. Cll. IX. not met by the production of a pass-book showing credits of the amount claimed. 1 See. 188— When Liability to Pay Begins. Liability to pay dues for stock subscribed does not begin, as a matter of course, until the association is incorporated. Nor does it begin until all the stock has been subscribed for ; or in the instance of a serial association, until all the stock of the particular series to which the stock subscribed for belongs has been taken. 2 The laws or by-laws may however, provide for the payment of dues when a certain amount of stock, less than the whole, has been subscribed for. 3 Likewise, if the association is put in running order before all of its stock has been subscribed for, a member attending its corporate meeting and voting and participating in the forwarding of its business will be liable for dues ; for he thereby waives his right to insist upon a full subscription before the association begins the transaction of business. 4 A subscriber to a series of stock which had commenced to run several months before may be required to pay dues and interest from the date they began to run. 5 Sec. 189 — Assumpsit for Dues — Notice. Assumpsit lies on behalf of the association against a mem- ber to recover dues he owes it. 6 Unless a statute or by-law 1 Sachs v. Duckworth B. & L. their dues and instalments, they Ass'n, 6 Ohio Dec. 254; s. c. 4 are not required, when such agency Ohio N. P. 214. is discontinued, to tender their Failure of a shareholder to pay clues at any other place. People, his ilius is not excused by the re- etc., Ass'n v. Reynolds, 17 Ind. fusal of the officers of the asso- App. 453; S. C. 45 N. E. Rep. 522. ciation to allow trim to inspect the 2 Morrison v. Dorsey, 48 Md. 461. books, where the inspection w;is » Massey v. Citizens' Building in. I ileniiinded until long after the and Savings Association of Paola, shareholder had ceased to pay his 22 Kan. (524. dues. Bukerv.Leighton Lea Ass'n 4 See generally Hinmanv. Ryan, 46 N. Y. Supp. 85; 8.0. L8 App. 8 Ohio C. C. 529. Div. 548. 6 Setliff v. North, etc., Ass'n Where an association agrees to (Tenn.), 39 S. W. Rep. 546. keep an agency in the city in ''Association v. Kribs, 7 Leg. & which members live, to receive Ins. Rep. 21. § 190. DUES ON STOCK-PAYMENTS. 199 requires notice to be given a member of his duty to pay bis clues, none need be given ; and a general statute requiring corporations to give notice of a failure to pay dues, before suit brought, has no application to a building association requiring periodical payments to be made of dues. 1 The dues for each particular period constitute a separate cause of action. 2 The amount recoverable is the amount of dues with interest. And where an association's contract stipu- lated that if the contracting member defaulted in payment of dues or interest, the whole amount of dues which would be payable before the maturing of the stock, less what had been paid thereon, should be immediately due and payable as liquidated damages for breach of the contract, such stipulation was enforced only to the extent of the actual damages occasioned by the breach. 3 Sec. 190 — Bringing Suit, Effect on Payment of Dues. The bringing of a suit against a member, either to fore- close a mortgage he has given or to recover dues past due, does not release him from liability to continue the payment of his dues as they accrue, nor enable him to evade a fine for their non-payment. 4 Nor does the duty to pay dues cease pending the negotiation of a plan to wind up an in- solvent association. 5 Sec. 191 — Dues Secured by Mortgage Given on Securing an Advance or Loan. Usually the terms of a mortgage given for a loan are broad enough to secure the payment of dues on the borrow- er's stock assigned as collateral security for the payment of the loan, 6 but not broad enough to secure the payment of 1 Morrison v. Dorsey, 48 Mel. sociation v. Metzger, 3 W. N. Cas. 461. 204 ; Union Building Association 2 Building Association v. Hop- v. Masonic Hall Association, 29 pie, 12 W. N. Cas. 222. N. J. Eq. 389. 3 Tilley v. American Building 5 Pioneer Savings and Loan Co. and Loan Association, 52 Fed. Rep. v. Oxford (Tex. 4 Civ. App.), 35 S. 618 ; S. C. 40 Amer. & Eng. Corp. W. Rep. 1078. 375. 6 Hagerman v. Ohio Building & 4 German Fair Hill Building As- Loan Associations, 25 Ohio St. 186. 200 BUILDING AND LOAN ASSOCIATIONS. Ch. IX. dues on stock not thus assigned. 1 And if there has been a foreclosure of the mortgage and a satisfaction of the decree by payment, the decree will stand as security for future payment of dues. 2 When he exercises the right to redeem he must still continue to make payments on his stock until the association or the series to which it belongs has ter- minated. 3 Sec. 192 — Lien on Stock for Dues. As elsewhere stated, when authorized by a statute or a by-law or by contract, 4 a building association may hold a lien on shares of stock for arrearages of dues that have accrued upon them. In such an event the holder of delin- quent stock cannot withdraw from the association without first paying all back dues. 5 Nor can he reduce his stock and demand that payments made on the larger number of shares shall be applied to the lesser number, and thus secure stock with all clues paid up to date of the demand. 6 The pledgee of stock takes it subject to the lien of the associa- tion for dues. 7 1 Everham v. Oriental Savings and Loan Association, 47 Pa. St. 352; Bowen v. Lincoln, etc., As- sociation, 51 N. J. Eq. 272 ; s. C. 28 Atl. Rep. Hi : 46 Amor. & Eng. Corp. Cas. 503. 2 Robertson v. American Home- stead Association, 10 Md. 397; 69 Amer. Dec. 145. See Risk v. Del- phos Building and Savings Asso- ciation. 31 Ohio St. 517; Mosley v. linker, (J I laic S7 ; Flagerman v. Ohio Building and Savings Asso- ciation, 25 Ohio St. L86; Everham V. Oriental, etc., Association. 47 Pa. St. 352; Sparrow v. Fanner, 26 Beav. 511 ; S. C. 33 L. T. 216; 28 I.. .1. Ch. 537; 5 Jur. (N. S.) 530. ( 'ontra. Everman v. Schmidl , '-'I Wkly. L. Bull. 56. Sparrow v. Farmer, eupra ; Farmer v. Smith, I B. & N. 196; S. c. 28 L. J. Exch. 226 ; 5 Jur. (N. S.) 533, note. * Thirty -First Street Building and Loan Association v. Wetherell, 43 111. App. 509. 6 McGrath v. Hamilton Savings and Loan Association, 44 Pa. St. 383; Anderson, etc., Association v. Thompson, 88 Ind. 405 ; Watkins v. Workingmen's Building and Loan Association, 97 Pa. St. 514 ; Hawkeye Benefit and Loan Asso- ciation v. Blackburn, 48 la. 385. 6 Fulton v. American Building and Loan Association, 40 Minn. 190 ; s. c. 48 N. W. Rep. 781 ; Eaton v. American Building and Loan Association, 47 Minn. 236; S. C. 49 N. W. Rep. 865. 7 Societe Canadienne-Francaise v. Daveluy, 20 Cas. S. C. 449. § 193. DUES ON STOCK-PAYMENTS. 201 Sec. 103 — Forfeitures of Stock for Non-payment of Dues. An association may provide by its by-laws that upon failure for a certain number of times or for a certain length of time the stock of such delinquent member may or shall be forfeited. 1 But forfeitures for non-payment of dues are not favored, and they must be declared in unambiguous language. 2 The rules relating to forfeitures are strictly construed; 3 and they must be strictly followed, or the de- faulting member will have a cause of action against the association for a conversion of his stock. 4 The fact of a member's default is sufficient notice to him of the associa- tion's right to forfeit the stock, and a notice need not be given unless some statute or the by-laws require it. 5 Before the forfeiture can be deemed to have taken place there must be some action upon the part of the society, either by the society itself or by its board of directors, or possibly its duly authorized officers, declaring a forfeiture of the stock, and usually a record made of such declaration. 6 The right of forfeiture may be waived, 7 as, for instance, by receiving dues on the delinquent stock. 8 When the stock is declared forfeited the membership of the owner ceases and his lia- bility to pay for the dues is at an end. 9 If the stock is forfeited in the hands of the assignee the liability of the assignor, by reason of his subscription for it, is terminated. 10 iCard v. Carr, 1 C. B. (N. S.) 6 Watkins v. Workingmen's 197 ; S. C. 26 L. J. C. P. 113. Building Association, 97 Pa. St. 2 Occidental Building and Loan 514. Association v. Sullivan, 62 Cal. 7 North American Building As- 394; In re Butchers' Benefit As- sociation v. Sutton, 35 Pa. St. 463. sociation, 38 Pa. St. 298. 8 Lime City Building, Loan and 3 Building Association v. Hopple, Savings Association v. Black, 136 12 W. N. Cas. 222. Ind. 544 ; S. c. 35 N. E. Rep. 829. 4 Allen v. American Building 9 McCahan v. Columbian Build- and Loan Association, 49 Minn, ing Association, 40 Md. 226. 544 ; s. c. 52 N. W. Rep. 144 ; 40 *> Hatfield v. Huntington City Amer. & Eng. Corp. Cas. 144. Building and Loan Association, 5 Freeman v. Ottawa, etc., Asso- 132 Ind. 149; S. c. 31 N. E. Rep. ciation, 114 111. 182 ; S. C. 28 N. E. 532. Rep. 611. 202 BUILDING AND LOAN ASSOCIATIONS. Cll. IX. After forfeiture of a member's stock he no longer has any interest in the assets of the association, for the} r belong to the members who have kept their stock alive by the pay- ment of their dues. It would be unjust to allow him to participate in a distribution of the assets if sufficient funds have been paid to retire unforfeited stock; for the latter would, under such an arrangement, have paid more than their proportion. Consequently, where a borrowing mem- ber has made default on his mortgage, and the stock he held has been declared forfeited, he cannot defend, on suit brought to foreclose the mortgage, on the ground that the association had retired the outstanding valid stock. 1 Sec. 194 — Where Liability for Dues Ceases. As stated in a former section, liability for dues ceases on forfeiture of the stock. So liability ceases when the asso- ciation has come to an end. 2 Such would be the case where a receiver is appointed for the association, 3 for that puts an end to its corporate existence ; and in this respect it is un- like the ordjnary association. But the fact that the officers of the association have acted illegally, or conducted the association in an illegal manner, does not relieve him from his liability to pay his dues so long as it is a going concern. 4 1 Id. Southern Building and of the matter, refused to pay their Loan Association v. Anniston dues and their shares were then Trust Co., 101 Ala. 582; s. c. 15 forfeited on due notice and in the So. Rep. 12:5; 29 L. R. A. 120. ina i mer prescribed in the constitu- loreclosure of the association's tion. Buker v. Leighton Lea lien "ii a member's stock and a Ass'n, 46 N. Y. Supp. 35; 18 Aj>j>. thereof under the decree is Div. 548. equivalent to a forfeiture of his -Cook v. Kent. 105 Mass. 210; :.. Building and Loan A.sso- Bowker v. .Mill River Loan Fund ciation of Dakota v. Logan, (Tex. Association. 7 Allen. 100. Civ. A pp. ) 33 S. \V. Rep. 1088. 8 Peter's Building Association v. Shareholders whose shares have Jaecksch. 51 Md. 198. been forfeited for o.on-paymen1 of i Regina v. D'Eyncourt, 4 B. & , are not entitled 1 [uitable S. 820; s. C. 9 L. T. Rep. (N. S.) relief on the ground thai they had 383; 12 W. R. 408; 28 J. P. 116; been deceived bj a secrel agree- Sub. nom. ; Hughes v. Layton, 10 menl between the promoters, Jur. (N. S.) 518; 88 L. J. M. C. 89; when they, after knowledge of the Sub. nom.\ I Inches?'. D'Eyncourt, ment, and after consideration 8N. R. 420; 116 E. L. &Eq. 819; Ho- § 197. DUES ON STOCK-PAYMENTS. 203 The foreclosure of the association's lien on a member's stock, followed by its sale under the decree, terminates his liability for dues. 1 Sec. 195— Purchaser of Mortgaged Premises. A purchaser of the premises mortgaged to an association to secure a loan is liable for the dues on the mortgagor's stock assigned as collateral, where he takes such shares, the same as if he was the original owner. 2 Sec. 196 — Number of Shares upon which Member is Liable for Dues. A member is liable for the dues upon all shares for which he subscribes, unless some statute forbids any one member holding more than a specified number of shares ; 3 in which event he is liable only for so many as he may own. But if a by-law limit the number he may hold, he will be liable for the full amount for which he may subscribe, although that amount exceed the limitation contained in such by-law ; for by ac- cepting the subscription the association waives the by-law to that extent, so that he cannot set it up as a defense. 4 Sec. 197 — Proof of Payments on Stock. If a stockholder be sued to recover dues on his stock and he plead payment, he must prove that the payments were made on the stock ; 5 although if sued on his mortgage for instalments thereon due, and it is proven that he had paid boken Building Association v. (Tex. Civ. App.) 35 S. W. Rep. Martin, 13 N. J. Eq. 428 ; Miller's 1078. Estate, 2 Pears (Pa.) 248. See 2 Handley v. Farmer, 29 Beav. Turner Ban-Verein v. Woodburn, 362. See Capital Hill Building As- 27 Wkly L. Bull. 409. See Hughes sociation v. Hilton, 1 Mackey, 107. v. Farmers, etc., Ass'n. (Tenn.) 46 3 Simpson v. Greenfield Building S. W. Rep. 362. and Saving Association, 38 Obio 1 Building and Loan Association St. 349. of Dakota v. Logan (Tex. Civ. 4 Hagerman v. Ohio Building App.) S. C. 33 S. W. Rep. 1088. and Savings Association, 25 Ohio Pending negotiations of a plan St. 186. to wind up an insolvent Associa- 5 Selden v. Reliable Savings and tion dues must be paid. Pioneer Building Association, 2 W. N. Cas. Savings and Loan Co. v. Oxford 481 ; s. c. 8U Pa. St. 336. 204 BUILDING AND LOAN ASSOCIATIONS. Cll. IX. certain sums to the society at the time he should have paid on the mortgage, the court will presume that such payments were made on his stock dues and on fines, and not on the mortgage. He has the burden to show that the payments were made on the mortgage if he desire them so ap- plied. 1 If he has lost his pass-book containing the entries as evidence of his payments, and the association disputes the pavments he claims, he must show by clear evidence that he made the payments before the court will allow them ; for vague and uncertain statements will not suffice.' 2 If he desires to have his stock applied to the satisfaction of his loan, he must prove that the stock has matured. 3 Sec. 198 — Application of Payments made by a Bor- rower. A borrowing stockholder, in the absence of any agree- ment on the subject, may apply his payments either to his stock dues or to the satisfaction of his mortgage, or to both ; and if he do not make the application, the society may. 4 And so his assignee for the benefit of his creditors may make the application if neither his assignor nor the so- ciety have done so. 6 Payment upon dues does not of itself work an extinguishment of so much of his mortgage, unless there be an agreement to that effect. 6 They are partial payments on his stock. 7 If the association has credited 1 Association v. Wall, 7 Phila. ing Association v. Sutton, 35 Pa. 240; Building Association v. Tay- St. 463. But see Pioneer Savings lor, 13 W. N. Cas. 13. & Loan Co. v. Cannon, 96 Tenn. 2 Clarkville Building and Loan 599 ; s. c. 36 S. W. Rep. 386. Association v. Stephens, 26 N. J. 5 Id. Eq. 351. 6 North American Building As- 3 Watkins v. Workingmen's sociation v. Sutton, 35 Pa. St. 463 ; Building and Loan Association, 97 Link v. Germantown Building As- Pa. St. 514. sociation, 89 Pa. St. 15 ; Economy 1 Spring Garden Association r. Building Association v. Hunger- Tradesnicn's Building Association, hurghley, 93 Pa. St. 258; Delano 16 Pa. St. 898; Early's Appeal, 89 v. Wild, 6 Allen, 1. Pa. St. Ill: Randall v. National 7 Seibel v. Victoria Building As- Building, Loan and Protective sociation, 48 Ohio St. 871 ; s. C. 2 Union, 42 Neb. 809; S. C. 60 N. W. N. E. Rep. 417. Rep. L019 ; North American Build- 198. DUES ON STOCK-rAYMENTS. 205 a payment to a stockholder's general account, an officer of the association cannot testify that such payments were con- sidered by it, in law, as payments on the stockholder's mortgage. 1 1 North American Building As- sociation v. Sutton, 35 Pa. St. 463. Of course a stockholder, when applying his stock dues paid in to his mortgage, is not entitled to in- tei-est on such dues ; Citizens' Mu- tual Loan and Accumulating Fund Association v. Webster, 25 Barb. 263, unless the association has come to an end by reason of its in- solvency and the appointment of a receiver. In determining the period fixed by the by-laws or contract as the limit allowed before the whole debt becomes due, partial pay- ments of dues cannot be counted. Thus a member is deemed six months in arrear, notwithstanding a partial payment of dues in tin.- first part of the six months. Barndt v. Greul, 4 Leg. Gaz. (Pa.) 388 ; s. c. 1 Leg. L. Reg. 737. If a member be both delinquent on his dues and on his mortgage, and he pay only enough to satisfy his dues without making an appli- cation of such payment, the asso- ciation may apply the payment to his stock and proceed to foreclose the mortgage. Nickels v. People's Building Loan and Savings Asso- ciation 93 Va. 380 ; 25 S. E. Rep. 8 ; People's Building Loan and Saving Association v. Ash worth. 91 Va. 706 ; s. c. 22 S. E. Rep. 522. CHAPTER X. FINES. Sec. 199. Definition. 200. Part of General Plan. 201. Not Regarded as a Penalty or Forfeiture. 202. Court Enforcing. 203. Charter or Statute Authorizing. 204. Fixed by By-Laws. 205. Must be Certain. 206. Must be Reasonable. 207. Amount of Fine. 208. Only Members Liable to Fine. 209. Additional Fine for Continued Neglect. 210. In Arithmetical Progression. 211. Fines on Delinquent Interest. 212. Interest on Fines. 213. Fines on Premiums. 214. Married Women Liable to Pay Fines. 215. Mortgage Secure. 216. Illegal Fines Reduce Debt. 217. When Fines Cease. 218. Lien on Stock. 219. Condonation or Remission of Fines. 220. How Collected. 221. Insolvency — Appointment of Receiver. Sec. 199— Definition. A line is a penalty inflicted in the nature of liquidated damages, pursuant to the provisions of the by-laws, upon a member, for failure to comply with the rules and regulations of the association requiring prompt payment of dues, in- terest or other sums payable at stated times on his stock. 1 Sec. 200— Part of General Plan. Fines area part of the general plan of all building associa- 1 Shannon v. Boward Mutual 56 Ga. 350; Hagerman v. Ohio I'.uil.lin^ Associat ion, ::c> Mnt even this extra compensation can be received only from a member of the association. No Loan can be made to any other person, at more than legal 1 Sullivan r. Jackson Building Homestead Loan Association, 54 andLoan S^sociation, 70 Miss. 94 ; N. Y. St. Repr. 63 ; s. c. 23 N Y. 1 1 So. Rep. 590; 46 Amer. & Supp. 203. Eng. <'<>i'|>. Cas. 494; Boone v. J26 § 222. PREMIUMS OR BONUS. 227 interest, and not even at that rate, provided any member of the association, who can give sufficient security, applies for the loan." 1 " Having no English word to express accurately the abatement, they might have called it, as they did, 'this premium bid for the right of precedence in taking the loan.' And there being no appropriate word to represent this transaction, it would naturally come to be called by various names which with more or less accuracy would in a word or brief phrase give an idea of it. Some might call it ' a redemption of his interest in the association,' as the ultimate effect of it would be, that he would at the close of the asso- ciation get no money from it, because what would be other- wise coming to him would be absorbed by the payment of his note and this abatement he had agreed to, or his pre- mium, as it is generally called. Sometimes it would be called, for the like reason, but with still more inaccuracy, ' a purchase of all his interest in the association by the associa- tion.' And as the loan is really to be ultimately paid by offsetting his interest in the association against this note to the association, it would sometimes with much more accuracy be called ' a loan on his interest in the association '." 2 " It appears, however, the association before paying the amount of the loan deducted the premium from the sum awarded and delivered to the borrower the residue. It actually had the premium in hand. The contract on the part of each was to pay money, the bidder to pay the premium, the lender to pay or advance the full amount of the loan awarded to the borrower. Either party could have insisted on such performance of the contract. Had they done so, no one, I suppose, would deny that the pre- mium, the whole of it, could he counted as so much money gained or earned. Its payment would have formed no part of the mortgage obligation. The parties were not bound 1 Mechanics', etc., Association v. bid. Bates v. People's, etc. , Asso- Wilcox, 24 Com. 147. ciation, 42 Ohio St. 655 ; Boone v. 2 Pfeister v. Wheeling Building Homestead Loan Association 54 Association, 19 W. Va. 676, 685. N. Y. St. Rep. 68 ; s. C. 23 N. Y. The premium is the amount of the Supp. 203. 228 BUILDING AND LOAN ASSOCIATIONS. Ch. XL to insist upon this method. The course they did adopt led to the same result. There was reason and natural equity in that mode of proceeding. It was a simple matter of compensation and avoided the circuit of two actual pay- ments. Both were implied and it was not necessary that they be formally made." 1 Sec. 223— Different Plans. It is impossible to enumerate all the many plans in vogue for the payment of premiums. An early plan was to put up the money on hands at public auction, and the persons desiring to secure loans entered into a competition by bid- ding for the money or so much as they desired, and the highest bidder received an award of the loan. If the bid, for instance, is ten per cent, then that percentage is deducted from the amount desired by the borrower, but he gives his 1 Boone v. Homestead Loan As- sociation, 54 N. Y. St. Repr. 63. The constitution of 1838 of Penn- sylvania provided that "No cor- porate body shall hereafter be created, renewed, or extended, with banking or discounting priv- ileges, without six months previous notice of the intended application for the same, in such manner as shall be provided by law." It was held that the word "discounting" applied to banks and not to a loan by a building and loan association. Schober v. Accommodation Saving Fund and Loan Association, 35 Pa. St. 223 ; Building Association v. Beemiller, 85 Pa. St. 225, note ; s. c. 15 Leg. Int. 132; 3 Phila. 115; Cooper v. Oriental Saving and Loan Association, 100 Pa. St. 402, 407; s. 0. 12 W. N. Cas. 332. Under a mortgage given to a building society, the principal sum advanced, together with a fixed sum l>y way of premium for the a■>; s. c. 20 S. W. Rep. 430. § 226. Ti: KM I IMS Oil liONUS. 231 have to pay for it. A declared object of the statute, as ex- pressed in its title, in authorizing these associations, 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." 1 The same doctrine has been announced in other states. 2 But where a statute authorizes the taking of interest upon a premium, it may be done. 3 A custom of an association, or of building associations generally, to charge 1 Forest City United Land and Building Association v. Gallagher, 25 Ohio St. 208 ; Sullivan v. Jack- son Building and Loan Association, 70 Miss. 94 ; s. C. 12 So. Rep. 590 ; 46 Anier. & Eng. Corp. Cas. 494; Goodman v. Durant Building and Loan Association, 71 Miss. 310; s. C 14 So. Rep. 146 ; Risk v. Del- phos Building and Saving Associa- tion, 31 Ohio St. 517. 2 In Ioiva, Hawkeye Benefit and Loan Association v. Blackburn, 48 la. 385 ; s. C. 6 Cent. L. Jr. 466 ; Burlington Mutual Loan Associa- tion v. Heider, 55 la. 424 ; Phillips v. Columbus City, etc., Associa- tion, 53 la. 719. In Kentucky, Gor- don v. Winchester Building and Accumulating Fund Association, 12 Bush. 110 ; Herbert v. Kenton Building and Savings Association, 11 Bush. 296. In Tennessee. Martin v. Nashville Building Association, 2 Cold. 418. In West Virginia, Parker v. U. S. Building, etc., Association, 19 W. Va. 744. In Virginia, Edelyn v. Pascoe, 22 Gratt. 826. In Mississippi, Peo- ple's Building and Loan Associa- tion v. McElroy,72 Miss. 434 ; s. c. 17 So. Rep. 348. In Maryland, Baltimore Permanent Building and Land Society v. Taylor, 41 Md. 409 ; Oak Cottage Building Asso- ciation v. Eastman, 31 Md. 556. In Noi*th Carolina, Hollowed r. Southern B. & L. Ass"n, 120 N. C. 286; 26 S. E. Rep. 781. See City B. & L. Co. v. Fatly, 1 AM.. A].).. 347 ; Citizens, etc., Ass'n v. Wbester 25 Barb. 263. 3 In Pennsylvania, Bui Id ing Asso- ciation v. Neurath, 2 W. N. Cas. 95 ; Building Association v. George, 3 W. N. Cas. 239 ; Selden v. Reliable Savings and Building Association, 811 Pa. St. 336. In New York, Citi- zens' Mutual, etc., Association v. Webster, 25 Barb. 263. In Ala- in una, Montgomery, etc., Associa- tion v. Robinson, 69 Ala. 419. In North Dakota, Vermont Loan and Trust Co. v. Whithed, 2 X. I). 82 ; S. c. 49 N. W. Rep. 318 ; 35 Anier. & Eng. Corp. Cas. 250. In Min- nesota, Fitzgerald v. Hennepin County, etc., Association, 56 Minn. 424 ; s. c. 57 X. W. Rep. 1066. In New Jersey. Bowen v. Lincoln Building and Loan Association, 51 N. J. Eq. 272; s. C. 28 Atl. Rep. 67; 16 Anier. & Eng. Corp. ('as. 494. In Canada, Canada Permanent Build- ing and Saving Society v. Harris, 16 U. C. C. P. 54. In Eng! am I. Harvey V. Municipal Permanent Investment Building Society L. R., 26 Ch. Div. 273 ; 5:5 L. J. Ch. Div. 1126 ; 51 L. T. N. S. 408 ; 32 W. R, 232 BUILDING AND LOAN ASSOCIATIONS. Ch. XL interest upon the premium bid, when no statute authorizes it, cannot be used to justify the exaction of interest on a bid ; nor does a custom of such associations to charge interest on money bid for by a borrower, whose application for a loan is subsequently refused, bind the parties. " Many things are done in the management of building associations by mutual consent which cannot be sustained in the courts. When the parties come here with their difficulties, they must rely upon the law of the land or the by-laws of the association to sustain their acts." l Sec. 227— Adding Bonus to Amount Loaned. A charter of an association provided " that it shall and may be lawful for the said association to loan money upon such interest as may be prescribed by law, for any period of time, and upon such premiums or bonus as may be agreed upon by the association and the borrower, and in all cases to deduct the interest and bonus, or either of them, in ad- vance." A shareholder borrowed $1000 and agreed to give a bonus of $250 for the loan. Instead of deducting the bonus, lie gave his note and mortgage for $1250, agreeing to pay the association the $1250 " in monthly instalments of ten dollars and forty-one and two-thirds cents each with an additional monthly instalment of six dollars and twenty- live cents as interest and bonus, both said instalments to be 557 : affirming in part, 52 L. J. Ch. stock as collateral, for the whole Div.349. Hughesv. Farmers', etc., amount of the loan, but received Ass'n, 16 s. W. Rep. 362 ; Payne v. only its amount, less the premium ; Freer, 2.1 Hun, 124; affirmed, 91 it was held that while she remained N. Y. 4o ; Melville v. American, a member of the association she etc., Ass'n, 33 Barb. 103. • was not entitled to a cancelation of 1 Winterer v. Fairmount Build- the trust deed on the ground that ing Association, 44 Leg. frit. 122. payment of interest on the pre- Where certain premiums were mium \\;is usurious, but was en- usurious, the amounl of the usury titled to have the illegal interest, credited on his Loan. Brown so paid, credited on the amount of r. Archer, 62 Mo. App. 277; B.C. dues and tines assessed. People's I Mo. App. Rep. 165. Building and Loan Associations. Where a stockholder bid off ;i McElroy, supra. loan it a premium, and gave her H lias been held thata member note, bearing ten per cent interest, cannol apply usurious interest ired by a trusl «!«*•■<), with Ikt pai!' the premium is to be ' Brown v. Archer, 62 Mo. App. computed on the sum actually re- 277; s. C. I App. Rep. Mo. 4G5 ; ceiveil I >y him. Mutual Building State v. Oberlin Buildingand Loan and Loan Association v. Tascotl Association, 35 Ohio St. 258; Mc- (III.,, 28 N. E. Rep. 801 ; 25 Ch. L. Cauley v. Workingmen's B. & S. News, 92; 10 Amer. .V Eng. Corp. Ass'n, 97 Tenn. 421; s. c. 37 S. \V. 361 ; affirming :!7 III. App. Rep. 212: 35 L. R. A. 211. Can 2~\, when statute permits it. People's \. statute providing thai no pre- S. & L. Ass'n v. Roberts, 5 Ohio tniums accruing to a building as- N. P. 86. ttion shall be deemed usurious, 8 Bates v. People's Saving and applies only to premiums exacted Loan Association, 42 Ohio St. 655 ; n, accordance with the statute, b. c. 18 WTdy. L. Bull. 396. § 230. PREMIUMS OR BONUS. 235 whether any one offers or not. If no offer to that amount is made, the money remains in the treasury without invest- ment. 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 institutions 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." 1 In an Ohio case it was said : "The most val- uable right that a member acquires by virtue of his mem- bership is that of obtaining a loan of mone} r 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." 2 But it has been held that if a by-law does fix an amount below which no bid will be received, and a borrower bid over that amount, even though no one else bid, he will be bound and the loan will not be deemed usurious. 3 " If a purchase of a loan is made upon competition in bidding, beyond the minimum premium fixed the purchaser cannot complain of the fixed premium, as his purchase was made in accordance with the law; but where he is obliged to take the loan at the minimum fixed premium, because of the rule of the associa- tion simply, and in the absence of competition bidding, he may complain and defend on that ground. The same prin- ciple will, of course, apply in the repayment of a loan, when the rule for settlement under the charter or by-laws, differs, in any respect, from that fixed by law." 1 Sec. 230 — Association Cannot Refuse a Bid. It necessarily follows from what has been said in the previous section that an association cannot refuse to enter- 1 Stiles' Appeal, 92 Pa. St. 122 ; Fund and Loan Association. 9 W. s. c. 9 W. N. Cas. 83 ! 37 Leg. Int. N. Cas. 251 ; s. c. 37 Leg. Int. 475. 366. 4 Albright v. Lafayette Building 2 State v. Greenville Building and Savings Association, 102 Pa. Association, 29 Ohio St. 92 ; State St. 411. v. Oberlin Building and Loan As- It has been held that the lien of sociation, 35 Ohio St. 258. a mortgage given an association 3 Orangeville Mutual Saving was valid as to the premiums 236 BUILDING AND LOAN ASSOCIATIONS. Ch. XI. tain a bid on the ground that it is too small or insignificant. If it is the only or the highest bid, and none other exceeds it in amount, the bidder is entitled to the loan. 1 But this rule probably does not prohibit the adoption of a by-law providing that no loan will be awarded to a bidder unless there has been at least one bid preceding his bid, a rule often adopted at auctions to prevent bidders agreeing not to bid against each other. 2 Sec. 231 — Change in by-laws. Where a by-law, in force when plaintiff became a mem- ber, and drew his money in advance, provided that the premium should be payable weekly, at the rate of $1 per share, and must be paid in full by withdrawing members, and afterwards the legislature passed an act requiring prem- iums to be paid in weekly sums, distributed through the whole estimated duration of the society, and that a with- drawing member should pay only a " relative proportion " of the whole premium, and the association changed its by- laws to correspond with the new law, and thereupon plain- tiff paid, and the society received his premium in small weekly instalments under the new law, and he afterwards withdrew, and to get his mortgage canceled was compelled to pay the balance of his premium in full under the by- laws in force when he received his money ; it was held that he was entitled to recover back the part of the premium paid for the time after the withdrawal, it being paid without consideration, but the part paid under the former by-law, while it was in force, could not be recovered back, although the whole amount was more than his "relative propor- tion." :; allowed tlie company am I, included precent. Hughes v. Farmers', etc., in the mortgage, as against subse- Ass'n (Tenn.). 46 S. W. Rep. 362. quent incumbrances; and that -An association can be com- though the loan was made with- polled to make a loan if the stock- < mt bidding. New Jersey, etc., holder complies with its by-laws. ('.,. /•. Bachelor, 54 N. J. Eq. 600; Bergman v. St. Paul, etc., Asso- 35 At I. Rep. 745. ciation, 29 Minn. 282 ; s. c. 13 N. i State v. Oberlin Building and W. Rep. 122. Loan \ sociation, 85 OhioSt. 258. 8 Windhorst v. Germania B. A. The person bidding need not be 7Wkly.L. Bull. 29. See Home, etc., §234. PREMIUMS OR BONUS. 237 Sec. 232— Collecting Premium after Maturity of Loan. A premium cannot be collected after the maturity of the loan, at least where the loan is for a specified time, and the premium is a percentage on the amount payable periodi- cally.! Sec. 233 — More than One Premium. Only one premium can be charged upon a loan. This was well illustrated in a case from Pennsylvania. There, after a sheriff's sale on a mortgage, the stockholders re- ceived a second loan, at a higher premium, on the same security ; and it was held that he was entitled to be repaid his first premium. 2 Sec. 234— Return of Premium on Withdrawal. A statute allowing a member withdrawing to a return of proportionate part of the premium he has paid, will not entitle a member to a return of proportionate part on de- fault made and suit brought to recover the amount due. 3 Association v. Boning, 7 Wkly. L. Bull. 174. A statute declaring that the premium bid shall not be taken as a violation of the statute of usury is void as to transactions already taken place. Reiser v, William Tell Saving Fund Association, 39 Pa. St. 137 ; Denny v. West Phila- delphia Saving and Building Asso- ciation, 39 Pa. St. 154 ; Premium Fund Association's Appeal, 39 Pa. St. 156; Blackburn's Appeal, 39 Pa. St. 160. See also Fisher v. Patton, 33 S. W. Rep. 451, although reversed. 134 Mo. 32; s. c. 34 S. W. Rep. 1096 ; McCauley v. Workingmen's B. & S. Ass'n, 97 Tenn. 421 ; s. c. 97 S. W. Rep. 212 ; 35 L. R. A. 244. The proportion of the premiums which shall be paid each week cannot be increased by subsequent action as to existing mortgages unless the constitution and by-laws confer such authority. And where the constitution provided that the instalments of premiums should be fifty cents per week for four years, and after that time the directors should determine the amount to be paid weekly, this language was held not to clearly give such au- thority, and was not construed prospectively, and to authorize a larger weekly instalment only as to loans made after the change. Burke v. Home Building Associa- tion, 7 Wkly. L. Bull. 114. 1 Savings, etc., Association r. Stevens, 5 Wkly. L. Bull. 113 ; Peo- ples' Saving and Loan Association v. Stevens, 3 Wkly. L. Bull. 113. 2 Flounders v. Hawley, 78 Pa. St. 45 ; S. c. 1 W. N. Cas. 74 ; 2 Del. (Pa.) 219. 8 Flynn v. Equitable Saving Fund," 3 Walk. (Pa.) 170. 238 BUILDING AND LOAN ASSOCIATIONS. Ch. XL AYhere a statute provided that a borrower might repay a loan at any time, " and in case of the repayment thereof be- fore the expiration of the eighth year after the organization of the corporation, there shall be refunded to such borrower one-eighth of the premium he paid for every year of the said eight years then unexpired ; " this was held to entitle the member to a return of one-eighth of the premium for every whole year anticipated, but not to a proportionate return for a fraction of a year. 1 A statute providing that, on repayment of a loan before the end of the eighth year after its issue of the stock on which the loan is made, one- eighth of the premium bid shall be returned for each unex- pired year of the eight, applies only in case of voluntary payment. 2 Under the rule of a building society which re- quired that loans upon a mortgage should be repaid by annual instalments and premiums spread over a certain number of years, it was held that the society was justified in adding the whole of the annual premiums to the capital ; and charging interest upon the combined amount ; and upon the borrower redeeming before the end of the period, he was not entitled to a rebate in respect of the premium con- tracted to be paid. 3 The by-laws of a society, fixing the terms on which a borrowing member might pay up the loan before the maturity of his stock, provided that he "be charged with the total amount of loan and premium, and credited with one-ninth of the premium for each whole un- expired year, up to the ninth year, — the basis of the loan, — together with dues and interest, or profit on said dues, as the case maybe; it was held that, in the settlement, the borrower should be charged interest during the first year on the whole premium, during the second year on eight-ninths, during the third year on seven-ninths, and so on. 4 1 Sherman Building Association Investment Building Society, L. v. Rock. '.) Phila. 75; S. C. 29 Leg. R. 26 Ch. Div. 273; s. c. 53 L. J. |„t. IK). Ch. 1126; 51 L. T. N. S. 408; 32 a People's Building and Loan W. R. 557 ; affirming in part, S. C. Association v. Billing, KM Mich. 52 L. J. Ch. 349. 186 ; s. C. ''.'.' N. W. Rep. 873. 4 Fitzgerald v. Hennepin County Elarvej v. Municipal Permanent Catholic Building and Loan Asso- § 235. PEEMIUMS OR BONUS. 239 Sec. 235 — Provable in Bankruptcy. If a borrower become bankrupt, the association may prove against his estate the amount of premium yet due, without any diminution. 1 ciation, 56 Minn. 424; s. C. 57 N. W. Rep. 1006. i Ex parte Bath, 27 Ch. Div. 509; s. C. 32 W. R. 808. This case decides that interest cannot be proved which accrued after the adjudication in bank- ruptcy. See also Ex parte Bath, 22 Ch. Div. 450 ; S. 0. 48 L. T. 2\)?>; 31 W. R. 281 ; and In re Browne [1891 J 2 Q. B. 574 ; s. C. 61 L. J. Q. B. 15 ; 65 L. T. 485 ; 40 W. R. 71. CHAPTER XII. LOANS TO MEMBERS. Sec. 236. Two Kinds of Members. 237. Amount of Loan Never Returned. 238. When Loan Falls Due. 239. Relationship of a Borrowing Member of an Incorporated Association to it. 240. Loans not a Usurious Transaction — Unincorporated Associa- tion — English Cases. 241. Loans not a Usurious Transaction — Incorporated Association — English Cases. 242. American Cases — Usury. 243. Arkansas — Louisiana — Alabama. 244. New Jersey — New Hampshire. 245. Illinois — Minnesota. 246. New York — Georgia. 247. Virginia — District of Columbia. 248. Mississippi — Michigan. 249 Nebraska. 250. North Carolina — South Carolina. 251. Kentucky — Texas. 252. Pennsylvania. 253. Indiana. 254. Connecticut — Iowa — Missouri — Ohio — West Virginia. 255. Canada — New Brunswick. Sec. 236— Two Kinds of Members. The workings of a building association are so well known, and so well understood at this time, that it is scarcely nec- essary to discuss them at length. The members fall readily into two classes, viz. : Borrowing and Non-borrowing mem- bers. A borrowing member is often termed an "advanced member," ;ind the amount of money he receives is often called an " advancement." This is upon the theory that his 240 § 237. LOANS TO MEMBERS. 241 stock has been paid off in advance of the time of its maturity. 1 Sec. 237 — Amount of Loan Never Returned. In theory, the amount of the loan is never returned by the borrower. Theoretically, this is correct ; but upon the principle that you cannot get something in this way for noth- ing, it is inaccurate. Either weekly, monthly, or at other stated periods of time, the borrower is paying to the asso- ciation the dues periodically accruing on his shares of stock, and at the same time is paying, for a like period, a certain sum of money as interest on his loan. If he becomes delin- quent in any way, he pays his tine the same as if he were not a borrower, and this is added to the general fund. This process continues until the dues, interest, and fines have accumulated in a sum that if divided among all the mem- bers of the association, or among all the members of the series to which the borrowing member belongs, each mem- ber would receive a sum equal to the amount he has bor- rowed. The sum that is then due him is applied to his debt, and his obligation is then canceled, while at the same time the association's obligation to him is likewise canceled. In this statement, one element which accelerates the accu- mulation of the general fund has been omitted ; and that is the several amounts of premiums bid for loans. If the amount of the loan is to be one thousand dollars, and the 144 The name is unimportant." nifies this, that the society pays to " It is an advancement of money the member by anticipation the in anticipation of the par A-alue of amount of his shares, upon receiv- his stock, or, if it be more agree- ing in return certain consider- able to so call it, a loan to be paid tions which are fixed by the rules." by stock at its par value, with cove- Brownlie v. Russell, 8 App. Cas. at. nants to make such payments of p. 249 ; s. C. 48 L. T. 881 ; 47 J. P. dues on stock, etc., as shall event- 757 ; 10 Rettie, H. L. 19 ; 20 Scots ually bring such shares to their L. R. 481. par value." Freeman v. Ottawa See, also, Commercial B. & L. Building, etc., Association, 114 111. Association v. Mackenzie, 85 Md. 182 ; s. C 28 N. E. Rep. 611. 132 ; s. c. 36 Atl. Rep. 754 ; and "An advance under the statute Richard v. Southwestern B. & L. and under those rules does not Association, 49 La. Ann. 481 ; S. C. mean a loan by the society upon 21 So. Rep. 643. the security of the shares ; it sig- \Q 242 BUILDING AND LOAN ASSOCIATIONS. Cli. XII. premium bid shall be two hundred dollars, it is quite clear that only eight hundred dollars will be advanced to the borrower, and the general fund will not be depleted by the sum of two hundred dollars. If the full thousand were drawn out by the borrower, it is quite evident that the gen- eral fund would not rise so quickly to that point where it would equal in amount the sum total of all the stock to which it is applicable. 1 Sec. 238— When Loan Falls Due. A loan to a member continues during the life of the asso- ciation, or during the continuance of the series of stock in which the borrower holds stock and by virtue of which the loan was secured by him. Of course, it is altogether possible to make a different kind of loan where the by-laws of the association provide for it ; but such a loan is not usual and is decidedly the exception. Usually these are not strictly building association loans. A long time to satisfy the loan by frequent payments are the characteristics of the plans of such an association ; and even though a definite time be fixed in the obligation for its maturity, courts will not con- strue it as due so long as the life of the association or series continues, unless there be default in the making of payments on the stock and of this interest. 2 Some English cases furnish very good illustrations of the statement. Thus, where the deed of trust simply recited the amount received by the member and contained an agreement for the pay- ment of "redemption money or interest " during the life of the association, the loan was construed as a continuing one during the time the association continued. 3 A like result was reached where a mortgage had been given for the payment of 8*., including redemption money, for 100 i Barker v. Bigelow, 15 Gray 130 ; ing Association, 30 Pa. St. 465; State v. Eornbacker, 12 N. J. L. Middle States Loan, etc., Co. v. 685; Brawnlee u. Russell, 8 A.pp. Bagerstown, etc., Co. 82 Md. 506 ; p. 249; s. G.48L.T.881 ; IT.), s. c. 33 Ail. Rep. 886. P. 757; lORettieH. L. 19; 20Scot. 8 Seagrave v. Pope, 1 De G. M. & L. R.481. Sughesv. Farmers', etc., G. 783 ; s. c. 16 Jur. 1099; 22 L. J. \ ,, (Tenn.), 46 8. W Rep. 862. Ch. 258; 15 E. L. & Eq. 477, 20 »Kupfert v. Guttenburg Build- L. J. Rep. 158. § 239. LOANS TO MEMBERS. 243 months; 1 and so where the note given by the borrowing member was payable on demand, the agreement of prefer- ence and stock payments being an additional and outside agreement. 2 This is upon the theory that the court will look at the transaction as the partit s thereto intended it, and will construe it according to such intention. 3 Sec. 239 — Relationship of a Borrowing Member of an Incorporated Association to It. The relationship of a borrowing member of an incor- porated association to it is not that of a partner to his part- nership. A member of an incorporation does not stand in the relationship to his co-member of a partner to the part- nership of which he is a member. A member of a building association, in fact, stands in a little different relation to his association that a member of an ordinary incorporation bears towards such a corporation. A member of the former has an interest in the accumulating fund that is greater and different, it may be said, than a member of the latter has in the general assets of the corporation. A member of a building association is, in a sense, both a borrower and a lender, through the medium of the association. Each dollar he pays in on his stock is for the satisfaction of his own and every other member's indebtedness by the accumulation of a fund for the purpose of paying off the stock, and thereby the cancelation of his stock. It is not easy to define the relationship, but it is not that of a partner, while it is something more than that of a member of an ordinary incorporation. 4 1 Bin-bridge v. Colton, 5 De G. & declared due, an election to mature Sm. 17; 15 Jur. 1070; 21 L. J. Ch. the loan for such default, when- 201 ; 8 E. L. & Eq. 57. ever actually made, must be as of 2 Silver v. Barnes, '6 Bing. N. C. the date of three months after such 180 ; 8 Scott, 300 ; 37 E. C. L. 335. default, and the amount due on 3 Where a mortgage is made to the stock and the withdrawal value secure a loan made on shares, with of its shares must be calculated as a provision that upon failure to pay of that date. United States, etc., any monthly dues on the stock or Co. v. Sullivan, 80 Fed. Rep. 762. interest continuing due for three * Estate of National Association, months, the whole loan might, at 9 W. N. C. 79. That a member the election of the mortgagee, be complying with the by-laws of the 244 BUILDING AND LOAN ASSOCIATIONS. Cll. XII. Sec. 240— Loan not a Usurious Transaction— Unincor- porated Association— English Cases. The relationship of a borrowing member to the associa- tion, and whether or not the transaction is usurious, is pretty clearly brought out in several early English cases, where the transaction was between a member of an unin- corporated association to which he belonged. The first case arose in 1839. By the rules of the society loans were made to its members from time to time at five per cent, interest, the member receiving the loan having bid the highest premium for it. A member having bid £15 17s. 6d. for a loan of £80, was awarded it and gave his note, payable on demand for the full amount, £80, with interest, the amount of the bid having been agreed upon, in addition. The whole sum, namely £80 plus £15 17 s. 6d,, and interest on the £80, was to be paid by monthly instalments of 16s. In a suit on the obligation given, usury was pleaded as a defence. The court left it to the jury to determine whether the contrivance was a shift to evade the usury laws. If they so found it to be, they were instructed to find for the defendant ; but if they found it to be lonafide partnership, they were to find for the plaintiffs. The jury gave their verdict for the plaintiffs, and the court refused to set it aside. In passing on the question Tindall, C. J., said : " 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 usurious. 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 defendant was interested in the fund when the money was advanced and when it was repaid. The rules of the society are, in effect, a mere agreement by partners that their joint contributions shall be advanced for the use of one or t he other as occasion requires; and the transaction association can compel it to make On the subject of this section, him a loan if it have funds, see see Bradbury v. Wild, 3 R. 195; !'„r K miui r.St. Paul, etc., Associa- B.C. [1893] 1 Ch. 377 ; 62 L. J. Ch. i ion, 29 Minn. 282 ; s. c. 13 N. W. 508 ; 68 L. T. 50 ; 41 W. R. 361 ; 57 Rep. 122. J. P. 68. § 241. LOANS TO MEMBERS. 245 was not a borrowing by the maker of the note from the payees." 2 It is to be observed that the question of usury was left to the jury, and the court refused to disturb their finding. In the next section we shall see the doctrine carried still farther. Sec. 241 — Loan not a Usurious Transaction — Incorpo- rated Association — English Cases. In the previous section we dealt with an unincorporated association. We now deal with associations duly incor- porated under statutes authorizing their incorporation. In one of these associations it appeared that the objects of the society were to accumulate and divide the profits at stated periods. The advancements were secured by members in the usual auction methods of competition among the mem- bers. The highest bidder took the share and hud the privi- lege of taking twenty at the same premium. For each share taken he paid the premium bid and also Ss. a month for one hundred months, as redemption money. If he would give security for its repayment, together with the premium and redemption money, he could have an advance of £100, the full value of each share. This did not debar him from par- ticipating in the general profits of the society. A member of the society secured an advancement of five shares at pre- miums of £71 for three, and £73 for the other two, gave the required security and received as an advance £500. His executrix filed a bill against the society, alleging that the transaction was usurious, the societv illegal ; and claimed the right to redeem the security on repayment of the £500 with lawful interest. It was held that the transaction was a dealing with partnership funds, not a loan, and hence there could be no question of usury. 2 In the next case a member was advanced, on two different occasions, upon ten shares, at a premium of £45 10,?. per share of £100. Each 1 Silver v. Barnes, 6 Bing. N. C. 2 Burbridge v. Cotton, 5 De G. & 180 ; s. c. 8 Scott, 800 ; 37 Eng. C. Sm. 17 ; s. c. 21 L. J. Ch. 201 : 15 L. 335. The court refers to a sim- Jur. 1070 ; 8 E. L. &Eq. 57, follow- ilar case before Chief Baron Alex- ing the principle laid down in Sil- ander in 1828, in which the same ver v. Barnes, supra. view was taken. 246 BUILDING AND LOAN ASSOCIATIONS. Ch. XII. time he received £272 10s., and gave two mortgages con- dition for payment of dues, etc., and 3*. 6d. per share redemption money, called in the rules interest. He desired to transfer these mortgages to other property. Obtaining the consent of the directors for that purpose, a deed was drawn by which, in consideration of £544, paid to him by the trustees of the society, he assigned to them certain lease- hold property, in trust, to permit him, as long as he should duly make the several payments and observe the society's regulations prescribed in its articles, to hold the premises described therein, and receive the rents thereof for his benefit. If he should make default for six months, the society could take the rents, and if insufficient to cover the payments due upon his obligation, the premises could be sold. In an elaborate opinion, it was held that the trans- action was not a loan, but an anticipatory payment, by way of discount, of the share the member would otherwise be entitled to claim payment of on the termination of the society. The court held that it made no difference whether the 3s. Gd. per share was called " redemption money " or " interest," in the society's rules ; and that it was a con- sideration, not for the loan of the money to be returned, but for a repayment to the member made earlier than that he would, of right, be entitled to receive it. 1 Since the date of these three decisions, other English cases have followed in the furrow ploughed by them. 2 Sec. 242 — American Cases — Usury. The reasoning of these cases have been in part adopted in America. In j\I seven of the eight shares of Border State Perpetual, etc., stock he had originally taken. Associations. Hayes, 61 Md. 597; leaving one share of such original Border State Perpetual, etc., Asso- stock still outstanding, and this ciation v. Hillary, 68 Md. 52 ; 11 one share was not paid until Au- Atl. Rep. 505. gust, 1879. In 1883, he filed a bill l Massey v. Citizens' Building against the association, claiming and Savings Association of Paola, tliat the transaction was usurious, 22 Kan. 624; Hekelnkaemper v. and praying that the association German Building Association, 22 tnighl be required to release the Kan. 549 ; Glynn v. Howe Building mortgage on being paid what was Association, 22 Kan. 746. Pioneer actually due. It was held that the etc., Ass'n. v. Kaspar (Kan.), 52 bill could be maintained, the plain- Pac. Rep, 623. tiff coming within the exception of -Martin v. Nashville Building the statute ; for the second mort- Association, 2 Cold. 418. gage transaction was a part of the '• Patterson v. Workingmen's first, and the application of a part Building and Loan Association, 14 of the money received on the Lea. 677 ; s. C. 10 Amer. & Eng. i,.| mortgage in discharge of Corp. Cas. 420; Ketliff v. North the in t did nol close the original Nashville, etc., Ass'n (Tenn.), 39 S. § 242. LOANS TO MEMBERS. 240 his offer for the money to be loaned, according to his esti- mate of the worth of the shares which he was allowed to take and of which he became the owner. * * * Whether the advance anticipated will finally be obtained, may per- haps be questionable ; but since the borrower, under such circumstances, is to have his full proportion of the benefit of all the gain wljich may be made, he cannot assert that lie contracted to pay, or that the lender has reserved to himself a usurious interest. 1 ' 1 In a subsequent case the court goes into a consideration of a borrowing transaction at great length, and reaches the conclusion that the parties sustain the relationship of part- ners, " because it is a dealing between them as partners in relation to a partnership fund, in which they have a com- mon interest." 2 In another and later case, it was said : " By joining the association and subscribing for shares therein, the plaintiff became bound to make a monthly pay- ment upon each share, and incurred a liability for certain fines for non-compliance with his obligations as a member. In consideration of these undertakings on his part, he be- came entitled to the privileges of a member, the principal of which was the right to participate in the final distribution of an accumulating fund, the value of which right would be contingent upon the success of the business of the associa- tion, and might be increased or diminished by the estimates which other members might make of its value, and this consequent willingness to dispose of their interest on more or less favorable terms. The period to which his monthly payments w T ould continue is of course indefinite. Whether, if he continue a member, he will ultimately receive more or less than the amount which he has paid, with interest, is uncertain. In view of these facts, it was held in Delano v. Wild 3 that it was not a usurious contract to agree to con- tinue his payments as if he had remained a member, and to "W. Rep. 546. Hughes v. Farmers', 2 Delano v. Wild, G Allen, 1 ; s. C. etc., Ass'n, 46 S. W. Rep. 362. 83 Am. Dec. 605 ; Bowker v. Mill 1 Merrill v. Mclntire, 13 Gray, River Loan Fund Association, 7 157; Barker v. Bigelow, 15 Gray, Allen, 100. 130 ; Baxter v. Mclntire, 13 Gray, 3 6 Allen, 1 ; S. C. 83 Am. Dec. 168. 605. 250 BUILDING AND LOAN ASSOCIATIONS. Cll. XII. receive any agreed sum in hand for the sum to which a member would be entitled on the final settlement of the affairs of the association. In the present case, the only dif- ference is that the payment of monthly dues is limited to a fixed time and amount. But be is thereby released from an obligation to continue to make it for an indefinite time and to au unlimited amount. The value of tbis release cannot be computed, and is therefore the subject of lawful agree- ment by the parties. The contract is not a mere advance or loan of money, to be repaid with more than lawful interest, as it would be if made with a stranger ; but the parties, hav- ing an existing contract by which the member is to pay cer- tain sums monthly for a period of time that is contingent, and the association being then bound to repay him a certain sum, which may be more or less than they have received from him, substitute for this contract a new one, by which a limit is placed to the member's payment, and a smaller sum received by him in advance in exchange for the right to a larger at some doubtful time in the future. There is nothing usurious in such a contract. It would be a contract on sufficient and lawful consideration if the plaintiff received nothing, and is none the less so that he is induced to make it bv a payment to him in money."' ] Sec. 243— Arkansas, Louisiana and Alabama. In Arkansas it is said that the premiums are not usurious, for the reason, in view of the whole contract, of the un- certainty as to the amount eventually to be paid by the borrower in order to discharge his obligation. 2 So in Louisiana a, Like result is reached, even with relation to un- incorporated associations. 3 In Alabama such transactions ifiowker v. Mill River, etc., As- Eng. Corp. Cas. 375: Black v. sociation, : Allen. 100. Tompkins, <>3 Ark. 502; 39 S. W. - Reeve v. Ladies' Building Asso- Rep. 55::. ciation, 56 Ark. 335 ; s. C. 19 S. W. ■ American Homestead Co. v. Rep. 917; 18 L. R. A. 129. Taylor Linigan, 46 La. Ann. 1118; s. c. 15 r. Van Buren Building* Loan As- S<». Rep. 369; Sec Latchford's Suc- ociation, 56 Ark. 840; 19 S. W. <-<-ssion, 42 La. Ann. 539; s. C 7 Rep. 918 ; Tilley v. American Build- S<>. Rep. 628; Richard v. South- ing & Loan Association (Ark), 52 western B. & L. Ass'n, 49 La. Ann. Fe I. Rep. <'>ls ; s. c. 40 Amer. & 1*1 ; 3. c. 21 So. Rep. 643. § 245. LOANS TO MEMBERS. 251 are upheld, 1 although a previous transaction, under the guise of a lease had been declared usurious. 2 In the latter state it is also held that if the transaction is expressly au- thorized by a statute the courts cannot hold it to be usurious, although the charge paid for the money exceed the lawful rate of interest. 3 Sec. 244 — New Jersey — New Hampshire. In New Jersey the usual loaning transaction of a building- association is regarded as valid, and not subject to the charge of a usurious one. 4 In New Hampshire the Massa- chusetts cases are followed, holding the contract of loan prim buy corporate stock of the Lender : thai the note given included the price of the stock in addition to the amount borrowed ; that such stock had no market value, and no divi- dends were paid thereon, it was held that the sale of stock was a mere cover for usury. City Loan Company v. Cheney, 01 Minn. 83 ; s. c. 63 N. W. Rep. 250. See also. Maudlin v. American Savings and Loan Association. ('»:'. Minn. 358 : S. 0. 05 N. W. Rep. 645. Estoppel to reclaim payments made under void by-law. Barton v. Pioneer S. & L. Co. (Minn.), 71 N. W. Rep. 906. :: Citizens' Mutual Loan Associa- tion v. Webster, 25 Barb. 263; City Building and Loan Associa- tion r. Fatty, 1 Abb. Dec. 347. 1 Melville/-. American Beneficial Building Association, 33 Barb. 103. 6 Concordia Savings, etc.. Asso- ciation r. Read, !»:! N. Y. 474; s. c. § 246. LOANS TO MEMBERS. 253 Georgia Supreme Court is very near that of New York and New Hampshire. "And if there can be any difference," said the court, " arising from the fact that the sale is made to the company itself, it is only in this, that the seller him- self 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 an interested party." 1 In an earlier case it was said by the court: "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 un- derstood, 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 corporation. This, each must decide for itself. If he conclude 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 private funds, and paid to (the borrower) for his worthless stock, in advance * * * is a total loss, not only to the body corporate, but to each individual." 2 In a subsequent case the court used the following language : " The very nature of such an institu- tion involves a profit and loss account, and an expense ac- count for management. An advanced, or borrowing mem- ber, as well as the rest, holds a relation to these accounts which must be adjusted before he can repudiate his express 4 Amer. & Eng. Corp. Cas. 175 ; Building Association, 46 Ga. 166. Payne v. Freer, 91 N. Y. 43, affirm- 2 Bibb County Loan Association ing, 25 Hun, 124. v. Richards, 21 Ga. 592. 1 Parker v. Fulton Loan and 254 BUILDING AND LOAN ASSOCIATIONS. Cll. XII. 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 in- terest on the latter sum. There may be no excess after de- ducting from his payment his due share of the bonds and expenses. As he takes his chances, in case an earty 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." 1 Sec. 247 — Virginia — District of Columbia. In Virginia it is considered that the effect of a loan to a borrower is to extinguish his membership in the association, his obligation binding him to continue certain payments dur- ing the association's existence. The association is regarded as having purchased the share ; and for this reason the trans- action is not regarded as usurious. 2 The same doctrine has been adopted by the supreme court of the District of Columbia? Sec. 248— Mississippi— Michigan. In J/Av.NvWyy''' it is held that the premium is a bonus paid 1 Pattison v. Albany Building him in violation of a by-law for- and Loan Association, 63 Ga. 373. bidding loans to non-members. See also, Van Pelt v. Home Build- Reynolds v. Georgia State, etc., ing and Loan Association, 79 Ga. Association (Ga.), 29 S. E. Rep. 187. 439 ; s. c. 4 S. E. Rep. 501 ; 19 - Winchester Building Associa- Amer. & Eng. Corp. Cas. 66, and tion v. Gilbert, 23 Gratt, 787 ; I l.i u kins v. American Building White v. Mechanics' Building As- and Loan Association, % Ga. 206 ; sociation, 22 Gratt. 233 ; Cason v. 22 S. B. Rep. 711 ; Goodrich Seldner, 77 Va. 293 ; Edelyn v. Pas- v. Atlanta National Building and coe, 22 Gratt. 826. Crabtree v. Old Loan Usociation, 96 Ga. 803; 22 Dominion, etc., Ass'n (Va.), 29 S. E. Rep. 585; Bosworth v. Sum- S.E.Rep.741: Bosangv.IronBelt, ter, 100 Ga. 60; 8. 0. 28 S. E. Rep. etc., Ass'n (Va.),30S. E. Rep. 440. i:,( :l l';il)sl v. Building Association, \ borrower cannot insist thai he I McArthur, 885; Mulloy v. Fifth whs no) a member, and thai the Ward Building Association, 2 Mc- ],,.,,, for that reason was made to Arthur, 594; Myers v. Schoyer, 20 § 240. LOANS TO MEMBERS. 255 by a member for a present advancement in cash of a sum certain " for the virtual transfer to the association of his share of stock, which in the final winding up of its affairs, may realize the sums actually received by the member, to- gether with the premium bid or which may not." The trans- action is therefore not usurious. 1 In Michigan it is held that the effect of the loan is to liquidate the shares, and to deprive the member of his power over them, to either sell or transfer them. 2 Sec. 249 — Nebraska. In Nebraska it is held that a building association incor- porated under the general laws for the creation of incorpo- rations, " for the transaction of any lawful business," and possessing the power to " make by-laws not inconsistent with any existing laws, for the management of its affairs," cannot, by any device whatever, take interest beyond the the maximum allowed by the general interest laws of the state. " Now, the scheme of a building association, by sell- ing shares under reservation of a premium, included 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." 3 D. C. 254 ; s. C. 20 Wash. L. Rep. even though the by-laws require a 503. greater amount. Sawyer v. Men- 1 Sullivan v. Jackson Building ominee Loan and Building Associ- Association, 70 Miss. 94 ; s. C. 12 ation, 103 Mich. 228 ; s. C. 61 N. So. Rep. 590 ; 46 Amer. & Eng. W. Rep. 521. But see otherwise, Corp. Cas. 494; Natchez Building Myers v. Alpena, etc., Ass'n and Loan Association v. Shields, (Mich). 75 N. W. Rep. 944. 71 Miss. 630 ; s. c. 15 So. Rep. 793 ; 3 Lincoln Building and Savings People's Building and Loan Asso- Association v. Graham. 7 Neb. 173 ; ciation v. McElroy, 72 Miss. 434; Lincoln Building and Savings As- s. c. 17 So. Rep. 348. sociation v. Benjamin, 7 Neb. 181. 2 Michigan Building and Saving See also, Randall v. National Build- Association v. McDevitt. 77 Mich, ing, Loan and Protection Union of 1 ; s. c. 43 N. W. Rep. 760; 30 Minneapolis, 42 Neb. 809 : S. C. 60 Amer. & Eng. Corp. Cas. 665. If N. W. 1019: Randall v. National the secretary of the association Building, Loan and Protection misrepresents the amount neces- Union Minneapolis, 43 Neb. 876; sary to redeem a loan about to be s. c. 62 N. W. Kip. 252 : charged taken out, the association will be by statute, see Livingston Loan bound by such representations, and Building Association i\ Drum- 256 BUILDING AND LOAN ASSOCIATIONS. Cll. XII. Sec. 250 — North Carolina — South Carolina. In North Carolina a building association can take only ordinary interest, or rather at a rate that does not exceed ordinary interest. " We know," said the court, " of no de- vice or cover by which these associations can take from those who borrow their money, more than the legal rate of interest, without incurring the penalties of our usury laws. Calling the borrower ' a partner,' or subsituting ' redeem- ing ' for lending, or ' premium or bonus ' for the amount which they profess to have advanced, and yet withhold, or ' dues ' for interest or any like subterfuges, will not avail. We look at the substance." 1 Therefore, the courts of that state have adopted the method, in computing the amount due from a member, of an ordinary loan with partial pay- ments. 2 Perhaps North Carolina inherited from Son tit Carolina the hostility manifested by the supreme court of that state at an early day towards building associations. A provision in the charter of an association in that state pro- viding that " any stockholder taking an advance shall allow to be deducted the premium offered by him " was still controlled by the general interest law providing " that every person lending or advancing money, or other com- modity upon interest, shall be allowed to recover the amounts or value actually lent or advanced ; and that the principal sum, amotmt, or value so lent or advanced without any interest shall be deemed or taken by the court to be mond, !'•» Neb. 200; s. c. 68 N. W. s. c. 26 S. E. Rep. 781; Hoskins v. Rep. 375. Mechanics' Building and Loan As- 1 Mills r. Salisbury Building and sociation, 84 N. C. 838; Heggie v. Loan Association, 75 N. C. 292; Peoples' Building and Loan Asso- Smith v. Old Dominion B. & S. ciation, 107 N. C. 581 ; Meroney v. Assn, ll'.i N. <'. jr,7; 21 S. E. Rep. Atlanta National Building and in. Loan Association, 116 N. C. 882 ; 2 Overby v. Fayettesville Building s. C. 21 S. E. Rep. 924; Smith v. and Loan Association, 81 N. < '. 56. Mechanics' Building and Loan As- See also, Manner v. (ireensboro sociation, 73 N. C. 372; Rowland Building and Loan Association, 78 v. Old Dominion Building and N. < '. 188; Latham V. Washington Loan Association, 115 N. C. N25 ; Building and Loan Association, 77 s. c. 18 S. E. Rep. 965; affirmed, N. C 115; Bollowell v. Southern 116N.C.877; S.-C. 22 S. E. Rep. 8; B. -V L. A jsociation, 130 N. C. 886; modified, 24 S. E. Rep. 366. §251. LOANS TO MEMBERS. 257 the true legal debt, or measure of damages, to all intents and purposes whatever, to be reserved without costs." x Sec. 251— Kentucky — Texas. In Kentucky it is held that the securing of an advance by a member worked a release of all his claims upon the asso- ciation, though remaining a member ; and as a consequence the loan was usurious. 2 In Texas the theory of a dealing with partnership funds is rejected, and only the amount actually loaned, with inter- est, can be recovered. 3 1 Columbia Building and Loan Association v. Bollinger, 12 Rich. Eq. 124; S. c. 78 Am. Dec. 463; distinguished in Thompson v. Gil- lison, 28 S. C. 534 ; 6 S. E. Rep. 333 ; 22 Ainer. & Eng. Corp. Cas. 615. A usury law passed after the or- ganization of an association is ap- plicable to its loans thereafter made. Mechanics' and Farmers' Building and Loan Association v. Dorsey, 15 S. C. 462. See generally, Sumpter Building and Loan Asso- ciation v. Winn, 45 S. C. 481 ; s. c. 23 S. E. Rep. 29 ; Buist v. Bryan 44 S. C. 121 ; s. c. 21 S. E. Rep. 537 ; Buist v. Fitzsiinons 44 S. C. 130 ; s. c. 21 S. E. Rep. 610 ; Pollock v. Carolina, etc., Association (S. C), 29 S. E. Rep. 77. But in this state a contract for repayment in instalments of a sum borrowed from a building associa- tion by a shareholder therein is not usurious on its face, if it stipu- lates that on final settlement the amounts to be retained by the as- sociation shall not exceed the sum actually borrowed, with interest thereon at eight per cent, the legal rate. Turner v. Intestate B. & L. Association (S. C), 25 S. E. Rep. 278. So where the defendant had sub- 17 scribed for shares, on which he was obliged, under the charter, to pay $15 per month until they matured, in order to participate in the prof- its ; and subsequently borrowed $1500 from the association, giving a bond as mortgage therefor in which he agreed to pay $7.50 a month interest thereon ; it was held that as this was only an agree- ment to pay interest at the rate of six per cent, per annum it was not usurious, the $15 monthly pay- ments on the stock having no con- nection with the loan. Equitable B. & L. Association v. Vance 49 S. C. 402 ; s. c. 27 S. E. Rep. 274. 2 Herbert v. Kenton Building and Savings Association of Coving- ton, 11 Bush. 296 ; Gordon v. Win- chester Building & Accumulating Fund Association, 12 Bush. 110 ; Henderson Building & Loan As- sociation v. Johnson, 88 Ky. 191 ; S. C. 3 L. R. A. 289 ; 10 S. W. Rep. 787 ; Southern Building & Loan Association of Tennessee v. Harris, 98 Ky. 41 ; 32 S. W. Rep. 261 ; Mutual Savings & L. Ass'n v. Owings (Ky.), 43 S. W. Rep. 422 ; Pryse v. People, etc., Ass'n (Ky.), 41 S. W. Rep. 574. 3 Jackson v. Cassidy, 68 Tex. 282 ; s. c. 4 S. W. Rep. 541 ; Elpaso 258 BUILDING AND LOAN ASSOCIATIONS. Gil. XII. Sec. 252— Pennsylvania. In the instance of an unincorporated association, it ap- peared that the member had received only $1,418, but had given his obligation to the association for $1,800. He re- fused to pay his fines and dues, and thereupon the associa- tion declared his bond forfeited, and caused a judgment to be entered upon it. In passing upon the case, the court said : " We have never had a case like this before, though such cases are not unknown in England. There such con- tract was enforced at law and in equity, as a security for the payment of the monthly contributions to the association. In the present case, the defendant has been treated as hav- ing forfeited his membership by default in paying his con- tributions, and has been required to stand to his bond of $1,800 as a loan, after allowing his paid contributions and his payment of interest as a credit thereon. The bond has tion v. Abbott, 85 Tex. 220 ; S. C. 20 S. W. Rep. 118 ; 40 Amer. & Eng. Corp. Cas. 371. But a note given by a stockholder for balance due, with the maximum legal inter- est is usury where the shares taken from him are credited with less than their withdrawal value in making up such balance. Bexar B. & L. Ass'n v. Seebe (Tex), 40 S. W. Rep. 875. A borrowing member cannot ap- ply usurious interest paid upon his loan in liquidation of stock dues, so long as such interest does not exceed the amount of the princi- pal. Heady v. Bexar Building, etc., Association (Tex. Civ. App.), s. C. 26 S. W. Rep. 468. See gener- ally, International Building and Loan Asssociation v. Braden (Tex. Civ. A pp.), 32 S. W. Rep. 704; l.uildin^ and Loan Association of Dakota v. Logan (Tex. ('iv. \pp>. 83 S. W. Rep. 1088 ; People's Build- ing, etc., Association r. Rising (Tex. Civ. App.), 34 S. W. Rep. 147. Building & Loan Association v. Lane, 81 Tex. 369 ; S. C. 17 S. W. Rep. 77 ; Bexar, etc., Association r. Robinson, 78 Tex. 163; S. C. 14 S. W. Rep. 227 ; Abbott v. Inter- national Building & Loan Associa- tion (Tex.), 25 S. W. Rep. 620 ; In- ternational Building & Loan A ss< >- ciation v. Biering, 86 Tex. 476; S. c. 25 S. W. Rep. 622 ; Interna- tional Building & Loan Associat ion r. Mayers (Tex. Civ. A.pp.), 25 S. W. Rep. 1132; Walters v. Texas Building & Loan Association (Tex. Civ. App.), --".l S. W. Rep. 51 ; Eeady v. Bexar Building, etc., As- sociation (Tex. Civ. App.). s. c. 26 S. W. Rep. 168. Pioneer, etc., Ass'n r. Everhart(Tex.),44S. W. Rep. 824. In considering t he quesl '"" "' usury, payments made by I he bor- rower On account Of Ids Stock are tlOl to be considered, since such paymenl are uol made for I be u e of t he money borrowed, but in order to acquire an interest in the propertj of the asocial ion. Inter jia' ional Building & Loan Associa- §253. LOANS TO MEMBERS. 259 not been used for its legitimate purpose of enforcing the contributions of the defendant as a member, because the association 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 therefore prohibited from considering this as a case of composition by anticipation of the defendant's 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 forfeiture of the defendant's mem- bership, can it be enforced." 1 The same views were enter- tained where the association was incorporated. 2 But an early case treated the transaction as a dealing with partner- ship funds, and consequently not usurious. 3 In 1859, a stat- ute was enacted regulating the whole matter of charges ; and subsequent statutes have made like provisions. Sec. 253— Indiana. In Indiana, the bonus, or premium is regarded merely as i Bechtold v. Brehm, 26 Pa. St. 237 ; s. c. 14 Leg. Int. 49); Saving 269. Fund v. Murray, 14 Leg. Int. 133 ; 2 Reiser v. William Tell Saving Building Association v. Eowe, 15 Fund Association, 39 Pa. St. 137 ; Leg. Int. 45 ; Columbia Building Denny v. West Philadelphia Sav- Association v. Dobleims, 15 Leg. ing & Building Association, 39 Pa. Int. 45 ; Building Association v. St. 154 ; Premium Fund Associa- Timmins, 3 Phila. 209 ; s. c. 15 tion's Appeal, 39 Pa. St. 156 ; Kelly Leg. Int. 318 ; Association v. Reid, v. Perseverance Building Associa- 3 Phila. 345 ; s. c. 16 Leg. Int. 157 ; Sunbury Savings Fund & Building Association v. Morton, 1 Luz. Leg. Reg. 147 ; Flounders v. Hawley, 1 W. N. Cas. 574 ; s. C. 78 Pa. St. 45; Philanthropic Building Associa- tion v. McKnight, 35 Pa. St, 470 ; Jarrett v. Cope, 68 Pa. St. 67; Rhoads v. Hoernerstown Building Association, 82 Pa. St. 180 ; Link v. Germantown Building Associa- tion, 89 Pa. St. 15 ; Skinner's Es- tate, 4 Phila, 189 ; s. C. 17 Leg. Int. 381. 3 Johnson v. Potomac Building Association, 2 Quart. L. Jr. 347 ; s. c. 14 Leg. Int. 393. tion, 39 Pa. St. 148 ; Blackburne's Appeal, 39 Pa. St. 160 ; Hansbury v. Pfeiffer, 35 Leg. Int. 395 ; Heck- man v. Building Association, 11 Lan. Bar. 110 ; Link v. Building Association, 89 Pa. St. 15 ; Row- land's Estate, 1 Del. (Pa.), 98; Houser v. Hermann Building As- sociation, 41 Pa. St. 478; Marble Building Association v. Hocker, 3 Phila. 494 ; s. C. 16 Leg. Int. 356 ; Kupfert v. Gutenberg Building As- sociation, 30 Pa. St. 465 ; Hughes' Appeal, 30 Pa. St. 471 ; (overruling Kelly v. Accommodation Saving Fund & Loan Association, 2 Phila. 260 BUILDING AND LOAN ASSOCIATIONS. Ch. XII. a contract price agreed upon by the parties for the " prefer- ence,'' which a building association is expressly authorized to sell, and a member authorized to buy, and it is not inter- est on money. " The question propounded to its corpora- tors, or the members of the association," said the supreme court of that state, " was practically this, ' How much will yon give for the privilege of taking this loan ? ' The mem- bers 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." J Sec. 254 — Connecticut — Iowa— Missouri— Ohio— West Virginia. In the State of Connecticut, the question of usurious interest does not seem to have been directly adjudicated, although there is a decided leaning to regard them as usuri- ous. 2 In Iowa, the ordinary building association loan is not regarded as usurious, although interest upon the pre- miums seems to have been so regarded. 3 In Missouri, it Would seem that a member is not in a position to plead usury, 4 for he shares in the profits of the adventure. 5 In Oh io it is held that the law against usury does not apply to premiums bid on fair competition, no imposition being practiced. 6 Nor can the fines, dues, and premiums be used to show that the interest charged is illegal, where a statute 1 McLaughlin v. Citizens' Build- sociation v. Blackburn, 48 la. 385 ; ing Loan and Savings Association, Burlington Mutual Loan Associa- 62 Ind. 264. This reasoning seems tion v. Heider, 55 la. 424 ; Phillips to apply to a mere loan and will v. Columbus City, etc., Associa- justify the taking of interest at tion. 5:; [a. 719 ; Sullivan Savings any rate. Association v. Copeland, 71 la. 67. 2 Mechanics' and Workingmen's 4 Hammerslough v. Kansas City Mutual Savings Bank and Building Building, Loan, etc., Association, Associal ion of New Haven v. Wil- 7!) Mo. 80. cox, \i\ Conn. 117; Welch r.Wods- 6 Brown v. Archer, 1 Mo. App. v., Ml,, 80 Conn. 149; West Win- Rep. 405 ; s. c 62 Mo. App. 277. Bted, etc., Association v. Ford, 27 6 Home Building Association v. Conn. 282; Mechanics', etc., Aeso- Boning, 7 Wkly. L. Bull. 174; s. c. ciation v. Allen, 28 Conn. 97. 10 Amer. Rec. 626. s Havvkiyc Benefit and Loan As- 255. LOANS TO MK.MIJKUS. 261 authorizes the imposition of fines, the assessment of dues or the taking of interest. 1 In West Virginia, such loans are upheld. 2 Sec. 255 — Canada — New Brunswick. The courts in Canada seem to regard a building associa- tion only authorized to take interest above the legal rates except where a statute authorizes it. " But we cannot but see very plainly that such societies are in themselves contri- vances to evade by statute the usury laws," said the court. 3 In New Brunswick the rate of interest taken is valid, even if above the rate allowed by the general interest laws. 4 1 Bates v. People's Saving and Loan Association, 42 Ohio St. 655 ; Lucas v. Greenville Building and Savings Association, 22 Ohio St. 339 ; Cincinnati German Building Association v. Flach, 1 Cin. S. C. Rep. 468 ; Seibel v. Building Asso- ciation, 43 Ohio St. 371 ; s. C. 1 West Rep. 340 ; 10 Amer. & Eng. Corp. Cas. 460 ; reversing, 13 Wkly L. Bull. 265. See Allemania Loan and Building Association v. Muel- ler, 8 Wkly. L. Bull. 97. An agree- ment that a retiring member may take out the money he has paid in, and interest thereon at a cer- tain rate over the legal rate is not open to the objection of usury. Such addition is not interest on money loaned, but is an adjudged profit on the money put in. Jung- kuntz v. West Liberty Building Association, 6 Wkly. L. Bull. 428; People's Savings, etc., Ass'n v. Roberts, 5 Ohio N. P. 86. Ad- ding the premium to the amount offered as a loan is, however, a usurious transaction. Bates v. People's, etc., Association, 42 Ohio St. 655. 2 Pfeister v. Wheeling Building Association, 19 W. Va. 676 ; Haigh v. United States Building, etc., Association, 19 W. Va. 792; Par- ker v. United States Building, etc., Association, 19 W. Va. 744. 3 Canada Permanent Building and Saving Society v. Rowell, 19 U. C. Q. B. 124 ; Canada Perma- nent Building and Saving Society v. Harris, 16 U. C. C. P. 54 ; Free- hold Permanent Building and Sav- ing Society v. Choate, 18 Grant Ch. 412. See Hughes v. La Com- pagnie des Villas, 5 Montreal Sup. Ct. 129. Where a mortgage given by a borrowing member recited that he had become the purchaser of seven shares of £100 each, and the mort- gage was conditioned for the pay- ment of the monthly subscriptions upon such shares, and of interest upon the said sum of £700, by equal monthly pajnnents of £3, 10s. each, and contained a provis- ion for the sale of the property in case of default, and for the society retaining out of the proceeds the remainder of the principal sum of £700 then remaining unpaid, and all interest, fines, and other sums 4 Almon v. Fairbanks. 1 R. & C. 407. CHAPTER XIII. LOANS TO MEMBERS, CONTINUED — INCIDENTS. Sec. 256. Presumption as to Usurious Contract. 257. Effect of Usurious Contract. 258. Who may Defend against a Usurious Claim. 259. Borrower Recovering Back Usurious Interest Paid by Him. 260. Charges Incident to a Loan not Usurious. 261. Right to add Amount of Interest. 262. When Interest Ceases to Run. 263. Amount Due on a Loan. 264. Amount Due — Ohio Rule. 265. Amount Due — Canadian Rule. 266. Amount Due — A Georgia Case. 267. Amount Due — English Rule. 268. Interest during Pendency of Suit. 269. Kind of Security. 270. Straight Loans. 271. Loan on Member's and Outsider's Security. 272. Object of Loan. 27o. Loans to Non-Members. 274. Taking Several Securities. 275. Purchasing Notes of Persons not Members. 276. Subscribing Articles of Association. 277. Loan to One in Arrears. 27s. Varying Contract of Loan. 270. Oppressive Contract, Borrower not Released From. 280. Lex Loci — Effect on Foreign Contracts. 281. Validity of Statutes Empowering Building Associations to take vi 1 ia t would Otherwise be Usurious Interest. rim- <.r payable to the society, giv- a month, or lO.s per share, for in- ing credit for subscriptions there- teresl for the whole period, but tofore paid, and interest thereon only at that rate or so much of the .it six per cent, for < ;t
  • >r the surplus to the mort- monthly subscription paid. (1866) g:igc ; it w;is held that the mort- Wilson r. U. C. B. S., 12 Grant gagor w;is not liable to pay d, lO.s- Cli. (Ca.) 206. 262 §257. LOANS TO MEMBERS — INCIDENTS. 263 Sec. 256— Presumption as to Usurious Contract. It is altogether possible that a building association may enter into a contract for the payment of usurious interest. Such would bean instance where it does not keep within the letter and spirit of the statute or within its own by-laws. But there is no presumption that a loan by a building asso- ciation is usurious; on the contrary it is presumed to be valid, and he who claims that it is usurious must prove it. 1 Sec. 257 — Effect of Usurious Contract, If the original contract for a loan is usurious and a new contract has been entered into to the effect that onlv the legal rate of interest shall be taken, the original contract from thence on is freed from the taint of usury and may be enforced. 2 So if the by-laws of the association provide that when it is wound up only the legal rate of interest on the amount advanced shall be exacted, it has been held that the contract for a loan cannot be declared usurious, although it may appear that more than the legal rate of interest has been 1 Selden v. Reliable Saving and Building Association, 80 Pa. St. 336 ; s. c. 2 W. N. Cas. 481 ; John- ston v. Elizabeth Building and Loan Association, 104 Pa. St. 394. In the first case cited in this note it was held that merely averring that only $1800 was received on a three thousand dollar mortgage did not show there was usury ; for it would be presumed that the dif- ference was for the premium. In a Canadian case it was said : "The only way in which such a transaction could be impeached would be, by showing that the defendant was induced to become a member, and did in fact become a member, at the request of the plaintiff, for the mere purpose of borrowing money at an excessive and usurious rate of interest, and that, therefore, it was corruptly agreed between them that he should become a member," etc., Canada Permanent Building and Saving Society v. Harris, 16 U. C. C. P. 54; doubting Canada Per- manent Building and Saving Soci- ety v. Rowell, 19 U. C. Q. B. 134. But see contrary International Building and Loan Association v. Biering (Tex. Civ. App.), 23 S. W. Rep. 621. A settlement made with the as- sociation, on full notice of what lie is charged with, is binding on a member. Building & Loan, Asso. v. Leonard. 74 Miss.. 810; s. c. 21 So. Rep. .13 ; even though he has no suspicion the loan is usurious. Star Savings & L. Ass'n v. Woods (Tenn.). 42 S. W. Rep. 872. 2 Phillips v. Columbia City, etc., Association, 53 la. 719 ; s. C 6 N. W. Rep. 121. 264 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. reserved. 1 A borrower cannot complain of usury if he has not received the full face of his loan, although paying inter- est upon it, when the amount he did not receive was always ready for him and his payments went into the common fund in which he was entitled to share notably upon dissolution. 2 But where the original contract was usurious and the parties entered into a subsequent written contract to the effect that in consideration of one dollar and the repayment of the usuri- ous interest and the payment of lawful interest after the date of such subsequent contract, the original contract should be valid and binding, it was held that the original transac- tion was not purged of usury, notwithstanding the interven- tion of the rights of third parties. 3 Sec. 258 — Who May Defend against a Usurious Claim. The defence of usury is a personal one and cannot be urged by strangers. But it is not confined to the principal debtor ; for his surety or guarantor may wage such a defence as successfully as he. 4 The vendee of property, however, which is subject to a mortgage given to secure a usurious loan cannot urge the defence of usury. 5 But the language of the statute on usury may be so broad as to allow the defence to be made by the vendee of the land, even thougb he be a vendee by virtue of a sheriff's sale. 6 But if the ven- dee purchases the land, subject to the mortgage, with an express stipulation to that effect, then he has a right to defend against the enforcement of the usurious debt thus secured; for the reason that the amount actually duo on 1 Thompson v. Gillison, 28 S. C. and Savings Association, 18 Ind. 534; s. C. 6S. E. Rep. 333. 237. 2 Hammerslough v. Kansas City 6 Sullivan Savings Institute v. Building, etc., Association, 71) Mo. Copeland, 71 la. (17. 80. 6 Lloyd v. Scott, 4 Pet. 205 : 8 E1 Paso Building and Loan As- same; case or second appeal, Scott iatioD v. Lane, s l Tex. 369; v. Lloyd,!) Pet. 418; reversing, 4 li S. W. Rep. 77. ('ranch. C. C. 206; Link v. Ger- See to the contrary, Phillips v. mantown Association, 89 Pa. St. Columbus City, etc., Association, 15; Building Association v. O'Con- ,; [a. 719; B. C. 6 N. W. Rep. 121. nor. 3 Phila. 153; Kupfert v. Gut- ' Betteley v. Reed, 4 < t >. B. 511 ; tenberg Building Association, 30 , C. 8 G. & i>. 561 : Stein v. In- Pa. St. 4G5. dianapolis Building Loan, Fund § 259. LOANS TO MEMBERS — INCIDENTS. 265 the debt enters into and forms a part of the consideration for the sale, and the purchaser is just as much interested in securing its reduction to the amount lawfully due as was the vendor before the sale. 1 Sec. 259— Borrower Recovering- Back Usurious Inter- est Paid by Him. The right of a borrower from a building association to recover from it usurious interest which he has paid it does not stand upon a different footing from the right of one in- dividual to recover from another usurious interest he has paid him for or on a loan. Where the statute against usury regarded the lender alone as the wrongdoer and also regard the borrower as his victim, the latter may recover whatever usurious interest he has paid the former. 2 In Maryland, however, if there has been a bona fide settle- ment and not a sham one 3 there can be no recovery of any usurious interest paid either before or at the time of the set- tlement. 4 A somewhat similar rule prevails in Georgia ; for there it is held that if the matter of usurious interest formed a distinct part of the controversy when the settlement was made, and the matter be settled, there can be no recovery. The reason for this decision is that there was an accord and satisfaction. 5 Where an account was furnished a borrower by a building association, and in it were distinct claims for usurious interest, and upon the basis of that account he set- tled and gave his note in settlement, it was held that he could not set up the amount of usurious interest as a defence in part when sued upon under the claim or ground that the set- 1 Link v. Germantown Building was said that it was recoverable Association, 89 Pa. St. 15. without the aid of a statute. 2 Philanthropic Building Asso- 3 See two Maryland cases in pre- ciation v. McKnight, 35 Pa. St. 470 ; ceding note. Border State, etc., Association v. 4 Await v. Eutaw Building Asso- Hilleary, 68 Md. 52 ; Border State, ciation, 34 Md. 435 ; Second Ger- etc, Association v. Hayes, 61 Md. man American Building Associa- 597 ; Parker v. Fulton Loan and tion of Baltimore v. Newman, 50 Building Association, 42 Ga. 451. Md. 62. See Bexar Building and Loan As- 5 Parker v. Fulton Loan and sociation v. Robinson, 78 Tex. 163 ; Building Association, 46 Ga. 166. S. c. 14 S. W. Rep. 227, where it 266 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. tlement was procured by fraud. 1 So where a borrower settled with an association, receiving credit for a show of the profits and a rebate of a part of the premium paid by him, it was held that he could not maintain an action against the society for usury. 2 Sec. 260 — Charges Incident to a Loan not Usurious. A deduction from a loan of the amount usually charged for an abstract of the title of the land to be mortgaged, the cost of recording the mortgage, the fee of an attorney for examining: the abstract of title, and the execution of the necessary papers, does not constitute a charge of usury nor render the transaction usurious. 3 Commission, however, paid the secretary of the association for securing the loan upon a contract made with the borrower in the name of the asso- ciation will be deemed usurious, if there be no evidence that the commission was not paid to and received by the associa- tion. 4 1 Pattison v. Albany Building Pollocks. Carolina, etc., Ass'n. 2."> ; ami Loan Association, 63 Ga. 373. s. c. Rep. 977. The borrower was guilty of laches The general statute of limita- in not claiming credit for the usuri- tions, providing within what time ous interest when first presented to suit shall be brought to recover him. It would be otherwise if he back usurious interest applies to wire not guilty of laches. Parker loans of building associations. v. Fulton Loan and Building Asso- Maule v. Building Association, 5 ciation, 46 Ga. 166. Phila. 421. 2 Natchez Building and Loan As- 3 Hoboken Building Association sociation v. Shields, 71 Miss. 30; v. Martin, 13 N. J. Eq. 428. S. C. 15 So. Rep. 793. SeetheNorth * Dime Savings Institution v. Carolina decisions, where no re- Mulford, 31 N. J. Eq. 99. It' the covery of usurious interest is al- directors of (lie corporation knew low oil. for the reason thai both nothing about the commission, and partiesare in paridelicto. Mills r. the secretary himself retained the Salisbury Building and Loan Asso- amount, the loan is not usuri- ciation, 75 N. C. 292; Latham v. ous. Muir v. Newark Savings In- Washington Building and Loan stitution, 16 N. J. Eq. 537. An iciation, 7? X. C. 145; Dicker- Act, in its tirst section, restricted son v. Raleigh Co-operative Land the amount of its loan to 6 per and Building Association, 89 N. C. cent, interest. A subsequent sec- 37, a similar rule prevails in tion authorized the association to We t Virginia, Haigh v. U. S. charge the borrower the cost of Building, ••(<■.. Association, L9 W. making the loan, expenses, inter- V;,. ;!i.\ est, premiums, fines. A subse- I'or South Carolina rule, see quent Act prohibited any one, 8 261. LOANS TO MEMBERS — INCIDENTS. 267 Sec. 261— Right to and Amount of Interest. Interest is incident to every loan, and it is not ultra vires for a building society to demand or reserve it although not especially authorized to do so. 1 The amount reserved, however, must not exceed the legal rate allowed on other loans. 2 And it is altogether possible to so combine the interest and expense of the loan as to render the interest usurious or illegal. 3 Nor can it be claimed that an unvary- ing amount of interest for the period of time the loan is to continue is usurious, on the ground that the payments on the stock is constantly reducing the amount the borrower will ultimately have to pay; for a payment of dues on the stock has nothing to do with the payment of the interest. 4 without exception, to exact more than six per cent, interest for the loan of money. This latter act was held to repeal the right given by the former statute to demand more than six percent, interest. Merony v. Atlanta National Building and Loan Association, 116 N. C. 882; s. c. 21 S. C. Rep. 924. Where a director charged $220 for procur- ing a loan of $600, and the associa- tion knew of his exactions, the transaction was held usurious. Brown v. Archer, 62 JIo! App. 277 ; s. C. 1 Mo. App. Rep. 405. 1 City Building and Loan Com- pany v. Fatty, 1 Abb. Dec. :'>47 ; Massey v. Citizens' Building, etc., Association, 22 Ken. 024. 2 Bates v. People's, etc., Associa- tion, 42 Ohio St. 665; Parker v. United States Building, etc., Asso- ciation, 19 W. Va. 744 ; Geiger v. Eight German Building Associa- tion. 58 Md. 569 ; Border State Per- petual Building Association v. Mc- Carthy, 57 Md. 555. 3 Waverly, etc., Association v. Buch, 64 Md. 338 ; s. c. 1 Cent. Rep. 484 ; 14 Amer. & Eng. Corp. Cas. 649. 4 Citizens' Mutual Loan and Ac- cumulating Fund Association v. Webster, 25 Barb. 263; Red Bank Association v. Patterson, 27 N. J. Eq. 223; City Building and Loan Company v. Fatty. 1 Abb. Dec. 347. See Seibel v. Victoria Building As- sociation. 43 Ohio St. 371 ; s. c. 1 West 340; 10 Vmer. & Eng. Corp. Cas. 463 : 13 Wkly. L. Bull, 242, 265. In Texas the legal limit of inter- est is 12 per cent. In that state a member of a building association, in consideration of a loan of $300, promised to pay the association $600 on the maturity of a certain series of stock, and also $3 monthly on 1 lis stock and $3 interest on the loan. It- was held that the con- tract was usurious; for the only rate. of interest legally chargeable was 12 per cent. International Building and Loan Association v. Mayers (Tex. Cip. A.pp.), 25 S. W. Rep. 1132. In that state. where under the provisions of a note to a building association, the amount required to pay a loan at any time, — it being payable on or before a certain time, — will, with the interest already paid, amount 268 BUILDING AND LOAN ASSOCIATIONS. Ch. XIII. Sec. 262 — When Interest Ceases to Run. The terms of the obligation may provide for the cessation of interest at a certain date, or at a certain stage of the loan, or when a certain condition of the society comes to pass. In such an event the interest will cease at the time the con- tract provides for its cessation. 1 It, of course, will cease when the society or t.ie series to which the loan belongs covers the full period for which it was organized, or when the stock upon which the loan was made has reached in value the amount of the loan. 2 Sec. 263 — Amount due on a Loan. It is sometimes difficult to determine the amount due on a loan, especially if paid off before due. If a statute or even a by-law fixes the amount due, or provides a rule for the ascertaining of that amount, then the amount to be paid or recovered must be ascertained in the manner or way there prescribed. 3 But if there be no such statute or by-law then the courts must adopt some rule, and here there has been a wide to more than the loan and 12 per . per annum for the use of it, the note is usurious; and the in- paid is to be applied in sat- isfaction of the principal, though the amount required to be paid from year to year, up to 1 he I ime i be note is to be paid, is less than 12 per. cent, per annum. Inter- national Building and Loan Asso- ciation v. Biering, ^\ Tex. 476; s. C. 25 S. W. Rep. 622. Bu1 if the time of payment is uncerta in, and lifference in the interest paid and I be lavs fu] rate may, at t lie t ime of t be mat urity of i be loan ed i be bonus, the I rue acl ion i- not usurious. Internationa] Building and Loan Associal ion v. Biering (TeJ Civ. Ipp.), 23 S. W. Rep, 621 : \ bbol I v. Internal tonal Building and Loan Association, '.':! s. \v. Rep. 629 : 86 Tex. Wl ; 16 V.mer. . amount actually advanced. Ohio \ tipulation in the mortgage B. \. v. Leyden, 1 Wkly. L. Bull. that "ii foreclosure lli<' amount 126 ; s. C. 4 Amer. Rec. 765. due shall be estimated, by adding ' Western Canada, T,. & S. S. v. to the consideration named the Eodges, 22 Grant Ch. 566. § 266. LOANS TO MEMBERS — INCIDENTS. 275 gage was made before it became due, the present value of future repayments should be calculated to the end of the term, and discounted at such rate of interest and on such terms as the directors might determine ; and by another of the rules the directors, on default, were empowered to sell the mortgaged estate, and on such sale to retain and apply so much of the purchase money as should be necessary to redeem the property, pursuant to the provisions contained in the foregoing rule : it was held that the master proceeded on an erroneous principle in calculating interest on the sum advanced at 9 per cent from the date of its advance until the day appointed for payment ; and that lie was bound to ascertain the amount necessary to discharge the mort- gage by the same rules, and on the same principle, as the directors of the society computed the same. 1 Sec. 266 — Amount Due. — A Georgia Case. The scheme of an association was that there should be two thousand shares, no one stockholder holding over thirty ; each share should pay one dollar at each monthly meeting, and at each meeting the amount then received should be sold to the highest bidder as an advance to the bidder upon his ultimate interest. The company was to be wound up when each share, under the workings of the asso- ciation, should be worth two hundred dollars, or when each member had purchased an advance on his stock. Any member advanced was required to give his note secured by mortgage for the ultimate assumed value of his stock and assign his stock to the association as collateral security. Each stockholder who received an advance was required to pay one dollar extra on each advanced share as interest. For any default in the payment of dues, as often as they were payable, he was to forfeit the additional sum of ten cents for every such failure, and for every dollar then unpaid. If any shareholder was in default three months, the associa- 1 Crone v. Crone, 26 Grant Ch. Provident L. Co., 31 U. C. C. P. 459 ; O'Donahoe's Estate L. R. 10 574. Ir. Eq. 221 ; Green v. Hamilton 276 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. tion could proceed to collect the amount due from him. The sum to be collected by the provisions of the charter and by- laws was to be in such an amount, at the rate of advance at the last monthly meeting, as would, if put up for sale, have brought the company the same interest the defaulter was paying, in no case less than the net amount received by him together with all other payments, moneys, and expenses due the association from him. A stockholder purchased an advance on his thirty shares. On the books of the asso- ciation he owed it forty-nine dollars, although it did not appear what this was for. He failed to pay his dues. A year after the association agreed to wind up at $154.00, the then value of the stock, and thereafter ceased to do busi- ness. At the last meeting the premium upon advances was twenty -three per cent. The account bet ween the association and stockholder was stated as follows : $200.00, less 23 per cent. $ 154 00 14 months dues, at $2.00 each 28 00 14 fines (10 per cent on $2.00) 2 80 In all, for each share $ 184 80 For thirty shares this amounted to 30 times 1 1 84.80 or $5544 00 To this add book account 49 00 And fine for that 4 90 The gross amount due $5597 90 But the company had quit business, and the stockholder was allowed a credit of si:>4.00, the agreed value of a share of stock, making a total of $4620,00. This total was de- ducted from the gross amount due, leaving a balance of $977.90, and this amount wbs held to be due. 1 1 Ocmulgec Building, etc., Asso- was reversed and went back, and ciation v. Thomson, 52 Ga. 427, It on further hearing, under addi- was said that if the company went tional evidence, it was found that on doing business, then he ought to the stockholder owed an additional pay the gross sum, viz. $5,597,90 sum, making a total of $1,634,65. and hold his stock as the other ad- Thomson v. Ocmulgee Building, vanced members did. This case etc, Association, 56 Ga. 350. § 267. LOANS TO MEMBERS — INCIDENTS. 277 Sec. 237.— Amount Due — English Kule. In the earlier English cases no interest had been reserved as such, but in lieu of that were monthly payments called "redemption money." The advancement was not regarded as a loan, nor were these monthly payments regarded as in- terest for the forbearance of the money advanced. In a premature redemption the courts allowed no rebate, except by way of bonus under the rules of the society. 1 In a more recent case a rule was adopted which is similar to the Ohio rule. The rules of a permanent society pro- vided that " any member receiving an advance shall repay the same, with interest, at the rate which shall be deter- mined by the board, by monthly or other instalments." A member obtained an advance of £600, at a monthly pay- ment of £9 13s., estimated to discharge the entire debt in seven years. He made default on his third instalment, and the mortgage was foreclosed and the property mortgaged sold. The society claimed the right to retain the aggregate amount of the whole number of instalments for seven years, together with fines due for payments in arrear down to the time of sale. The court held that the society was entitled to retain out of the proceeds of the sale all subscriptions and fines payable up to the time of the completion of the sale, and such further sum as represented the remainder of the principal sum remaining at that time unpaid ; but that it was not entitled to any payment in respect of interest accruing after the principal had been all repaid. In passing on the case Justice Cairns said : " The manner in which the mort- gage 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] treated as if he had received an advance of £600 at £5 per cent. ; but 1 Seagrave v. Pope, 1 DeG. M. & Fleming v. Self, 3 DeG. Mac. & G. 783 ; 16 Jur; 1099 ; 22 L. J. Ch. G. 997 ; 24 L. J. Ch. 29 ; 3 Eq. 258 ; 15 E. L. & Eq. Rep. 477 ; Rep. 14 ; 1 Jur. N. S. 25. 278 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. 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 principal. If that be so, one would, in the absence of any stipulation to the con- trarv, suppose that, if default was made in payment of any of the instalments, and the property was 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 hav- ing been paid off, there would be nothing in respect of which interest could accrue. Interest implies forbearance, and, therefore, when the whole sum is paid there can be no interest. That seems the natural result of the transaction, and the trust of the sale moneys in the mortgage deed is con- sistent with that view. It is there provided that the trustee, after payment of the expenses of the sale, shall ' retain all such subscriptions, fines, and other sums of money, and pay- ments 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 parties hereto that in case any such sale shall take place all the moneys which would at any time afterwards 1 )(•(•< >me 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 consid- ered 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 fine ; no more can you include payments in respect of interest, for interest can only ; i rise in respect of a principal sum remaining outstand- ing and forborne. Therefore, my conclusion is, that every- thing due, in respect of monthly instalments and fines, at the i ime of t he sale, must he 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 much of the principal remained unpaid. That must also •><• retained, and that will conclude the transaction." Jn this conclusion Justice Mcllish concurred, saying: "Ac- § 268. LOANS TO MEMBERS — INCIDENTS. 279 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 interest, at the rate which shall be determined by the board, that 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 less than the amount of his share." 1 Sec. 268. — Interest During Pendency of Suit. Interest continues to run during the pendency of a suit on the obligation given by the borrower for a foreclosure of the mortgage. Nor does it suspend the payment of dues. 2 A tender of the amount due will also stop the running of the interest. If the tender be after suit brought, the bor- rower will be liable for all costs, at least for those accrued up to that date, including the cost of rendering the judgment. 3 An agreement made at some time after the date of tender, to accept such tender, starts the interest to running from the date of acceptance. 4 1 In re Goldsmith, L. R. 10 Ch. 204 ; Union Building Loan Asso- App. 41 ; S. C. 44 L. J. Bank 1 ; 23 ciation of New Brunswick v. Ma- W. R. 39 ; 31 L. T. N. S. 366. sonic Hall Association of New See Matterson v. Elderfield L. R., Brunswick, 29 N. J. Eq. 389 ; Mc- 4 Ch. App. 207 ; 20 L. T. N. S. 503 ; Cahan v. Columbian Building As- 17 W. R. 422 ; 33 J. P. 326 ; Mosley sociation, 40 Md. 226 ; Cincinnati v. Baker, 6 Hare, 87; s. c. 12 Jur. German Building Association v. 551 ; 17 L. J. Ch. 25 ; affirmed on Flack, 1 Cine. Supr. Rep. 468. appeal, 1 Hall & T. 301 ; s. C. 13 3 Columbian Building Associa- Jur. 817 ; 18 L. J. Ch. 457 : 3DeG., tion of East Baltimore v. Crumb, Mac. & G. 1082 ; Smith v. Pilking- 42 Md. 192. If the debtor borrow ton, 1 DeG. F. & J. 120 ; s. c. 29 L. the money from a bank to make J. Ch. 227 ; Archer v. Harrison, 7 the tender, and immediately on a DeG., Mac. & G. 404; 3 Jur. N. S. refusal to accept it, returns it to 194 ; In re O'Donahoe, 10 Ir R. Eq. the bank, the tender is invalid 221 ; and Farmer v. Smith, 4 H. & and of no avail. Middle States N. 196; 5 Jur. N. S. 533, n.; 28 L. Loan, etc., Co. v. Hagerstown. J. Exch. 226. See § 284. etc., Co., 82 Md. 507 ; s. c. 33 Atl. 2 German Fair Hill Building As- Rep. 886. sociation v. Metzger, 3 W. N. Cas. 4 Id. 280 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. Sec. 269.— Kind of Security. If a corporation has power to make a loan it has power to take security for its repayment ; this is incide'nt to the power to make a loan. And if no statute forbid it, that security may be a mortgage on real estate. 1 It has, in fact, authority to take any kind of security, unless forbidden by statute. 2 The borrower having received the benefit of the loan and given security for its repayment, cannot defeat a recovery by getting up as a defence that the act of the cor- poration was ultra vires. 2, Nearly all associations require the borrower to assign his stock as additional security for the loan ; but a loan on the shares, accompanied by no other security, is usually unauthorized. 4 If a borrower owns more shares than the by-laws permit, and obtains a loan upon them, he cannot set up as a defence his own violation of such by-laws ; nor can his creditors. 5 So a wife giving a mortgage for money borrowed on shares is estopped from showing that her husband subscribed for them in her name. 6 Sec. 270 — Straight Loans. Unless forbidden by a statute or its by-laws, a building society has full power to make a loan upon the same terms as individuals make them. They are not confined to the loan usually made by such associations. " A building and loan association may lawfully lend its money to its members, or other persons, on adequate and proper security, in the 1 Massey v. Citizens' Building tion, 47 111. App. 602 ; affirmed. andSavings Association of Paola, 151 111. 531; s. c. 38 N. E. Rep. 22 Kas. 624. 236 : 26 Ch. L. News, 239. 2 Union Building and Loan As- 4 Cullerner. London, etc., Build- sociation v. Masonic Hall Associa- ing Society, L. R., 25 Q. B. Div. t ion, 29 X. .1. Eq. 389. 485 ; s. c. 59 L. J. Q. B. 525 ; 63 L. Central Building and Loan As- T. 511 ; 39 W. R. 88; 6T. L. R. 214, sociation v. Lampson, 60 Minn. ■! lit ; 55 J. P. 148. s. c. 62 N. W. Rep. 544; B Victoria Building Association Malley v. People's Building, etc., v. The Arbiter Bund, (» Wkly. L. •ciation, 85 N. Y. Supp. 1 1. Bull. 823 ; s. c. 10 Am. L. Rec. 485. The same is true where one cor- 'Ohio Building Association v. poration borrows of another. Km- Neyden, 1 Wkly. L. Bull. 126 ; S. C. disli v. Garden <'i1y. etc., Associa- 1 Amor. L. Rec. 7|>. <',<»•_' ; af- no action allowed to be maintained firmed, L51 III. 531 ; 26 Ch. I.. N. upon it. Anderson v. Cleburne 38 N. E. Rep. 286. Building and Loan Association ,,,,,-. Bamilton Provident (Tex.) 16 S. W. Rep. 298. Loan Co.. 81 U. < '. 0. I'. 574. § 270. LOANS TO MEMBERS — INCIDENTS. 283 In a Kansas case it was said: — "Contracts for the borrowing of money from building and loan associations in Kansas are only exempt from the provisions of the usury or interest laws of the state when members of such associa- tions are parties thereto. It was never intended that these corporations, organized as this one was, for the purpose of giving to its members, through their savings, an easy way to discharge encumbrances and to build homes, should loan their funds to others than their own members, or that if they did attempt the exercise of such authority, that they could disregard the wise and wholesome provisions of the statute regulating the rate of interest collectible by law. It was never intended that these corporations, seeking and obtain- ing privileges from the state as useful and beneficial asso- ciations from the comparative poor and needy, should blos- som out as loan agencies and banking institutions, without limit as to the rate of interest they could receive and col- lect. Neither the letter nor the spirit of the laws relating to these corporations would authorize such a construction.' 1 Sec. 274 — Taking Several Securities. If an association take more than one security, it may, at its option, pursue one or all of them when default is made ; and a custom of taking only real estate mortgage security is no defence for the sureties on the other security when sued. 2 Sec. 275 — Purchasing; Notes of Persons not Members. A building association has no power to take its funds and purchase notes of strangers to its organization. It cannot discount notes. 3 Sec. 276 — Subscribing Articles of Association. Where, by the charter, the right to collect otherwise 1 St. Joseph, etc., Building Asso- s. c. 16 Jur. 637 ; 21 I.. J. Ch. 169 ; ciation v. Thompson, 19 Kan. 321. 16 J. P. 116. See § 283. 2 Juniata Building and Loan As- 3 State v. Greenville Building sociation v. Hetzel, 103 Pa. St. 507. and Savings Association, 29 Ohio See Reeves v. White, 17 Q. B. 995 ; St. 92. See § 282. 284 BUILDING AND LOAN ASSOCIATIONS. CI). XIII. usurious interest, premiums and fines was qualified by a proviso, "that such stockholders shall have signed an agreement containing the following words," the association can only recover the actual amount loaned, with simple in- terest, if the borrowing member has not signed the agree- ment to which reference has been made. 1 Sec. 277 — Loan to One in Arrears. There is nothing to prevent a loan being made to a mem- ber when in arrears on his stock. " If, when the loan was awarded, they were in arrears, but paid the arrears out of the loan, in the absence of bad faith, they would be regarded as not in arrears when the loan was made." 2 Sec. 278 — Varying Contract of Loan. After a loan has been made, the association cannot change the terms of the contract, nor can the legislature. 3 The provisions of the constitution of a building association pro- viding for the manner of payment by and credits to borrow- ing members, create vested rights in such members which cannot be modified as to them without their consent. 4 A change of the rules of a society, which would otherwise affect their contracts, can have no application to a contract theretofore by them made with the association. 5 Sec. 270— Oppressive Contract, Borrower not Relieved from. A borrower cannot claim a right to be relieved from a 1 Anthracite Building and Loan 5 In re Norwich and Norfolk ociation v. Lyons, 2 Kulp. Building Society, Smith's Case, 1 (Pa.) 409. But the burden is on L. R. 1 Ch. Div. 481 ; s. e. 45 L. J. the borrower to show that he did Ch. 1 43 ; 24 W. R. 103; Christie v. notsign the agreement. Nicely's North Counties, etc.. Society L. R., I. tate,3 Kulp. (Pa.), !i. 43 Ch. Div. 62; Burke v. Home, 'Citizens' Building, etc., Asso- etc., Association, 7 Wkly. L. Bull, ciation v. Coriell, 34 N. J. Eq. 383. 114; Home, etc., Association v. BCason v. Seldner, 77 Va. 293; Boning, 7 Wkly. L. Bull. 174; s. c 6 A iik r. N. W. 1 Betz v. Fulton Building and Rep. 277;Hawley«. Northside,etc, Saving Association,! Ohio N. P. 12. Ass'n (Colo.), 52 Pac. Rep. 408. § 279. LOANS TO MEMBERS — INCIDENTS. 285 contract of loan merely because it is oppressive, unless he can show that a fraud inducing him to enter into the loan has been perpetrated upon him. 1 In a New York case it was said: "That the defendant is required to pay con- siderable sums of money, every month, and that these pay- ments may be increased by fines in case of default, and that sach fines may be made heavier for a continued default, forms no sufficient reason for declaring the contract void, in the whole, or even pro temto. It is not shown or pretended, ex- cept in the arguments of counsel, that the defendant did not fully understand the nature of the bargain made ; or that he could not have calculated the precise amount he would be bound to pay; or that he has been in any manner deceived, defrauded or misled, either in joining the associa- tion, or bidding for the shares and paying his premium. His engagement may be an onerous one, but all his asso- ciates entered into the same engagement and assumed the same burden. For aught that appears, they have borne those burdens, and made all their payments regularly, in the expectation that the defendant and every other mem- ber, would do the same, and that the winding up of the association, and the termination of the tax upon them, would be speeded. To release the defendant from his con- tract, 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 agree- ment, all of them will be, at no very distant day, relieved from the 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 accumulations of honest industry are the surest way 1 Watkins v. Workingmen's v. American Building and Loan Building and Loan Association, 97 Association, 52 Fed. Rep. 618 ; s. c. Pa. St. 514 ; See, however, Tilley 40 Amer. & Eng. Corp. Cas. 375. 286 BUILDING AND LOAN ASSOCIATIONS. Cll. XIII. to wealth. But they will have met with no losses which a reasonable prudence would not have enabled them to foresee and measure.*' x Sec. 280— Lex Loci — Effect on Foreign Contracts. A contract of loan is controlled by the law of the place the same as if it were an ordinary contract. Thus, where a contract of loan was made by a building association in Vir- ginia to a citizen of that state upon lands located there, but the bond was made payable in New York, it was held that it was a New York contract, and its legality must be determined by the laws of that state. 2 And the same rule was adopted when the contract was made in Pennsylvania but payable in Maryland, where the association was incor- porated ; 3 and so when payable in New York. 4 So a con- 1 Citizens' Mutual Loan and Ac- cumulating Fund Association v. Webster, 25 Barb. 263. In an action to foreclose a mort- gage on land, it appeared that the defendant applied to plaintiff, a building society, for a loan of §3,000 ; defendant agreeing that, out of that amount, he would pay $ 600 into plaintiff's guaranty fund. He then owned fifteen shares of plaintiff's stock, of the par value of sjOOcacli. Plaintiff, not having all the money, borrowed $2,000 from one M., and defendant at plaintiff's request, executed a mortgage to M. for that amount. I >< Inn la nt then executed to plain- tiff tin; mortgage sued on, which provided for tin- payment by de- fendant to plaintiff of $30 per in. mih until such payments, with the share <>f plaint id's profits to Which defendant would be en- titled, Bhould amount to $3,000, when the mortgage should be \2. Foreign ( 'orporal ion. Sec. 282 — Power to Take Security for a Loan. J I' ;i corporation lias the power to make a loan, it has the 200 § 283. MORTGAGES. 291 power to take security for its payment. The latter power is incident to the former, 1 just as the power of an association to borrow money shows with it the incidental power to execute a note as evidence of the debt. But the power to loan does not authorize a corporation to buy notes to sell for gain ; for that is beyond the scope of the corporation. 2 These rules are as applicable to a building association as to a corporation. Indeed, the cases cited are building associa- tion cases. Sec. 283— Kind of Security. The security almost universally taken is a mortgage upon an unincumbered freehold estate ; but there is nothing to prevent a mortgage being taken upon a leasehold, 3 nor even upon an equitable title. 4 It is not essential that the person borrowing the money should give the mortgage upon his own land ; for a stranger to the association may lawfully bind his land to secure the loan made to such borrower. 5 If a statute authorizes the taking of personal security, such security may be taken from a person not a member of the association ; 6 and it has been held that additional personal 1 Massey v. Citizens' Building that a mortgage on chattels will and Savings Association of Paola, be enforced. Bismarck Building 22 Kan. 624 ; Union Building and and Loan Association v. Bolster, Loan Association of New Brims- 92 Pa. St. 123. wick v. Masonic Hall Association 4 Lincoln Building and Saving of New Brunswick, 29 N. J. Eq. Association v. Haas, 10 Neb. 581 ; 389. See § 269. s. c. 7 N. W. Eep. 327. See § 269. 2 Manufacturers and Mechanics' 5 Massey v. Citizens' Building Saving and Loan Association v. and Savings Association of Paola, Conover, 5 Phila. 18 ; 19 Leg. Int. 22 Kan. 624 ; Relief Saving Fund 116. See § 275. Association v. Longshore, 8 Luz. 3 Sheffield and S. Y. Permanent Leg. Reg (Pa.) 199 Johnston v. Building Society v. Aizlewood L. Elizabeth Building and Loan As- R., 44 Ch. Div. 412 ; s. c. 62 L. T. sociation, 104 Pa. St. 394 ; Tanner's 678Segravev. Pope, 1 DeG. M. & Appeal, 95 Pa. St. 118; Juniata G. 783; 20 L. T. Rep. 158; 16 Jur. Building Association v. Mixell, 84 1099 ; 22 L. J. Ch. 258 ; 15 E. L. & Pa. St. 313 ; Pfeister v. Wheeling, Eq. 477. etc., Association, 19 W. Va. 676. Power to loan on real estate does 6 Freehold Loan and Savings not apply to a power to loan on Society v. Farrell, 31 U. C. C. P. chattels, although it would seem 453. 292 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. security may be taken unless prohibited by a statute, 1 al- though it had been held that a personal security alone was invalid. 2 "Where the by-laws provided that the borrowers from the association should " secure the payment of said loan, with legal interest, by satisfactory bond or mortgage upon real estate," it was held that the officers of the asso- ciation had the power to take both securities, and if both were taken, with sureties on the bond, the presumption would be that the officers relied upon the security of both ; that the association was not restricted to the pursuit of one before the other, and that parol evidence that it was the custom of the association to secure the loans by real estate security, which was treated as a primary security and was first resorted to, was incompetent. 3 Sec. 284 — First or Second Mortgage. Unless the charter, some statute or the by-laws prevent it, the association is not restricted to a first mortgage when making a loan ; but it may make such loan on a second or any other mortgage. 4 Not only may they do this, but they may advance money to redeem a second mortgage ; and when the loan was on a collier, it was held 1 Hope v. Glass, 23 U. C. Q. B. if sufficient. It was held that the 86 ; Sheffield and South Yorkshire society could not object to the Building Society v. Aizlewood, 44 security on the ground they urged. Ch. Div. 412 ; S. C. 59 L. J. Ch. 34 ; In re Canada Mutual Building So- 62 L. T. 678 ; 6 T. L. R. 25. ciety, 3 Leg. News. 58. 2 Canada Permanent Building That a building association has and Savings Society v. Lewis, 8 U. the same power to take personal C. C. P. 352. security as an individual, see Union 3 Juniata v. Building and Loan Building Loan Association v. Ma- Association v. Hertzel, 103 Pa. St. sonic Hall Association, 29 N. J. 507 ; s. C. 41 Leg. Int. 155 ; 12 W. Eq. 389. N. Cas. 431 ; 31 Pitts. L. Jr. 473. In Australia the society is the A society refused to make a loan owner of the land mortgaged, 1 .•■<-. 1 1 1 i- the property offered as a when default is made, within the security lay in a part of the city meaning of the Health Act. Port where it did nol desire to invest. Melbourne v. Permanent Savings Its rules provided that the security Building Society L. R., 20 Vict. offered must be t<» the satisfaction (Australia), 508. of the board as well as of the valua- 4 Citizens' Building Loan and tion, and also that all property in Savings Association v. Coriell, 34 the city was available as security, N. J. Ecp 383. See § 269. § 285. MORTGAGES. 293 that the directors could advance money to run the collier, if necessary to realize the money advanced. 1 But when II., — a member of a building society which could only lend on a first mortgage on real estate, but could release part of a piece of mortgaged property, if satisfied that the remainder would be sufficient security, — borrowed £17,000 from the society on a first mortgage ; and the society having ex- hausted its powers, applied for a loan from 13., who lent £6,000 to H. on security of the property mortgaged to the society, which joined in the security to postpone its own mortgage ; and the £6,000 was at once handed to the society by H., who was credited with the amount in part discharge of the £17,000 ; it was held (1) that the transaction with B. was ultra vires the society ; (2) that B.'s security for £6,000 was postponed to the society's security for £11,000 ; and (3) that B. was entitled to a security, as against the so- ciety, in respect of any part of the £6,000 applied in its pay- ment of any debts and liabilities payable by the society. 2 Sec. 285— Validity of Mortgage. If the loan was not authorized by the statute, it seems that the mortgage is invalid ; for it is only security for the payment of money within the statute. 3 Indeed, a 1 Sheffield & South Yorkshire Notice to a director borrowing Permanent Building Society v. from an association is not notice Aizlewood, L. R. 44 Ch. Div. 412 ; to the association of a prior mort- s. C. 59 L. J. Ch. 34 ; 62 L. T. 678 ; gage ; for in borrowing he is act- 6 T. L. R. 25. Where money was ing for himself. Merchantville B. advanced by a mortgagor to can- & L. Ass'n v. Zane (N. J. Ch.) 38 eel a mortgage held by a building Atl. Rep. 420. society and also paid to the bor- 2 Portsea Island Building Society rower, it was held that he had v. Barclay, 8 R. 389 ; s. c. [1894] 3 priority over an intermediate Ch. 86 ; 63 L. J. Ch. 837 ; 10 T. L. R. mortgage of which the last loaner 526 ; 71 L. T. Rep. 82 ; 1 Manson, had no knowledge when he made 339; on appeal affirmed, 12 Eep. the advance and paid the money. 324 ; s. c. [1895] 2 Ch. 298 ; 64 L. Hosking v. Smith, L. R. 13 App. J. Ch. 579 ; 72 L. J. 744 ; 43 W. R. Cas. 582; s. c. 58 L. J. Ch. 367; 586; 11 T. L. R. 424. See also 59 L. T. 565 ; 37 W. R. 257 ; over- Small v. Smith, L. R., 10 App. Cas. ruling, Poase v. Jackson, L. R., 3 119. Ch. 576 ; and Robinson v. Trevor, 3 Franklin Building Association. L. R., 2 Q. B. Div. 423. v. Mather, 4 Abb. Pr. 274. 291 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. mortgage is not operative only so far as the charter of the association, a statute, or the by-laws authorize it ; and it must conform to them. 1 Thus, where the by-laws required weekly payments of dues and instalments, and provided that all its loans should become due in six years from the organization of the society, or when its stock reached its par value, it was held that the liability of a borrower to pay weekly dues and instalments ceased six years from the date of his loan. 2 And where the statute or charter under which a building association is organized defines the formal covenants or conditions which may be embodied in the mortgage, with a design of bringing about the results con- templated by the statute or charter, these details must be strictly pursued. 3 So a reservation inserted in a mortgage, which is not contemplated by the statute or the by-laws, cannot be enforced. 4 Strictly speaking, however, the form of the mortgage is not very material ; for it will be inter- preted in the light of the provisions of the statute or charter and the by-laws of the association. In a Pennsylvania case it was said : " There is no prescribed form for a building association mortgage. Its validity as such depends on the facts, and these must be taken as a whole. If this trans- action was not in fact a loan by a building association to a member, no form would save it from the ordinary rules as to interest and usury, and so on; on the other hand, as it clear! v was in fact such a loan, no mere form of the instru- ment can deprive it of the privileges of such loans." 5 The i Shannon v. Howard Mutual 5 Wkly. L. Bull. 752 ; Building As- Building Association, 30 Md. 383. sooiation v. Schuller, 3 W. N. Cas. 2 Lime City Building, Saving 431. and Loan Association v. Wagner, B Building Association v. Robin- 122 Ind. 78; s. c. 23 N. E. Repr. son, 1!) Phila. 358; S. c. 46 Leg. 689 ; IT Amer. St. Rep. 342. Int. 5. See contra, Fagan v. Peo- * Smith v. Mechanics' Building pie's Saving and Loan Association, and Loan Association, 73 N. C. 55 Minn. 437 ; S. C. 57 N. W. Rep. 142 ; O'Malley v. People's, etc., As- * Shannon v. Howard Mutual sociation, 36 N. Y. Supp. 1016. Building Association, 3('» M< I . :is:j ; a secret un<• held to be a part of the 186 ; Building Association v.Egger, mortgage or contract of borrow- § 287. MORTGAGES. 295 mortgage is not void for uncertainty on the ground that it runs during the existence of the association without fixing any time for its termination. 1 It is not necessary to express in the mortgage how much of the interest received is a bonus in respect of the sum advanced, and how much for interest. 2 Sec. 286 — Reformation of Mortgage. If, for any reason, the mortgage and contract of borrow- ing do not conform to the actual contract between the association and the borrower, both such mortgage and con- tract may be reformed, so as to accurately express the true contract. Where a schedule was exhibited to a borrower, showing the amount of payments he would be required to make, such schedule was used for the purpose of showing the actual contract. 8 Sec. 287— By-Laws a Part of the Mortgage. The courts have not been of a unanimous opinion whether or not the by-laws of the loaning association can be ex- amined as a part of the contract of borrowing or as a part of the mortgage. In an early Maryland case it was said that the courts could not look beyond the mortgage to the by-laws in determining the amount due where the mortgage made no reference to such by-laws ; and even a covenant to pay " all fines imposed by the articles of association " was not such a reference to the by-laws as to make them a part of the mortgage. 4 But in a subsequent case the language ing. Pangborn v. Citizens', etc., ciety v. Lucas, 44 U. C. Q. B. 106 ; Association, 35 N. J. Eq. 341. Hodgins v. Ontario Loan and De- 1 Robertson v. American Home- benture Co., 7 Ontario App. 202. stead Association, 10 Md. 397 ; s. c. Tbe fact that the association is 69 Amer. Dec. 145 ; Merrill v. Mc- wrongly named in the mortgage Intire, 13 Gray, 157 ; Winchester does not render the contract of Building Association v. Gilbert, 23 borrowing invalid. Hoboken Gratt. 787 ; Franklin Building As- Building Association v. Martin, 2 sociatien v. Mather, 4 Abb. Pr. 274. Beas. (N. J.) Eq. 427. 2 Freehold Permanent Building 4 Robertson v. American Home- and Savings Society v. Choate, 18 stead Association, 10 Md. 397 ; 69 Grant Ch. 412. Amer. Dec. 145. 8 Superior Saving and Loan So- *296 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. used in the case just cited was examined at considerable length and the conclusion reached that the by-laws of the loaning association could be, and properly so, examined for the purpose of determining the amount due. 1 There are other decisions to the same effect ; and it may be laid down as a rule that the by-laws of the loaning association are a part of the contract of loaning without any specific refer- ence to them being made in the mortgage. 2 Sec. 288— What Mortgage Covers. Agreements may be inserted in the mortgage to the effect that the mortgagor shall pay the taxes assessed against the property mortgaged, and if he do not, the asso- ciation may pay them and recover the amount from him in any decree of foreclosure entered on the mortgage. 3 So it is proper to insert a clause providing for the insur- ance of the property mortgaged, for the benefit of the asso- ciation, and in like manner providing that the association may pay it if the mortgagor do not, and charge it up under the mortgage or foreclosure. Likewise, it is proper for the association to agree that it will effect an insurance on the property for the benefit of the mortgagor ; and if it do not, .•mil the property be destroyed, the association will be liable for the amount the mortgagor would have received if the insurance had been perfected, and not the amount agreed upon between such association and the mortgagor. In such an instance the association is, having received a benefit 1 McCahan v. Columbian Build- States Savings and Loan Co. v. ing Association of East Baltimore, Cade 15 Wash. 38: s. c. 45 Pac. •1<> Mil. 226. Rep. G56 ; Mechanics', etc., Ass'n - I. inie City Building, Saving v. Vierling, 66 111. App. 621. and Loan Association v. Wagner, 8 Huntington, etc., Association L22 End. 78; S. C. 23 N. E. Rep. v. Melsheimer, 14 W. N. Cas. 344. 689; 17 Amer. St. Rep. 342; Wil- Usually such a clause is unneces- soii v. Shoenlaub, 99 Mo. 96; 8. C. sary in order to charge the land 12 8. W. Rep. 361 ; O'Malley v. mortgaged with the taxes the ss- People's Ass'n, !)2 Him, 572; 72 sociation lias had to pay to pro- N. Y. St. Rep. 289; 36 N. Y. Supp. cure its security. Montgomery, 1016; Aul'l r. Glasgow Building etc., Association v. Robinson, 69 Society, 12 App. < 'as. at p. 205 ; 56 Ala. 413. L. T. 776; 85 W. R. 682; United § 288. MORTGAGES. 297 under the agreement, estopped to deny the validity of the contract. In discussing this question the court said : " As an incident to security upon improved real estate, no reason is perceived why it may not be regarded as within the powers granted, that the corporation should have the the right to contract for insurance on the improvements on the property, to make more available and certain their security, and such a contract would be for the benefit of the company. It was expressly provided in the deed of trust, that appellee should keep the property insured in such, com- pany, and for such amount, as appellant should designate, not exceeding the amount of the indebtedness, except at the option of appellee. It was in pursuance of this provision in his contract that appellee procured or permitted the secre- tary to obtain the insurance for the first year, and con- tracted that he should procure it for the succeeding year. It was for the better securing of the loan made to appellee that the insurance was to be procured, and in this view iJt can hardly be said that it was not incidental to the legiti- mate purpose of the corporation, nor that it was not for its benefit. It was germane to the business that the corpora- tion was transacting, and, in case of loss, would inure to its advantage. The liability of the company, however, is resisted mainly on the ground that there is no authority in the act of the legislature authorizing the incorporation of the company, or in the articles of association, for making the contract to procure insurance for appellee ; and because it is beyond the powers expressly conferred, it is insisted that such contract is void, and cannot be enforced. It is said that there is nothing in the act of the Legislature authorizing such corporations, or in the articles of associa- tion, that would authorize appellant to engage in the in- surance business. It may be conceded that appellant has no such power, but that is not the case. Appellant did not undertake to insure the propert} r of appellee, but only to ob- tain insurance for him in some responsible company, as it had previously done. This is a very different undertaking, and rests wholly on different principles. The true construc- tion of the contract declared on is that, by the terms of the 298 BUILDING AND LOAN ASSOCIATIONS. Ch. XIV- original agreement, appellee was bound to keep the prop- erty insured in such company as appellant should select ; and because it was supposed to be some advantage to the com- pany to attend to the insurance themselves, that right was conceded to them on their agreement to procure it. For what reason the company desired to attend to the insurance is not very clear, nor is it material. It is sufficient that they desired to have it under their control, and it may be pre- sumed to have been to their interest to have it, or else they would not have sought the privilege, when appellee was anxious and desirous to attend to it himself. No reason is perceived why the company could not have obtained the control of the insurance, which was for the security of the loan to appellee, and to contract that it would procure it for him in a company that they would select ; and to hold that appellant would not be liable for the breach of such contract simply because it is beyond the express power conferred, would be to carry the doctrine of ultra vires to an unprece- dented extent. This doctrine must have a reasonable con- struction." 1 If a mortgage provide that on foreclosure there shall be retained out of the proceeds of the sale " the principal, in- terest, and premiums " then due, and all fines and penalties due under the by-laws, the association has no right to retain the monthly " dues " on the mortgagor's stock. 2 Nor is the mortgage a security for the " fines " unless it is expressly stipulated in the mortgage that it shall be a security for their payment; and if it does not contain such a stipulation, and the mortgagor pay fines, he cannot, on foreclosure, claim credit on his mortgage for the amount thus paid. 3 H'],ir;iL'o Building Society v. pany, 04 Ga. 5C2 ; s. C. 20 S. E. Crowell, 65 Til. 453 ; Montgomery, Rep. 101. i lion v. Robinson, 69 - Pagan v. People's Saving and Ala. Loan Association, 55 Minn. 437; bhe asssociation to re- s. c. 57 N. W. Rep. 142. New Jer- cover the amount LI has paid for sey, etc., Co. v. Bachelor, 54 N. J. in urance, it must aver what Eq. 600 ; S. c. 85 Atl. Rep. 745. amounl if paid. Butler V. Mutual 3 Clarkville Building and Loan Aid, Loan and Investment Com- Association V. Stephens, 26 N.J. 289. MORTGAGES. 209 The directors of a building association were empowered, after four years had expired, to double the amount of pre iniums to be paid each week. It was held that the mort- gage did not embrace the increase, the terms of the mort- gage not expressly covering it. 1 Sec. 289 — Amount One Shareholder Can Borrow. In keeping with the original plan of building associa- Eq. 351 ; Hamilton Building Asso- ciation v. Reynolds, 5 Duer 671 ; Hazel, etc., Association v. Groes- beck, 41 Leg. Int. 16. 1 Home Building Association v. Boning, 7 Wkly. L. Bull. 174 ; S. C. 10 Araer. L. Rec. 626. An advance made after the re- cording of the second mortgage given for the purchase money, un- der an agreement inserted in the prior mortgage, is subject to such second mortgage. The first mort- gagee had no actual notice of the second mortgage, although it was recorded. Pierce v. Canada Per- manent Loan and Savings Co., 24 Ontario, 426. The by-laws of an association divided its stock into four series of 500 shares each, to be paid for in weekly payments of one dollar. "When the funds amounted to §500, the sum was assigned to some share, which was then termed a "redeemed share,"' and the holder was thereafter required to pay in- terest on the amount monthly, be- sides the one dollar a week, until all the shares in that series were " redeemed." A shareholder had $500 assigned to him, and gave his note for payment, served by a deed of trust authorizing a sale of the propert} r if default be made in the monthly or weekly payments. It was held that default in the pay- ment of the dues was the default in the weekly payments referred to in the trust deed, and author- ized a sale of the property. Wil- sons. Schoenlaub, 99 Mo. 96 ; s. c. 12 S. W. Rep. 361. If the bill or complaint to fore- close the mortgage proceed upon the theory that only the principal and interest is due and not that on assessment on the stock is due, there can be no recovery for the latter. Cummings v. Citizens' Building, Loan and Savings Asso- ciation, 142 Ind. 600 ; s. c. 42 N. E. Rep. 213. If the mortgage is a security for dues and premiums it remains such as long as the shares of stock are in force. Haynes v. People's Building, Loan & Savings Associa- tion, 2 Ohio N. P. 181 ; s. c. 3 Ohio Dec. 228. Concordia, etc., Ass'n, v. Read, 93 N. Y. 474. A bond and mortgage executed by a member to secure an anti- cipated loan, cannot, if the loan be made, not be retained as security for items owing by the mortg which were to be deducted from the gross amount of the loan when made, where they were neither given nor received as security for such items. Furey v. Knights of Pythias Building and Loan Asso- ciation (N. J. Ch.), 34 Atl. Rep. 380. In such an instance the mem- ber may maintain an action to can- cel the mortgage, although some 300 BUILDING AND LOAN ASSOCIATIONS. Ch. XIV. tions, it is sometimes provided that a member can own not to exceed a certain number of shares. But, if a shareholder own more than the by-laws permit him to own, and he ob- tain a loan by reason of such ownership to the full extent of the number of shares he owns, he cannot, nor can his creditors, set up such by-laws as a defence to a foreclosure of the mortgage. 1 So a wife giving a mortgage for money borrowed on the limited number of shares in her name, is estopped from showing that her husband subscribed for them in her name. 2 Sec. 290 — Assignment of Mortgage. If a building association has the power to borrow money, it has the power to assign mortgages made to it by its bor- rowing members, to secure the amount borrowed ; and the power of assignment may be said to be measured by the power to borrow. 3 Indeed, it would seem that an associa- tion is not thus limited in assigning its mortgaged securities, but possesses a general power of assignment. 4 If the associa- tion be solvent, such an assignment may be made for the payment of an order given to a member on his withdrawal ; and it does not violate a statute providing that at no time shall more than one-half of the funds in the treasury be ap- plicable to the demands of withdrawing stockholders if the association receive the interest on the mortgage assigned. 5 Whatever payments the mortgagee may make to the as- signee will inure to his benefit, the same as if he had made it items or amounts were covered by See Munhall v. Boedecker, 44 111. the mortgage, the association in- App. L31 ; and Murray v. Scott L. sistiiiK that it also cover items that R., 9 App. Cas. 519; s. C. 53 L.J. i: didnot. Id. 745; 33 W. R. 173; 51 L. T. 462. 1 Victoria Building Association Manahan v. Varnum, 11 Gray, 405. /-. ^.rbeiter Bund, 6 Wkly. L. Bull. But not if deposited with a state 823 ; s. c. I" Amir. L. Rec. 485. official as security, Trowbridge v. 2 Ohio Building Association v. Bamilton (Wash). 52Pac. Rep. 328. Leyden, 1 Wkly L. Bull. 126 ; s. c. 4 Ulster v. Permanent Building ■1 A.mer. L. Rec. 765. Society v. Glenton L. R. 21 Ir. Ch. 8 North Hudson Mutual Building 121. See Itunmey & Smith. In re and Loan Association v. First Na- 66 L. J. Ch. 641 ; s. c. [1897] 2 Ch. tional Bank, 79 Wis. 81 ; S. C. 47 351 ; 76 I, T. 800; 45 W. R. 678. •;. \v. Rep. 800; LI L. R. A. 845; B Quein v. Smith, 108 Pa. St. 325; 85 \im.t. .V Eng. Corp. Cas. 231. s. c. 42Leg. int. 386. § 292. MORTGAGES. 301 direct to the association j 1 and if the borrower had the right, given him before the assignment, to appropriate his stock to the payment of the mortgage, the assignment will not deprive him of such right. 2 Where it is shown that the di- rectors or trustees made the assignment, it will be presumed that they had the power to make the assignment ; 3 and this presumption would no doubt be entertained if the president should make the assignment, following the method usually followed by such officer in executing contracts on behalf of the association. Sec. 291 — Not Assets for Purposes of Withdrawals. If a member desire to withdraw from an association, he cannot insist that his right to withdraw is applicable to the funds loaned by the association, and which are represented by the mortgages. Such right is limited to the funds on hand, and is not available as respects funds loaned, which are to be returned to the association in small instalments extending over a period of years. 4 Nor can the mortgages be considered as assets in determining the amount on hand necessary to pay off unadvanced shares on winding up the association. 5 Sec. 292— Tender of Amount Due. It is sometimes desirable to tender to the mortgagee the amount due it under the mortgage ; and in a mortgage be- tween private individuals the amount to tender is easily ascertainable. But in the case of a building association mortgage, it is a very difficult matter to determine, without access to the books of the association, how much is due when default has been made. The courts have, therefore, allowed an expressed willingness to pay the amount due, when ascer- tained, to be substituted for an actual tender ; and it is i North Hudson M. B. & L. As- L. R. A. 752 ; 35 Amer. & Eng. sociationu. First Nat. Bank, supra. Corp. Cas. 244. 2 Quein v. Smith, siqira. 5 Lister v. Log Cabin Building 3 Manahan v. Varnum, 11 Gray, Association, 38 Md. 115 ; Barton v. 405. Enterprise Loan and Building As- * State v. Redwood Falls Build- sociation, 114 Ind. 226 ; s. c. 16 N. ing and Loan Association, 45 Minn. E. Rep. 486; 13 West. Rep. 816; 154 ; s. c. 47 N. W. Rep. 540 ; 10 22 Amer. & Eng. Corp. Cas. 612. 802 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. effectual for the purpose of stopping the running of interest and as a bar to costs of a suit to foreclose the mortgage. 1 An expressed willingness to pay is even sufficient to enable the mortgagor to maintain an action for an injunction to restrain the sale of the land mortgaged under a power of sale inserted in the mortgage. 2 If the association, at any time after the expression of a willingness to accept the offer, expresses its intention to accept such offer, then the interest will again begin to run, and will so continue until the money is brought into court. 3 Sec. 293 — Marshalling Assets — Lien on Stock — Second Mortgagee. Conflicts arise often between the association and creditors of the society concerning the right of the latter to resort to securities held by it. This is particularly true where the society holds the first mortgage and also a lien on the stock of the borrowing member, and the creditor is a second mortgagee on the same real estate. In such a case the latter has the right in equity to compel the former to look primarily to such stock. 4 The fact that a creditor of the mortgagor has levied his execution on the stock will not defeat the second mortgagee's right to insist that the stock be first sold and the proceeds applied to the building society's mortgage. 5 1 Columbian Building Associa- 4 Herbert v. Mechanics' Building tion of East Baltimore v. Crumb, and Loan Association, 17 N. J. Eq. 42 Md. 192. 497. This case reverses the same 2 Forsyth v. Hibernia Building case under the name of The Me- Association, 1 Mackey (D. C.) 205. chanics' Building and Loan Asso- 8 Columbian Building Associa- ciation of New Brunswick v. Con- tion of East Baltimore v. Crumb, over, 14 N. J. Eq. 219. To same supra. effect Phillipsburg Mutual Loan If the mortgagor borrow tern- and Building Association?'. Hawk, porarily from a bank a sum sufli- 27 N. J. Eq. 355 ; Red Bank Mutual cierrl to pay <>ir the mortgage, and Building and Loan Association v. on refusal by the association to ac- Patterson, 27 N. J. Eq. 223 ; Wash- cept the money tendered, returns iugton Building and Loan Associa- te amount to tin- bank-, (he ten- tion v. Beaghen, 27 N. J. Eq. 99; der is ineffectual for :in\ purpose;. Moxon v. Berkeley, etc., Society, Middle Stales, etc, Co. V. I lagers- 59 L. Jr. Ch. 524. town, etc., Co., 82 Bid. 506; s. c. 6 Phillipsburg Mutual Loan and :;:; At I. Rep. 886. § 293. MORTGAGES. 303 Where several building associations made loans at the same time to an individual upon mortgages on the same lot, and some of them did not require the mortgagor to as- sign them his shares of stock as it had habitually done, it was held that the other loaning associations, which had taken assignments of their own stock from the borrower, could not insist that the first associations should be postponed to the extent of the value of their stock, on the ground that if they had taken assignments of such stock the securities to that extent would have been enhanced and all thereby benefited. " This claim of equity," said the court, " is based on the as- sumption that the complainants and the Empire Association, as between them and the other associations which obtained collateral security of the stock to the full extent of their loans, were bound to obtain such security to a like extent. There was no agreement between the mortgagees that any col- lateral security whatever should be obtained ; but it is in- sisted 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 associations. That the complainants intended to obtain col- lateral security on stock to the full amount of their loan is not questioned. 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." l But where M. executed a mortgage on two lots to a build- ing association, assigning to them stock as collateral ; and he afterwards gave a mortgage on one of these lots, and, after the execution of the second mortgage, he assigned to T. and O. his interest in the five shares of stock pledged, it Building Association v. Hawk, tion v. Masonic 1 [all, etc., Associa- supra. tion, 29 N. J. Eq. 389. 1 Union Building Loan Associa- 30-4 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. was held that the second mortgagee could compel the build- ing association to resort to the lot on which he had no mortgage first, although he had no equity to compel the ajmropriation of the stock to the payment of the first mort- gage. T. and O. were bona fide purchasers, and could not be prejudiced, although, if M. had held the stock, the second mortgagee could have also compelled the association to first resort to that. 1 Where a person, whose shares had been redeemed, exe- cuted a trust deed upon his property to secure payment of his dues, interest, fines, etc., and then gave another deed of the same property to secure a debt to a third person, it was held that upon his default to pay his dues, interest, and fines, and the sale of the property b} T the building associa- tion, the debtors and other creditors could elect to have the proceeds of the sale invested, and the unpaid monthly dues, interest, and fines paid monthly out of the interest, and as much of the principal as might be necessary, or to have the present value of these monthly dues and interest ascer- tained, on the principle of annuities, and paid out of the proceeds of sale to the association. 2 Sec. 294— Marshalling Assets— Pennsylvania Cases. A somewhat different rule prevails in Pennsylvania from that prevalent in the cases cited in the preceding section, which renders it desirable to state it apart from the doc- trine of that section. In an early case a building society had obtained a judgment against one Sutton for the full amount of its mortgage, less the premiums, which were not recoverable. Sutton had assigned his shares of stock to a third person, but the association refused to admit the a soignee as a stockholder, and suit was brought by him ;i!_ r ;iinst the association for that reason. The court decided that payments of dues on the stock should not be regarded as working an extinguishment to that extent of the amount due on the mortgage,- for to so hold would be giving the association an additional facility for obtaining excessive 1 Ki-illy v. Mayor, 12 Beas. (N.J.) 2 Winchester Building Associa- I •;,,. 55. " tion v. Gilbert, 23 Gratt. 787. § 294. MORTGAGES. 305 interest. It was also said that the debtor was not com- pelled to give up his stock whenever suit was brought against him on his bond and mortgage. The assignee was, therefore, entitled to maintain his suit. 1 From this case arose the doctrine that only the debtor, and in the absence of an election on his part, the society only, could make the application of payments, and that a purchaser at the sale could not require anything to be done which either the borrower or society had not seen fit to require. The facts involved in this case were these : One C. had given a mortgage and assigned his stock to the Tradesmen's Loan Association. He was a member of the association. Subsequently he gave a judgment to the Spring Garden Loan Association upon the same property, but subject to the first mortgage. He then made an assign- ment for the benefit of his creditors, and the mortgaged premises were sold by the sheriff to the latter association, subject to the first mortgage. C.'s assignee then notified the Tradesmen's Loan Assosiation of the assignment, and that he claimed the stock assigned to it as collateral security, demanding that it collect the whole amount of the mortgage and not allow any deduction for C.'s payments on the stock. After that the association brought an action of scire facias on its mortgage, and the Spring Garden Asso- ciation claimed that the stock payments made by C. upon the stock held as collateral by the Tradesmen's Loan Asso- ciation should be applied to part payment of the mortgage debt. As we have seen, the right of the Spring Garden Association to have such an application of these payments was denied on the ground that only C. or the Tradesmen's Loan Association could insist on their application to the dis- charge of the mortgage. 2 In a later case property mort- gaged to an unincorporated building association was sold by the sheriff upon a judgment against the owner to L., 1 North America Building Asso- St. 465 ; and Hughes' Appeal, 30 ciation v. Sutton, 35 Pa. St. 463 ; Pa. St. 471. s. c. 78 Am. Dec. 349. See, on the 1 Spring Garden Association v. right of the association to a bor- Tradesman's Association, 46 Pa. rower's stock, Kupfert v. Gutten- St. 493. berg Building Association, 30 Pa. 20 306 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. who was notified before the sale that the purchaser would take the property subject to the building association's mortgage. The latter having brought suit, L. claimed credit for the stock payments made by the mortgagor ; but the court held that there having been no appropriation of the stock to the debt by either the borrower or the association, it could not be compelled by the purchaser of the fee of the land mortgaged. 1 In a case subsequent to this in point of time the facts were substantially as follows : II. was the owner of property on which a building association held a first, and one R., a second mortgage. S. had a judgment against II. for §1,400, and he took out an execution, and H.'s stock, held by the association as collateral security for the loan, was sold, he, S., becoming the purchaser, subject to the association's claim upon it. The association having reached the limit of its chartered existence, and being in the process of winding-up, the board of directors by resolu- tion directed the president and secretary to assign to S. the mortgage given it by H., upon S. paying it the arrearages due on the stock, amounting to $73.14. This arrangement was consummated. Between the passage of the resolution and the assignment of the stock, suit was brought on the mort^aofe in the name of the association against II. for benefit of S. H. at no time had ever been six months in arrears in the payment of his dues or interest on the mort- gage; but judgment was taken against him by default for $2,346.37, and execution issued thereon. R., the second mortgagee, then petitioned the court to open the judgment and let him defend ; but before the trial heobtained a judg- ment on bis mortgage and purchased the land at sheriff's sale on an execution issued upon the judgment. On the trial S. got ;i verdict for ssl.7~> the amount he had paid the association for the assignment of the mortgage, wit h interest thereon, and judgment was entered on the verdict. The court, reversed the case, and in so doing said of the ap- plication of tin- stock-payments to the mortgage: "Either of the original parties mighl have made such application before the levy of S.'s attachment, but this was done by 1 Lint '•. Germantown Building Association, 89 Pa. St. 15. § 294. MORTGAGES. 307 neither of these parties, and so S., by virtue of his attach- ment, took the place of EL, and as the company might, at H.'s instance, had he returned the stock, have paid to him the value thereof, and retained the mortgage, so might it have done with S. In such a case, however, It. could not In- heard to complain, for his position as second mortgagee could not be in the least affected thereby. This stock be- came collateral security, not for his benefit, but for thai of the association, hence its surrender would have put him in no worse position than he was when his mortgage was exe- cuted. Surely then Ii. could not intervene to prevent the disposition of collaterals, in which he had no interest." Having then stated that the borrower might elect to draw his stock and compel the association to proceed upon the mortgage, the court says : " 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 could not put R.'s mortgage in a worse position because S. held the first lien rather than the company. S. was undoubtedly by act of law owner of his stock, which was worth some $2,200, and that amount he had the right to demand of the com- pany, or its equivalent. The company, on 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 this case it was bound to do, it thereby clothed him with all the rights 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 R. had nothing to do." 1 1 Economy Building Association 7 Phila. 189 ; Springville Building v. Hungerbuehler, 95 Pa. St. 258. Association v. Raber, 24 Pitts. L. Tbe following cases may also be Jr. 23 ; s. c. 33 Leg. Int. 329 : 1 1 examined, all from Pennsylvania ; Phila. 546 ; Harris' Appeal, 18 W. Selden v. Reliable Savings and N. Cas. 14; Kingsessing Building Building Association, 32 P. F. Association v. Roan, it W. N. Cas. Smith, 336 ; s. c. 2 W. N. Cas. 481 ; 15; Association v. Wall, 7 Phila. Kreamer v. Springfield Building 189; In re Treffeison, :: Kulp, '-'-os • Association, 6 "W. N. Cas. 267; Oliver's Estate, 1 Del. (Pa.) 358; Building Associations. Eshelbach, Whilden v. Broomall, 1 Del. (Pa.) 308 BUILDESTG AND LOAN ASSOCIATIONS. Cll. XIV. Sec. 295 — Marshalling Assets — Judgment Creditors. A mere judgment creditor of the borrower does not have the same right to demand a marshalling of the assets as does a subsequent mortgagee or purchaser of the land mort- gaged. " 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 diligence, to the favor of equity. Neither natural justice nor public policy enacts a preference for him over adverse claimants." 1 Sec. 296— Marshalling Assets— Rights of Third Per- sons Cannot he Prejudiced. The rights of third persons cannot be prejudiced by the 142 ; Houlett's Est. 2 Chester. (Pa.) 511 ; Kelly v. Accommodation Savings Fund, 2 Phila. 237. On default of a mortgagor his land was sold under the mortgage for enough to cover the entire mortgage debt. A judgment creditor of the mortgagor attached his stock in lands of the association, which had been pledged for the payment of the mortgage debt, and therefore the mortgagor elected to apply his stock in payment of his debt to the association. A second judgment creditor, who was next to the association, claimed that the borrower's election was bind- ing. The court recognized the doctrine of subrogation, and lull I, that, as at the time of the attach- ment neither the association nor tin- borrower had exercised any rights over the stock, the attach- m< -tit gave a legal title and that t he second judgment creditor had no standing in court. Central Building Association v. Schmitt, 12 W. N. Cas. 239. \ member of an English Society obtained a loan from it, in respect of certain shares, an approprial ion of a urn of money, repaymenl of which was secured by mortgage to the society. Afterwards he made default in such payments, and also discontinued his subscriptions. He was then entitled, by the rules of the society, to have his subscrip- tions placed to his credit on his re- payments under the mortgage, but he made no requests therefor, and it was not done ; but the society en- tered on the mortgaged property, and ultimately sold it for a sum which repaid all moneys due the society, and left a surplus for the member. He had mortgaged the equity of redemption in the prop- erty to A., and his other property* including his subscriptions to the society, had been assigned to B. It was held that as between A. and B., the doctrine of marshalling ap- plied, and the repayments to the society must he apportioned rata- bly between the mortgaged prop- ertyand I lie subscriptions. Moxon v. Berkeley Building Society, 59 Law .1. Ch. 524. 1 Herbert v. Mechanics' Building and Loan Association, 17 N. J. Eq. 497; Weiss's Appeal, 5 W. N. Cas. 428; Knell v. Green Street Build- ing Association, 34 Md. 67. § 290. MORTGAGES. 309 right of a- lienholder to Lave the mortgaged securities so marshalled as to protect his security. Thus, where a bor- rower executed a mortgage on two lots to a building asso- ciation, at the same time assigning it five shares of stock as collateral security, and then gave complainant a second mortgage on one of these lots, and finally, after the execu- tion thereof, assigned to S. and O. his interest in these five shares ; it was held, that although the complainant could require the association to sell first the lot on which it had an exclusive lien, he had no equity to compel the appropria- tion of the stock to the payment of the debt. " The com- plainant had no lien upon the property [the shares of stock], 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 qualifica- tions, and is never applied except where it can be done without injustice to the creditor, or other party in interest, having a title to the double fund, or injury of a third per- son, over whom the party claiming the benefit of the principle 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 asso- ciation. 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 com- plainant 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." 1 1 Reilly v. Mayer, 12 N. J. Eq. 55. 310 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. See. 297— Marshalling Assets — Notification of Prior Mortgagee of Subsequent Mortgagee's Rights. If the previous mortgagee or lienholder desires to preserve his rights and compel the prior mortgagee to resort to that fund or property to which he has the exclusive right to re- sort, he must notify such prior mortgagee of his right to compel a marshalling of the assets before such prior mort- gagee has exercised his right to exhaust that property to which only he can resort. 1 As a logical result of this rule it follows that if a building association release its claim on that property to which it has the exclusive right to resort before notification of the rights of the persons who can re- sort only to the property not released, it will not be post- poned to the rights of the latter, but can still enforce its right against the property. 2 But, it has been held, that where a building association not only held a mortgage on certain land, but had also taken an assignment of certain shares of stock of the borrower as collateral security, a re- lease of the stock would postpone the association as to a second mortgagee, to the extent of the value of such stock, the association, at the time of the release, having actual notice of the existence of the second mortgage. 3 Sec. 298 — Pursuing Two or More Remedies. If the association lias two or more remedies it is not bound to pursue one to the exclusion of the other, unless the pursuit of one amounts to the election of a cause of action to the exclusion of another, like the waiver of a tort and bringing an action in assumpsit precludes a second action in toi't lor the same damages. Thus, where the rules of a society provided that if a borrowing member defaulted in his payments for six months the directors should appoint a person to collect the rents and profits of the premises mort- gaged; and if such rents and profits were insufficient, or 1 [Jniontowu Building and Loan second mortgage is not notice to Association's Appeal, 92 Pa. St. 200. the first mortgagee. , Id. Quakertow n hiiildin^and Loan :t Washington Building and Loan iciation v. Sorver, 88 Leg. tnt. Association v. Blaghen, ~7 N. J. The mere recording of the Eq. '.•'.». § 299. MORTGAGES. 311 the member refused to allow the person so appointed to collect them, or refused to collect them himself and apply them to the debt when requested, then the directors should absolutely sell and dispose of all or any part of the prem- ises so mortgaged, it was held that if the society could maintain an action upon the covenant at all it might resort either to that remedy or to the remedy prescribed by the rule at their option. 1 Sec. 299 — Action to Foreclose. Where the action be at law or in equity the method of computing the amount due is the same. Where codes have been adopted, the usual method under them for the fore- closure of ordinary mortgages may be pursued ; but where the distinction between the practice at law and in equity is maintained, then a suit in equity to foreclose can be main- tained. Either party has a right to apply to a court of equity to fix the amount actually due on the security, with the view, on the one hand, to the enforcement of it in case of failure to pay according to condition ; or, on the other, to a redemption by the payment of the true amount found due. 2 The action may be upon both the bond and mort- gage, or upon either of them. 3 Either the amount due the association, or facts be stated from which that amount can be ascertained, should be stated in the complaint or bill. 4 In an action on the note given for the loan, where the pay- ment of the note depends on the payment of assessments made, it is not necessary to allege the manner in which the assessments were made. 5 All that can be included in the account is the actual arrears and charges standing against the borrower unsatisfied at the time of the decree, made up i Reeves v. White, 17 Q. B. 995 ; ing, 37 111. App. 274 ; Buist v. Fitz- s. c. 16 Jur. 637 ; 21 L. J. Q. B. 169 ; simons, 49 S. C. 130 ; 21 S. E. Rep. 16 J. P. 115. 610. 2 Franklin Building Association 6 ,Borchus v. Huntington Build- v. Mather, 4 Abb. Pr. 274. ing, Loan and Saving Association, 3 Juniata Building Associations. 97 Ind. 180 ; Wohlford v. Citizens Hetzel, 103 Pa. St. 507. Building, Loan and Savings Asso- 4 Mutual Building and Loan As- ciation, 140 Ind. CG2 ; s. C 40 N. E. sociation v. Tascott, (111.) 28 N. E. Rep. 694. Rep. 801; 40 Amer. & Eng. Corp. The constitution and by-laws, Cas. 361 ; 25 Ch. News, 92 ; modify- under the Indiana practice, are no 312 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. of the items enumerated in the mortgage, weekly instal- ments, fines (usually), interest, ground rent, taxes, costs, insurance, and the like, if any such be in arrears, deducting whatever credits the borrower is entitled to. 1 Sec. 300 — Defenses. It has been said that if a oorrower desires to set up as a defense that he did not sign the constitution or by-laws he has the burden to show that fact. 2 But it may well be part of the complaint and cannot be made exhibits. Newman v. Ligonier Building, Loan and Sav- ings Association, 97 Ind. 295. 1 Robertson v. American Home- stead Association, 10 Md. 397 ; s. c. 69 Amer. Dec. 145 ; Montgomery, etc., Association v. Robinson, 69 Ala. 413. Where a declaration, in an ac- tion by a building and loan asso- ciation against a borrowing mem- ber on a bond secured by deed to land, contains a complete state- ment of the account between the parties, the notice required by the Georgian Code, Sec. 3968a, as to the status of the account, may be dispensed with. Hawkins? 1 . Amer- icans National Building and Loan Association, 96 Ga. 206; s. c. 22 S. E. Rep. 711. In Indiana, in an action to fore- close a mortgage, it is not neces- sary to allege under Elliott's Supp. Sec. 854 (Acts 1885 p. 86 see. 15), providing thai associations organ- ized prior to tin' passage of the act of which this section is a part "may accepl the provisions of this act" by filing a written acceptance, etc., it appearing from the art, taken as a whole, t hat its intenl ion bo enlarge, rather than re st rid , the powers of prior existing ; , ociations. 1 tatfleld v. I [unting- ton < !ity Building, Loan ami Sav- ings Association, 132 Ind. 149 ; S. C. 31 N. E. Rep. 532. Where the premium on the loan is stated in the bill at a certain sum, which is less than the per- centage bid, the association cannot recover a larger sum for the pre- mium than that alleged. Mutual Building and Loan Association v. Tascott (111.), 28 N. E. Rep. 801; 25 Ch. L. News, 92 ; 40 Amer. & Eng. Corp. Cas. 144. Where the contract authorizes the association to foreclose upon the land mortgaged to secure the sum borrowed or rely upon the shares of the borrowing member when matured for payment of the loan, and the by-laws vest the dis- cretion to foreclose in the board of directors, the board will not, by injunction, be compelled to fore- close the mortgage after a sale of the bond by the borrowing mem- ber subject to the mortgage, so as to release the borrowing member's shares from liability. Redhefferv. House and Home Building and Loan Association, 2 Mo. App. Repr. 911 ; s. c. 64 Mo. App. 96. For amount receivable in Kan- sas, see M nrphy r. ( ioodland Build- ing & Loan Association, 2 Kan. \!T 330; S.C. 43 Pac. Rep. 863. 2 Niceley's Estate, 8 Kulp. 47; Building Association v. Lyons, 2 Kulp. 109. § 300. MORTGAGES. 313 doubted if that omission would be a defense ; for the reason that one cannot plead his own neglect of duty as a defense to the right to recover. Nor can a borrower, to a complaint or bill to foreclose a mortgage, plead irregularities by the association in granting the loan. 1 A vote to close the asso- ciation does not affect a borrowing member ; nor impose upon him a greater burden. 2 A building association which voluntarily closes its business, in violation of its charter and by-laws, requiring its continuance for ten years, unless within that time each share of $100 shall, by its earnings, reach the value of $200, forfeits its rights, it has been held, to foreclose a mortgage given to secure the purchase of its stock or to collect monthly instalments subsequently becom- ing due by contract of sale. 3 The fact that the association has retired the outstanding valid stock furnishes no defense for a failure of the mortsra^or to refund the monev bor- rowed on his notes ; for such assets in the hands of the bor- rower belong to those members who kept their stock alive by the payment of dues, and the association being entitled to collect for their benefit. 4 The giving of the mortgage estops the mortgagor to deny that he is not a member, if there be no evidence that the bond and mortgage were taken with a view to evade the provisions of the statute which prohibits loans to others than members. 5 Indeed, the ques- tion of estoppel has been pushed a little further than this, by holding that all claiming through or under the borrower are estopped to deny his capacity to make the loan. 6 The borrower is also estopped to show that the association was 1 Conservative Building and Loan Kan. 549. Mechanics' B. Ass'n Association v. Cady, 55 111. App. v. Stevens, 5 Duer, 676. 469 ; Reynolds v. Georgia State, 3 Sumter Building and Loan As- etc, Ass'n (Ga.), 29 S. E. Rep. 187. sociation v. Winn, 45 S. C. 381 : The fact that the acknowledg- s. c. 23 S. E. Rep. 29. ment of the mortgage was taken 4 Hatfield v. Huntington City by an officer and stockholder of Building, Loan and Saving Asso- the association is no defense. Hor- ciation, 132 Ind. 149; s. c. 31 N. E. ton v. Columbian Building and Rep. 532. Loan Association, 6 Wkly L. Bull. 5 Howard Mutual, etc., Associa- 141. tion v. Mclntire, 3 Allen, 571. 2 Hekelnkaemper v. German 6 Kadish v. Garden City, etc., Building, etc., Association, 22 Association, 47 111. App. 602; af- 314 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV '. not legally incorporated. 1 The adoption of an illegal by-law does not absolve the debtors of the association from com- pliance with their contracts unaffected by the objectionable by-law. 2 Sec. 301 — Abandonment of Plan of Association. We have already seen in the preceding section what is the effect of a voluntary closing of the association upon a mortgage given to secure the payment of instalments on stock; 3 but where the mortgage is given for money bor- rowed quite a different rule prevails. It is quite clear that a vote to close cannot add any greater burden to the bor- rowing member's load; 4 and it may even lighten that bur- den by requiring him to only pay back the money he actu- ally received with interest, indeed, give him the benefit of the usury laws to recover a penalty, 5 and for all fines, pen- alties, or weekly dues he may have paid. 6 Where a building association loaned money which was to be paid at the maturity of certain shares of its stock owned by and pledged to it by the defendant, which stock was to be paid for in instalments, and was to be credited with the earnings to be paid from the loan of the instalments so paid, and the association subsequently ehangedits by-laws so as to firmed, 151 111. 531 : 38 N. E. Rep. Div. Ill ; s. c. 53 L. J. Ch. 774 : 51 236; 26 Ch. L. X. 258; Conserva- L. T. (X. S.) 433; 32 W. R. 773; tive Building and Loan Associa- Holgate v. Shutt, L. R. 28 Ch. Div. t ion r. ( !ady, 55 111. App. 469. No 111 ; s. c. 54 L. J. Ch. 436 ; 51 L. defense can be urged to an exe- T. (X. S.) 673 ; 49 J. P. 228. cutcd ultra fires contract. Groh- 8 Sumter Building and Loan As- tnann v. Brown, 68 Mo. App. 630. sociation v. Winn. 45 S. C. 381; 1 Williamson v. Kokomo Build- s. C. 23 S. E. Rep. 29. ing and Loan Association, 89 [nd. 4 Hekelnkoemper v. German 389. Second Manhattan B. Ass 'n, v. Building, etc., Association, 22 Bayes, I AM,. App. Dec. L83; s. c. Kan. 549. 2 Keyes, 192. B Sumter Huilding and I. nan As- - Orangeville Mutual Saving sociation v. Winn, 45 S. C. 381; Fund and Loan Association r. s. c. 23 S. E. Rep. 29. Young, i) W. N. ('as. 251 : s. c. 37 6 Strauss v. Carolina Interstate Leg. Int. 175, Building.'ind Loan Association, 117 I or the effed of auditing ao- N. C. 308; s. c. 23 S. E. Rep. 450. counts under the English Statute, As elsewhere shown, the rule is ee Holgate v. Shutt L. R., 27 Ch. sometimes different. § 302. MORTGAGES. 315 authorize it to read making assessments on stock of non- borrowing members, and fix a different time for the matu- rity of the debts of borrowing members, the association thereby rendering itself powerless to perform its contract with the defendant, it was held he entitled to be credited with the amount he had already paid in, and, having paid more than the original debt, it was held he was entitled to be discharged. 1 Sec. 302 — Fraudulent Representations of Officers of Association, An association may be bound by the representations of its officers concerning its loans ; and so it will be bound if it authorize them to make representations con- trary to its by-laws. Thus it was held that a loan asso- ciation could be compelled to accept such a sum in satisfac- tion of a mortgage given by one of its members, and held by it, as accords with the representations in reference to its by-laws, made by the secretary, in his dealings with the plaintiff, at the time of making the loan. 2 But a representa- tion that the profits of the association would be shared equally by all the members cannot be held untruthful where it appears that all profits of a particular series of stock were accumulated until that series became par, when all stock- holders in that series were entitled to the par value of their stock; borrowers being credited with such amount, and others being paid cash. And a representation in the asso- ciation's circulars that it would be better and cheaper to borrow money of it than elsewhere is no ground for relief, though it prove untrue, where it appears that this was 1 International Building and re Middlesborough Redcar, etc., Loan Association v. Braden (Tex. Building Society, 58 L. J. Ch. 771 ; Civ. App.), 32 S. W. Rep. 704. 5 T. L. R. 516. The rules of an association must 2 Sawyer v. Menominee Loan and be taken to contemplate a " going Building Association, 103 Mich. concern." Brownlie v. Russell, 8 228 ; S. C. 61 N. W. Rep. 521. Neu- App. Cas. 235 ; S. c. 48 L. T. 881 ; man v. N. Y. Mutual, etc., Ass'n, 47 J. P. 757 ; Sibun v. Pearce, 44 17 N. Y. App. Rep. 72 ; S. C. 44 N. Ch. Div. at p. 370 ; 63 L. T. 123 ; Y. Supp. 896. 38 W. R. 658 ; 6 T. L. R. 262 ; In 316 BUILDING AND LOAN ASSOCIATIONS. Ch. XIV caused by the high premium bid by the complainant for the loan, and the fines incurred by him by failure to pay instal- ments at maturity, and that otherwise the loan would have been at less than the usual rate of interest. 1 Sec. 303— Set-off. If a member of a building association hold distinct claims against the association, he is just like any creditor of the association who is not a member ; and when suit is brought to foreclose his mortgage he may plead the amount of his claim as set-off to the same, as if the association had sued him upon any other kind of a contractual debt. 2 So a share- holder who has made a mortgage can set-off as against the amount due by him to the association under the mortgage, claims held by him against it, consisting of balances due from the association to members who had withdrawn from the association and assigned them to the borrower ; and there being nothing in the constitution of the association which made it inequitable to allow the set-off, having due regard to all the rights of others. 3 But he cannot prove as a sot-off, losses suffered by him by reason of suspension of business by the association. 4 Sec. 304 — Evidence on Foreclosure Suit. The introduction of the bond given for the loan and the mortgage given to secure it, together with the entries in the books of the association showing the amount due, is suffi- cient to authorize a decree of foreclosure. 5 Usually the by- laws of the association are introduced, to determine the manner of carrying on the association, or its plan. 6 1 Winget v. Quincy Building and 8 Hennighausen v. Tisher, 50 Homestead Association, 128 01. 67; Md. 583. s. C. 21 N. E. I ;>•]>. 12. 4 Johnston v. Building Associa- Thal the fraudulent representa- tion, 104 Pa. St. 394; s. c. 41 Leg. tionsofa promoter may have been [nt.233; 14 W.N. C. 244; 32Pitts. condoned by the stockholder, sec L. Jr. 460. Bukerv. Leightor Lea Ass 'n., 46N. s Richards v. Bibb County Asso- rt. Supp. 35; S. c. 18 \|.|.. Div. 548. ciation, 24 Ga. 198. - Remington v. Sing, It A.bb 9 It is error to exclude evidence Pr. 278. Franklin B. Ass'n, v. that the scries of stock to which Blather, I Abb. Pr. 274. the dcfendent belonged had S305. MOltTGAGES. 317 Sec. 305 — Decree — Sale. Where the stock of the borrower is assigned as collateral security, and its value is not credited on the amount other- wise due when the decree of foreclosure is rendered, such stock should be ordered lirst sold and credited on the decree of foreclosure. The shares should be sold subject to all dues which accrued before and after trial and arc unpaid, or sold freed from all dues which accrued prior to the sale. In that case, the dues which accrue after the trial and before the sale should be paid first out of the proceeds of the sale. 1 The sale should be for cash, to pay the expenses of the sale and the amount then actually due ; and as to the residue, on such terms of credit as would meet and discharge the monthly dues and the interest on the loans, as the same may accrue from time to time between the date of sale and the winding up of the association, whenever that may be. 2 (distinguishing Licking County- Saving, Loan, and Building Asso- ciation Bebout, 29 Ohio St. 252 ) ; Dominion Building and Loan As- sociation v. Gordon, 26 N. S. 551. After breach of the condition of a mortgage given to secure the payment of stated dues, interest or loans advanced, and fines, the decree in an action to foreclose should be confined to the amount of such dues, interest, and fines, then due and unpaid. In comput- ing the time for which notice of a sale on execution should be adver- tised before the day of sale, the day on which the notice was first published may be included, and the day of sale must be excluded. Hagerman v. Ohio Building and Saving Association, 25 Ohio St. 180. "The sum for which the mort- gage was to be foreclosed was such a sum as would, by the constitu- tion of the association, be sufficient to redeem the property on the day of the judgment of foreclosure. ' at the rate of premium,' at which matured, and that it is with a sum equalling the amount of the bond, as these facts, if true, are equiva- lent to a payment of the bond. Charles Tyrell Loan and Building Association v. Haley, 139 Pa. St. 436 ; s. c. 20 Atl. Rep. 1003. A certificate referred to in the mortgage is admissible in evidence. United Savings and Loan Co. v. Cade, 15 Wash. 38 ; s. c. 45 Pac. Rep. 656. The mortgagee or purchaser of the land mortgaged cann'ot compel the association to foreclose the mortgage where the right is op- tional with it. Redheffer v. House, etc., Ass'n, 64 Mo. App. 46. 1 Massey v. Citizens' Building and Savings Association, 22 Kan. 624. 2 Fox v. Cottage Building Fund Association, 81 Va. 677. The recovery must be limited, in the order of sale, to the amount of dues and interest that had accrued at the time of rendering the decree. Risk v . Delphos Building and Sav- ing Association, 31 Ohio St. 517 ; 318 BUILDING AND LOAN ASSOCIATIONS. CI). XVI. Sec. 306— Decree Stands as Security for Future Pay- ments. A decree of foreclosure, where the mortgagor has asserted his right to redeem before sale, by paying the amount judi- cially ascertained, will stand as security for future instal- ments and liabilities. 1 Sec. 307 — Foreclosure and Sale Under Mortgage Does Not Necessarily Terminate Mortgagor's Membership. The foreclosure of the mortgage and sale under the decree does not necessarily terminate the membership of the bor- rower in the association nor extinguish his stock. For in- stance, if the association make the whole amount of the debt out of a sale of the mortgaged premises, without ap- plying the member's stock interest to a reduction of his debt, the membership is not terminated; and more espe- cially is this true if the society continues to collect dues from him upon the shares originally advanced. 2 But if the stock has been assigned as collateral security, and has been applied to a reduction of the amount due under the mort- gage, then a sale of the property mortgaged "terminates the membership of the mortgagor in the association, and the obligation to continue payment of dues in consequence of membership ceases." 3 Sec. 308 — Right of Purchaser of Land Mortgaged. Where the purchaser of the land mortgaged to a building association took the forfeited shares of the defaulting bor- rower and agreed to pay a part of the purchase-money in instalments of a specified amount, he was subsequently held the funds were then selling." sociation, 31 Ohio St. 517. See also Richards v. Bibb County Associa- Sparrow v. Farmer, 26 Beav. nil t ion, 24 < la. 198 ; Ocmulgee Build- s. C. 28 L. J. Ch. 537 ; 33 L. T. 216 ing, etc., Association v. Thomson, 5 Jur. (N. S.), 530; Farmer v I ;. Smith, 4 II. & N. 196; S. c. 28 L Robertson '•. American Home- J. Exch. 226 ; 5 .Jur. N. S. 533, note tead Association, 10 Md. 397 ; B.C. 2 North American Building As- 69 \m. Dec. M. r ) ; Eagerman v. sociation v. Sutton, 35 Pa. St. 463. Ohio Building ami Savings Asso- :l MrCahan v. Columbian Build- ci.it ion. 25 Ohio St. L86; Risk u. ing Association of East Baltimore, Delphos Building and Saving As- 40 Md. 226. § 310. MORTGAGES. 319 liable under the rules of the society to fines for non payment of the instalments. By this arrangement he prac- tically became a member of the association. 1 In another instance the purchaser of the mortgaged property agreed with the association to pay off the debt at the rate of a cer- tain number of dollars per month, and it was decided that he was not to be treated as a member of the association, on default made by him, and that half of his monthly pay- ments should be credited to him on account of dues on the stock. 2 Sec. 309— Discharge of Debt by Sale of Land — As- sumpsit for Remainder Due. A building association mortgage is just like any other mortgage when sale of the land mortgaged has been made under it, or under a decree of foreclosure rendered upon it : its lien is divested. 3 Of course, if the sale of the land mort- gaged does not bring enough to liquidate the amount due the association, the debt is not discharged ; and implied assump- sit will lie for the remainder due. 4 In England it is held, however, that assumpsit will not lie for the mortgage- money, if there be a covenant for its repayment. 5 Sec. 310— Cancellation of Mortgages— May Show Ma- turity of Stock. A mortgagor when sued on his mortgage may alw r ays show that it has been satisfied. Thus, a mortgagor may show as a defense that if the profits w T ere divided in the manner provided by the constitution and by-laws the stock would have matured and the debt therefore be extinguished. 1 Handley v. Farmer, 29 Beav. 4 McCahan v. Columbian Build- 362. ing Association, 40 Md. 226. 2 Capital Hill Building Associa- 5 Middleditch v. Ellis, 2 Exch. tion v. Hilton, 1 Mackey (D. C.) 623; s. c. 17 L.J. Exch, 365 : Sher- 107. See Hemperly v. Tyson, 170 iff v. Glenton, 28 L. T. (N. S.) 65. Pa. St. 385 ; s. c. 37 W. N. Cas. 301 ; It would seem that the suit rnus I 32 Atl. Rep. 1081. be upon the covenant to repay. 3 Germania Building Association Rudge v. Richens L. R.. 8 C. P. v. Neill, 93 Pa. St. 322. 358 : S. C. 42 L. J. C. P. 127 ; 28 L. T. 537. 320 BUILDING AND LOAN ASSOCIATIONS. Ch. XIV. He is not compelled to resort to a mandamus or suit in equity to compel the association to divide and apply the profits to the proper series of stock, and to declare the series matured. The association may show that the stock has not matured or it has met with losses. His answer in such a case is equivalent to a bill in equity. 1 The mortgagor may maintain an action for an accounting and cancelation of his mortgage ; and in such a case the court will ascertain the amount due thereon and name a reasonable day for its payment, and order the property mortgaged sold on default. 2 Upon such a bill the mort- gagor may allege that he was induced to become a borrower of the association by false and fraudulent representations of its officers, and may pray that his stock be canceled ; but he must make out a clear case and not have been guilty of unnecessary delay, at least until he had experimented with the association a few years and not found it as profitable as he had supposed. 3 Equity will grant a prayer for discovery, an accounting, an injunction, and the appointment of a re- ceiver where a complainant alleges that the association, by its constitution and by-laws, promised that when each shareholder had made payments upon his shares of stock, making such shares of a certain value, it would declare the institution closed, and deliver to those who had taken loans their securities to be canceled, and pay to those who 1 Charles Tyrell Loan and Build- s. c. 21 N. E. Rep. 12 ; 25 Amer. & ing Association v. Haley, 139 Pa. Eng. Corp. Cas. 652 ; affirming, 29 St. 470 ; s. c. 48 Leg. Int. 345 ; 27 111. App. 173. W. N. Cas. 244 ; 20 Atl. Rep. 1063 ; The declarations of the secretary Buist v. Bryon, S. C, 21 S. E. as to the amount due does not bind Rep. 537 ; Everman v. Schmitt, 24 the association, unless it be shown Wkly. L. Bull. 56 ; Buist v. Fitz- that he had authority to make such imons, 44 S. C. 130 ; 21 S. E. Rep. an admission. It is not sufficient 610. alone to show that he had charge - Kirks ?\ Durant Building and of the hooks and accounts of the Loan Association, (Miss.), is So. association to render such declara- Rep. 859; Hempstead Building As- tions admissible. Johnston v. Eliz- sociation v. King, 58 Md. 279; abeth Building and Loan Associa- i .(■ v. Schoyer, 20 D. C. 254. lien, nil Pa. St. 394 ; s. C. 41 Leg. swingel v. Quincy Building and Int. 238; 11 W. N. Cas. 244; 32 Homestead Association, 128 111. 67 ; Pitts. L. Jr. 460. §310. MORTGAGES. 321 had simply invested their money the full value of their shares ; that he had made such payments, and the company had declared the institution closed; and that the company has in its possession assets, and refuses to pay him after the lapse of ten years. 1 1 Amer. v. Union Building and Loan Association, 50 N. J. Ch. 170 ; S. c. 24 Atl. Rep. 552. In England the indorsement of the statutory receipt of cancela- tion on a borrower's mortgage pre- cludes the association from mak- ing further claim against the mort- gagor in respect of the debt. Har- vey v. Municipal Permanent In- vestment Building Society L. R., 26 Ch. Div. 273 ; s. C. 53 L. J. Ch. 1126 ; 51 L. T. N. Y. 408 ; 32 W. R. 557 ; affirming, 52 L. J. Ch. 349 ; Sangster v. Cochrane L. R., 28 Ch. Div. 298 ; s. c. 54 L. J. Ch. 301 ; 51 L. T. N. S. 889 ; 33 W. R. 221 ; 49 J. P. 327 ; Robinson v. Trevor L. R. , 12 Q. B. Div. 423 ; S. C. 53 L. J. Q. B. 85 ; 50 L. T. N. S. 190 ; 32 W. R. 374 ; Carlisle Banking Co. v. Thompson L. R., 28 Ch. Div. 398 ; S. c. 53 L. T. N. S. 115 ; 33 W. R. 119. Parts of a loan as year by year dues are paid cannot be canceled ; but such loan must be settled, with such dues and other credits, when the share is fully paid ; and desig- nating the ordinary dues as " dues paid on loans awarded " does not change their nature or application. Seibel v. Building Association, 43 Ohio St. 371 ; S. C. 10 Amer. & Eng. Corp. Cas. 460 ; reversing, 13 Wkly. L. Bull. 265. In an action by a shareholder for an accounting, no inquiry can be had into the association's general affairs, nor settle the respective and mutual rights of the stock- 21 holders and creditors. Myers v. Schoyer, 20 D. C. 254. Plaintiffs, as trustees of a Build- ing Society, advanced to defendant a sum of money on the security of five mortgages, the foreclosure of which was sought in the suit. Defendant answered that lie was entitled to a release of a portion of the mortgaged property under the 6th rule, providing " that the trus- tees shall be empowered, by direc- tion of the board, at any period, to release any portion of the prop- erty mortgaged, on being satisfied, in manner before mentioned, * * * that the remaining property is suf- ficient value to secure the society. Defendant alleged that the direc- tors had refused such release, al- though the amounts due under the mortgages had been largely re- duced and had further refused to submit the matter to arbitration, as demanded by him under the 29th rule, providing, "that the board for the time being, * * * shall determine all disputes con- cerning the affairs of the soci- ety, * * * which shall or may hereafter, arise between the trus- tees, officers, or other shareholders of the society * * * and, if the de- cision be not satisfactory, reference shall be made to arbitration." De- fendant also pleaded usury, as in- validating the mortgages, the so- ciety having taken, by way of a bonus or premium, a sum exceed- ing the legal rate of interest. It was held that the rule providing 322 BUILDING AND LOAN ASSOCIATIONS. Cll. XIV. Sec. 311 — Revocation of Cancelation Improperly Made. If the association has improperly canceled a mortgage it may maintain an action to have the cancelation revoked. Thus where the defendant was a director of an association and obtained a loan from it, secured by mortgage ; and a by-law provided that whenever the shares of any series were ascertained to be worth $200 each, each shareholder should receive that amount in cash, or have his securities satisfied ; and the association, the defendant voting, passed a resolution directing the satisfaction of the defendant's mortgage, being deceived by the secretary's false report that the stock of the defendant's series was worth $200 ; it was held that he had no cause to complain of. a decree striking off the satisfaction. 1 Sec. 312 — Foreign Corporations. In many of the states a building association of another state is required to file with an officer of the state where it desires to do business a statement of its financial condition. This is for the benefit of those who desire to deal with it. Certain penalties are often inflicted if failure in this respect should be made. Where such a statute was in force, a for- eign association doing business in that state was, in a fore- closure proceeding, restricted to the principal sum actually loaned with simple interest thereon and taxes paid to pro- tect the lien of the mortgage. No recoveiy was allowed for bonuses or premiums and other dues allowed under its for the partial release of the prop- formed all the conditions of the city li It tin' matter to the disc-re- mortgage given to secure his loan, tion of the directors; that the de- was entitled to a cancelation of tnand and refusal did not consti- the mortgage on the association tute a " difference " or "dispute." becoming insolvent, though lie is which the defendant could insist on not relieved from personal liability having referred to arbitration un- on his shares, Evermanv. Schraitt, der the 39th rule. Aimon v. Fair- 24 Wkly. L. Bull. 56. banks, 1 It. & C. (N. S.) 407. « Appeal of Callahan, 124 Pa. St. [n Ohio it was held that a share- L38; S.C. 16 Atl. Rep. 638 ; 46 Leg. bolder who had fully repaid in dues Int. 200; 23 W. N. Cas. 233; 19 and dividends the amount advanced Pitts L. Jr. 411. to him, and hail in good fait h per- §312. MORTGAGES. 323 by-laws. 1 Such a statute, however, does not affect loans entered into before it was enacted. 2 A suit will not lie to cancel a mortgage given to a foreign association that lias not complied with the law before the mortgagee has paid what is justly due the association. 3 Nor can a shareholder and borrower defend on the ground that the association had not complied with the law if it has done so at the time of the loan. 4 1 Maine Guarantee Co. v. Cox, Ind ; s. c. 42 N. E. Rep. 915 ; New York, etc., Ass'n v. Slough- ter, 17 Pa. C. C. 66. 2 Amer. Building and Loan As- sociation v. Rainbolt, 48 Neb. 434 ; s. c. 67 N. W. Rep. 493. 3 New York National, etc., Ass'n v. Cnnaon (Tenn), 41 S. W. Rep. 1054. 4 Illinois B. & L. Ass'n v. Walker (Tenn.), 42 S. W. Rep. 191. The statute of Illinois requiring a foreign association to make cer- tain deposits within the state be- fore doing business, does not ap- ply to the taking of additional se- curities for loans made before the act went into effect. Rhodes v. Missouri S. & L. Co., 63 111. App. 77. CHAPTEE XV. WITHDRAWALS. Sec. 313. Right to Withdraw. 314. Members Cannot be Deprived of the Privilege of With- drawing. 315. Notice of Withdrawal. 316. Canceling Notice of Withdrawal. 317. Order of Withdrawal. 318. No Funds to Pay Withdrawing Members. 319. Suit by Withdrawing Member — Lack of Funds. 320. Status of Member Giving Notice. 321. Effect of Withdrawal. 322. Suit to Recover Amount Due — Defence. 323. Amount to be Withdrawn. 324. Amount Standing to Member's Credit. 325. Interest on Withdrawal Amount. 326. Payment of Amount Due. 327. Withholding Right to an Execution to Enforce Judgment. 328. Pledged Stock. 329. Insolvency of Associations. 330. Matured Stock. 331. Foreign Associations. Sec. 313— Right to Withdraw. The right to withdraw from a building association has always been esteemed a valuable privilege. In this respect there is no corresponding privilege in an ordinary corpora- tion. A member desiring to withdraw must comply with the terms of the articles of association, or the by-laws, or the statute, as the case may be. 1 It is not necessary to first obtain the consent of the association or its officers before a withdrawal can be effected. Thus, under a by-law provid- 1 Carter v. Aetna Loan Co., 1 ciety, 5 L. T. Rep. 211 ; Hartford Mo. A pp. I.vpr. :;."»,",: s. c. 61 Mo. v. Co-operation Mutual Homestead App. 218; Security Loan Associa- Co. 128 Mass. 494; Booz's Appeal, linn r. Lake, 69 Ala. 456; S. C. 1 109 Pa. St. 592 ; s. c. 16 W. N. Cas. Amer. & Eng. Corp. Cas. 418. On 3(55. Tims if the by-laws require second appeal, 72 Ala. 207; In re, a withdrawing stockholder to pro- Sliellielil Permanent Building So- duce his pass book before he is 324 § 313. WITHDRAWALS. 325 ing that "in case any member, by reason of sickness or removal, or through misfortune, is unable to continue the payment of his subscription, he may give notice to the sec- retary of an intention to withdraw from the association ; and in case the directors are satisfied as to the grounds of withdrawal, his whole amount of subscription shall be returned, except the fee ; " and that " any person wishing to withdraw for the above reasons, or otherwise," and who shall have been a member for a certain time, " and be clear of the books," shall be entitled to a certain interest on that amount ; it was held that any person having been a mem- ber for that time, and "clear of the books," may withdraw without leave of the directors." 1 "Where the by-laws of an association and the certificate of membership issued fix the rights of a member to withdraw therefrom, parol evidence of the " customary practice " in such cases is not admissible. 2 Under a like provision, where a member gave notice of an intention to withdraw on account of "losses in business, sickness in his family, and the rigor of the times," it was held that he could maintain an action to recover back his funds, although the directors did not consent to his with- drawal, if he proved that he was totally unable to continue the payment of his subscription, and that there was nothing in the pecuniary condition of the association furnishing any reason why the money paid to it by him should not be returned. To exclude evidence of these facts was held to be error. Nor had the directors the arbitrary power to say that he should not withdraw on the pretence that they were not satisfied as to the grounds of his withdrawal. 3 The right to withdraw usually refers to members in good standing ; and a statute giving a withdrawing member certain rights has no reference to a defaulting member. 4 paid, the production is a condi- 2 American Building and Loan tion precedent. Atkinson v. Brad- Association v. Mordock, 39 Neb. ford, etc., Building Society L. R., 413 ; s. C. 58 N. W. Rep. 107. 25 Q. B. Div. 377 ; 59 L. J. Q B. 360. 3 Wetterwulgh v. Knickerbocker 1 Fuller v. Salem and Dan vers Building Association, 2 Bosw. 381. Loan and Fund Association, 10 4 Watkins v. Workingmen's Gray, 94. Building and Loan Association, 97 326 BUILDING AND LOAN ASSOCIATIONS. Ch. XV. After stock lias matured the right to withdraw has ceased. 1 Sec. 314 — Member Cannot be Deprived of the Privilege of Withdrawing. Any by-law in force at the time a person becomes a member of the association granting to a member the right of withdrawal, enters into and becomes a part of his con- tract with the association which cannot be taken away from him without his consent. 2 A person has the right to treat the by-laws given him on his becoming a member of the association as all the by-laws such association had, and he is not bound to take notice of modifications of such by-laws, with respect to withdrawing, on the record of the company simply ; unless further notice be given him, which notice must be proven by the company to have been given. 3 A resolution providing that the value of all stock borrowed on, to a certain amount, should be allowed to such holders as desired to redeem, cannot be rescinded to the prejudice of a member who had made application to withdraw, and had refrained from paying his monthly dues, in the belief that his application had been accepted. 4 Where the articles of association provided that, after notice of withdrawal of shares, the amount " shall be refunded to such member as soon as the necessaiy funds are in the treasury," the asso- ciation, it was held, could not lend any of its funds while withdrawal notices were on file; and the right of the with- drawing member to receive payment was not affected by a Pa. St. 514; S. C. 38 Leg. Int. 333 ; tion, 25 N. Y. Supp. 835; S. c. 5 ID W. N. (as. 114; Laurel Run Misc. Rep. 518; Bergman v. St. Building Association v. Sperring, Paul, etc., Association, 29 Minn. 106 Pa. St. 334 ; s.C. 15 W. N. Cas. 275 ; S. c. 13 N. W. Rep. 120 ; Mil- 340 : 32 Pitts. L. Jr. 394. ler v. Jefferson Building Associa- 1 Laurel Run, etc., Association t ion, 50 Pa. St. 32. v. Sperring, 106 Pa. St. 334 ; 15 \V. 8 McKenney v. Diamond State N. Cas. 340; 41 Leg. Int. 38*3 ; 32 Loan Association, 7 Houst. 557 Pitts. L. Jr. 894. (Del.); s. c. 18 Atl. Rep. 905; - Bolyoko Building and Loan As- Murray v. Scott, 9 L. R. App. Cas. .lion v. Lewis, l <'<>lo. A.pp. 519 ; S. C. 53 L.J. Ch. 715; 51 L. 1 r, . ... o. .'; Pac. Rep. 872 ; Bngle- T. (N. S.) 462 ; 83 W. R. 173. hardl v. Fifth Ward Permanent ' Eyre v. Building Association, Dime Saving and Loan Associa- 17 Leg. Int. 148. § 315. WITHDRAWALS. 327 resolution by the board of directors that only one-half of the receipts of the association should be applied for the pay- ment of withdrawals, and the other half should be loaned to members. 1 An association may authorize a borrowing member to withdraw and be released upon the payment of dues, interest, and fines up to a specified time, and it may afterwards resolve that such permission shall remain open only to a certain date ; and borrowing members who fail to avail themselves of their opportunity before the date so determined cannot do so afterwards. 2 But, under its power to change its by-laws, a building association may vary the order or postpone the time of withdrawal. In all such in- stances as this it is considered that only the remedy is affected and not the right of the member or the contract between him and the association. 3 Sec. 315— Notice of Withdrawal. The statute or by-laws provide, almost universally, for the giving of notice of an intention to withdraw. Usually this notice must be in writing, although the association, through its officers, may waive the written and accept an oral notice. 4 But the secretary of the association cannot waive a written notice. 5 If the constitution or by-laws re- quire the notice be given " to the directors," a notice to the stockholders, assembled at their annual meeting, is not suf- ficient, although every officer and director of the association be present. " They attend the meetings as stockholders, members of the corporation, individually, not officially." 6 1 Wolfe v. Conkey Avenue Sav- Misc. Rep. 427 ; Wilson v. Society ings Aid and Loan Association, 82 L. R., 22 Q. B. Div. 381, note; Hun, 201 ; s. c. 27 N. Y. Supp. 44 ; Rosenberg v. Society, Id. 373; 58 N. Y. St. Rep. 606. Bradbury r. Wild [1893], 1 Ch. 2 Booz's Appeal, 109 Pa. St. 592 ; 377 ; 41 W. R, 361. s. C. 16 W. N. Cas. 365. * McKenney v. Diamond State 3 Englebardt v. Fifth Ward Per- Loan Association, 7 Houst. 557, manent Dime Saving and Loan (Del) ; s. c. 18 Atl. Rep. 905. Association, 148 N. Y. 281 ; s. c. 42 5 j nre Sheffield Permanent Build- N. E. Rep. 710 ; reversing, 25 N. Y. ing Association, 5 L. T. Rep. 211. Supp. 835 ; 5 Misc. Rep. 518 ; Paw- 6 Brown's Estate, 12 W. N. Cas. lick v. Homestead Loan Associa- 207. Some of the stockholders tion, 37 N. Y. Supp. 164 ; s. c. 15 were not present at the meeting. 328 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. A notice of withdrawal cannot be dispensed with, if the member desires to change his relation to the society as a member to a lender, when his share matures. 1 If the by- laws provide for notice to be given to the secretary of the association, a notice given to anyone acting for him in his absence, and at his place of business, is held to be as effec- tual as if given to the secretary himself. 2 1 In re Sheffield Permanent Building Society, 5 L. T. Rep. 811. The 31st rule of an English So- ciety authorized the board to issue a deposit on paid up shares for 301, each at 5 per cent interest, with the right of withdrawing the whole or part of the deposit upon notice, in preference to all other shai'es. This rule was struck out by the certifying barrister, but the direc- tors printed and acted upon it by issuing shares accordingly. Some years afterwards the rule was amended, by altering 301 into 11, and the amendment was certified by the barrister ; and those who had taken 301 shares had them ex- changed for 11 shares, and other 1 1 shares were issii<'me so before or after the amendment was certi- fied, and whether they had given DOtice of withdrawal or not, wen; r a specified period from the time of the establishment of the society, his righl to give notice would seem 1 Botten v. City and Suburban Benefit Building Society, 98 L. T. 326 ; s. C on appeal, 98 L. T. 349 ; Hoyt v. Inter-Ocean Building As- sociation, 58 Minn. 345 ; S. C. 60 N. W. Rep. 678 ; Wolfe v. Conkey Avenue Savings, etc., Association, 75 Hun, 201 ; s. c. 58 N. Y. St. Rep. 656 ; 27 N. Y. Supp. 84 ; Brett v. Monarch Investment Building So- . 9 Reports, 141 ; S. C. [1894], 1 Q. B. 367 : 63 L. J. Q. B. 237 : 70 L. T. Rep. 146; Siburn v. Pearce, 44 Ch. Div. 354; S. C. 63 L. T. 123 : 38 W. R. 658; 6 T. L. Rep. 262; A ul 1 v. Glasgow Workingmen's. etc., Building Society, 12 A pp. Cas. at p. 20 1 : In re Blackburn and I >is1 rici I lenefit Building Society, 24 Ch. Div. 421 ; 52 L. J. Ch. 894 ; 49L.T. 730;32W. R. 159 ; affirmed, sub. num. Walton v. Edge, 10 App. 54 L. .1. Ch. 362 ; 52 L. T.666 : 33 W. R. 1 17 ; 19 J. P. 468. - Botten v. < !ity and Suburban Building Association [1895], 2 I !h. 441; 64 L.J.Ch. 609; 72 LT. 722 ; II W. R. 12; /// re Middlesborough Building Society, 53 L. T. (N. S.) 203. • Rodgers v. Soul hwesl era M a tual Savings Fund and Building laiion, 7 W. X. <'as. 95. See Building Association '•. Jones, '2 La ■ Time I Pa.) I \. S.) 17. 4 1'epe r. ( !ity ami Suburban So- § 318. WITHDRAWALS. 331 require notice and yet the withdrawing member be entitled to priority. Thus, where a rule provided that all unad- vanced members should have issued to them certificates, at the meeting- of the directors next after the realization of their shares, entitling them to be paid, and such certificates should be paid in order according to their date, as the funds in hand should from time to time be sufficient for the j air- pose ; it was held that the holders of the realized shares and the withdrawing members had priority in the winding- up of the society over those members who had not given notice of withdrawal. 1 Sec. 318 — No Funds to Pay Withdrawing Members. Where a member has the right to withdraw, it is the duty of the association to keep itself in a condition to meet his demand. Usually the time between the giving of the no- tice of withdrawal and that lixed for payment is sufficient to enable the association to accumulate a fund amply large to meet the member's demand. The society cannot set up as a defense that it has no funds applicable to the payment of the member's claim, because it has invested them in real estate ; for such action is an abuse of its [towers. 2 A lack not to be affected. Thus, where among them pro rata. The regis- by one of the rules of a building trar held that as there was nothing society, incorporated on the 2d in the rules fixing the date at January, L889, it was provided that which the member must give no- ' after the society lias been incur- tice to withdraw, the member was porated five years, any member entitled to rank for withdraw;;! as may withdraw his shares. * * from the date of his actual notice." All withdrawals shall be repaid Davis on Building Societies, (4 only from sums received from re- p. 201, citing, Hinton v. First Bir- payments made subsequent to the mingham Perfect Thrift Building notice of withdrawal on advances Society. Report of the Chief by ballot, and they shall be paid Registrar for 1894, p. 64. in order of notice given, of which 1 These were realized sha res. /*/ a register shall be kept," a member re Norwich and Norfolk Building gave notice on 17th September, Society, 45 L. J. Ch. 785. SeeCar- 1892, and claimed to rank for with- rick v. Wills, 12 Rettie, 1271 ; S. C. drawal as from that date ; the so- 22 Scot. L. R. 833. ciety claimed that all notices re- 2 Second National Loan and ceived before 2d January. 1894, Homestead Association v. Hubley should rank as of that date, and 34 Leg. Int. 6 ; s. c. 24 Pitts. L. the available funds be distributed Jr. 50. 332 BUILDING AND LOAN ASSOCIATIONS. Ch. XV. of funds is no defense. 1 The right of a withdrawing mem- ber to receive payment cannot be affected by a resolution of the board of directors, adopted after he has put his notice on file, that only half of the receipts shall be applied to the payment of withdrawals, and the other half should be loaned to members. 2 Sec. 319 — Suit by Withdrawing Member— Lack of Funds. Where no funds applicable to the satisfaction of the with- drawing member's claim are in the treasury, it has been held that that fact was no defense, even though all the funds in the treasury were withdrawn for the legitimate business of the association and according to its by-laws. Thus, where a statute provided that at no time should more than one- half of the funds in the treasury be applied to the demands of withdrawing stockholders, except by the consent of the directors, it was held no defense that fifty per cent, of its funds had been so applied, and the directors refused to give their consent to the withdrawal of any part of the remain- ing fifty per cent. In passing on the question, the court said : " That he may, upon the refusal of the company to pay him, sue it, and recover judgment, just as any other litor, is not doubtful. It is urged, however, that he is • stopped by the proviso, from legal process for therecoverv of his money, until the treasury has funds sufficient to meet ids claim. If this be the true interpretation of the statute, then is this creditor in a most unfortunate position; for the corporation may never choose to make the necess;irv provi- sion for such purpose, and therefore he can never have pro- cess to compel it to do so. It is a fact now alleged that this company has no money t<> apply to the claim in suit. When 1 Beethoven Building Associa- hardt v. Fifth "Ward Permanent tion v. Weber, 5 Atl. 285 (Pa.) S. C. Dime Saving ami Loan Associa- 3 Cent. Rep. '.Hi;. See however tion, 148 N. Y. 281 ; s. c. 42 N. E. ions following. Rep. 710 ; Schout v. Conkey Ave. - Wolfe '•. Conkey Avenue Sav- etc., Ass'n 87 Hun, 568; s. c. :!2 N. ings Aid and Loan Association, 75 Y. Supp. 7K5; 11 Misc. Rep. 45-1; I lut,. '.'Ill ; s. c. 27 X. Y. Sup. II ; 66 N. Y. SI. Rep. 70. 58 X. Y. si. Rep. 656. See Engel § 319. WITHDRAWALS. 333 will it have? in one, six, or ten years, or ever? And will the statute of limitations be suspended in the mean time \ To these questions the defendant but answers : The proviso interposes to prevent the plaintiff from all compulsory pro- cess, though his claim be recognized, in the body of the statute, as just and proper, as long as the corporation man- age to maintain an empty treasury, or, which is the same thing, as long as prior drafts leave no money to be applied to his debt. Looking at the statute as a whole, we are not pre- pared to adopt an interpretation so contrary to the spirit and the plain dictates of justice. Whilst it certainly intended that the operations of the corporation shall not be embar- rassed 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." 1 A conclusion has been reached by other courts, in passing judgment upon statutes almost identical with that of Penn- sylvania, that is diametrically opposite to the opinion quoted above. Thus, in Minnesota, a statute provided that " not more than one-half of the amount received in payment on stock by " a building association " in any one month shall be used to pay withdrawals without the consent of the board of directors." In construing this statute, it was held that a non-borrowing member of an association, who had given notice of withdrawal, could not bring an action and take judgment against the association for the amount due, when, under the section, there was no money in the treasury legally applicable to the payment of his claim. 2 A similar conclusion was reached in Texas, where it was held that the plaintiff must allege and prove that there were funds applica- ble to the payment of his claim. 3 In England the by-laws of an 1 United States Building Asso- Loan Association v. Kerr (Tex.), ciation v. Silverman, 85 Pa. St. 13 S. W. Rep. 1020 ; Printers' Build- 394. ing and Loan Association v. Pax- 2 Heinbokel v. National Saving, ton. (Tex. Civ. App.) 33 S. E. Rep. Loan and Building Association, 59 389; Hawley v. North, etc., Ass'n Minn. 340 ; s. C. 59 N. W. Rep. 1050. (Colo.) 52 Pac. Rep. 408. 3 Texas Homestead Building and In this case the plaintiff set out 334 BUILDING AND LOAN ASSOCIATIONS. Ch. XV. association provided that " if the available balance in hand shall be at any time insufficient to pay all the depositors wishing to withdraw, they shall be paid, in rotation, accord- ing to the priority of their notices." The plaintiff received a deposit note from the defendant association, which stated that the deposit was received subject to fourteen days' no- tice of withdrawal. It was held that, where the available balance in hand was insufficient to pay all the depositors who had given notice to withdraw, the condition did not merely regulate the mode of distributing that balance among those depositors, but postponed the depositors' right of ac- tion to recover his deposit until the available balance was sufficient to pay him, in rotation, according to the priority of his notice. 1 The right of action cannot be defeated by an unauthorized application of the funds to loans in prefer- ence to withdrawals, and if it appear that but for such appli- cation there would have been the necessary funds in the treasury during the intervals between the filing of his no- tice and the commencement of his action, to pay all previous applications as well as his own, the plaintiff can recover. 2 Sec. 320 — Status of Members Giving Notice. "Whenever a member gives notice of his intention to the by-law without the proviso, was no controversy in regard to which latter contained the liniita- the loans of the association, a tion, and this was held to consti- withdrawing stockholder could not tute such a variance as to leave maintain an action against the as- the plaintiff without proof. sociationfor the valueof hisstock. 1 Brett v. .Monarch Investment Maloney v. Real Estate Building & Building Society, 9 Report, 141; Loan Association, 57 Mo. App. 384. s. c. [1894], 1 Q. B. 367; 63 L. J. Q. The same resull has been reached li. 237 : 70 L. T. Rep. 146. in New York. Engelhar'dt v. Fifth 2 Wolf e v. Conkey Avenue Sav- Ward Permanent Dime Savings etc. Association, 75 Hun, 201; and Loan Association, 148 N. Y. s. C. 27 N. Y. Supp. II ; 58 N. Y. 281 ; s. C. 42 N. E. Rep. 710; re- st. Repr. 656; Englehardt v. Fifth versing, 25 N. Y. Supp. 835; and Ward, etc., Association, 1 is N. Y. citing, Brett v. Society [1894], 1 Q. 281 ; s. c 12 N. E. Rep. 710. B. 367 ; Barnard v. Tonson [1894], In Missouri it was held that if 1 Ch. 374. the associal ion was honestly apply- Sufficiency of complaint. White- ing the shares of its funds required footu. National Fraternity Build- bj tatute to the paymenl ofwith- ing & Loan Association, 18 Mont- drawing shareholders, and there ana, 164 ; S. C. 44 Pac. Rep. 514. § 320. WITHDRAWALS. 335 withdraw be stops paving dues. lie has then announced his intention to sever his relation to the society. Should he thereafter participate as a stockholder in a stockholders' meeting, even if held six and ten months after giving such notice, he will waive his right to withdraw. 1 Mere delay in closing up the transaction, occasioned by the society demanding a greater sum than that due it, and which per- sists in such demand after its attention has been called to the error, does not work a forfeiture of the right of the member giving the notice to withdraw, even though a period of several } 7 ears elapses, if such member offered to pay the amount actually due the association at the time of his proposed withdrawal, and has been ready and willing to settle on that basis ever since. 2 A member's right to with- es draw cannot be transferred to another member. 3 The member giving notice of an intention to withdraw does not, however, cease to be a member of the association; but that relationship is not severed until the end of the period required to transpire between the giving of the notice and the time he is entitled to his money. Thus, where a sixty days' notice is required, membership does not terminate until the end of the sixty days. 4 But where the rules of a society provided that members giving notice of withdrawal should cease to take part in the affairs of the society, it was held that this left them mem- bers in ascertaining the statutory majority of members required to sign an instrument of dissolution. 5 And while it has been held that a member cannot be affected by rules adopted by the society after he gave notice of his intention to withdraw 6 ; yet in a more recent case it has been held 1 Decatur Building and Invest- 4 Siburn v. Pearee, L. R. 44 Ch. ment Co. v. Neal, 97 Ala. 717 ; s. c. Div. 354 ; s. c. 62 L. T. 388 ; 63 L. 12 So. Rep. 780; Hawley v. North, T. 123 ; 38 W. R. 658; 6 T. L. R. etc., Ass'n (Colo.), 52 Pac. Rep. 262; United States Building and 408. Loan Association v. Silverman, 85 2 People's Building and Loan Pa. St. 394. Association v. Furey, 47 N. J. Eq. 5 Siburn v. Pearee. supra. 410 ; s. C. 20 Atl. Rep. 890. 6 Armitage v. Walker, 2 K. & J. 3 Hennighausen v. Tisher, 50 211 ; s. c. 20 J. P. 53 ; 2 Jur. (N. Md. 583. S.) 13 ; 26 L. T. Rep. 182. 336 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. that a society, after a member has given notice of an inten- tion to withdraw, may adopt a resolution varying the order of withdrawal, by preferring claims of a small amount, though by such rule the right of the member seeking to withdraw has been postponed to the right of the members having small amounts. 1 " "When the plaintiff gave notice of withdrawal," said the court in the case last cited, " he had a vested right to be paid according to the then existing rule ; but this does not settle the question, because there existed also against him the power of altering the rule, so that the question assumes this form, that he had a vested right liable to be divested by any later rule duly passed." 2 Sec. 321— Effect of Withdrawal. As soon as the time fixed by the statute or rules of the society necessary to elapse after notice given of an inten- tion to withdraw has expired, and the member has done all on his part required of him to perfect his withdrawal, he ceases to be a member of the association, and becomes a mere creditor, having relations to the society somewhat like other general creditors. 3 If the association be solvent he is entitled to be paid in his turn, and is not bound pro rata with members giving notice of an intention to withdraw 1 Pepe v. City and Suburban Building and Investment Co. v. Permanent Building Society (1893) Neal, 97 Ala. 717 ; s. C. 12 So. Rep. 2 Ch. 311; S. C. 3 Rep. 471; 62 L. J. 780; Engelhardt v. Fifth Ward Ch. 501 ; 68 L. T. 846; 41 W. R.548. Permanent Dime Saving and Loan 2 Upon an analogous subject see Association, 25 N. Y. Supp. 835 ; Stohr v. San Francisco Musical s. c. 5 Misc. Rep. 518; Browne v. Fund Society, 82 Cal. 557 ; S. C. 22 Sanders, 20 D. C. 455; s. c. 20 Pac. Rep. 1125. Wash. L. Rep. 277; Haigh v. For tin' purpose of arbitration United States, etc., Association, 19 under the English statute a mem- W. Va. 792 ; Hartford v. Coopera- ber having given notice of with- tion Homestead Co., 128 Mass. 494. drawal is still subject to tbat McNab v. Southern Ass'n, 50 S. C. statute. Walkeru. General, etc., 89; 27 S. E. Rep. 543; Lepore v. Building Society. I,. I:.. 36 Ch. Twin Cities, etc., Ass'n, 5 Pa. Supr. Div. 777; 67 L. T. 574. Ct. 270 ; s. c. 40 W. N. C. 548 ; Gas- Brown'a Estate, 12 W. N. Cas. paro v. Same, 40 W. N. C. 551 : United states Building As- Prairie State, etc., Ass'n v. Nub- ation v. Silverman, 85 Pa. St. ling, 170 111. 240 ; s. c. 48 N. E. Rep. . i . :::. Leg. Int. 53 : Decatur Mini; affirming, 64111. App. 329. § 322. WITHDRAWALS. 337 after he has given notice. 1 He is, however, not like an out- side creditor, and is therefore a creditor in a qualified sense; for he cannot enforce his claim regardless of the conse- quence to the association. 2 Sec. 322 — Suit to Recover Amount Due — Defense. In an action to recover the amount due the withdrawing member, he must show that he has complied with the by- laws of the association, and that payment was refused him. This is usually an action at law. 3 Thus, where one by-law of an association provided that "if any member wishes to withdraw * * * he shall give notice * * * of such intention, when the company shall, within one year after the receipt of such notice, pay to said member the sum of money which he has paid as instalments, and the $100 which he originally paid for the stock ; " and another by-law provided that, " if any member wilfully neglects his 1 Hoyt v. Interocean Building Association, 58 Minn. 345 ; S. c. 60 N. W. Rep. 678. 2 Christian's Appeal, 102 Pa. St. 184. In re Blackburn and District Benefit Building Society, 48 L. T. (N. S.) 134 See on the subject of this section, generally, see Wittnian v. Build- ing Association, 7 W. N. Cas. 80. A member of a building society cannot be a withdrawal stock- holder so long as his stock is held in pledge by the association. Wad- linger v. Washington, etc., Asso- ciation, 153 Pa. St. 622 ; s. c. 26 Atl. Rep. 647 ; Dennison v. Alpena, etc., Ass'n, 75 N. W. Rep. 300. ' ' That he is not an ordinary creditor, is plain. He cannot come into competition with outside cred- itors. On the other hand, as be- tween himself and the continuing members, he is entitled to be paid the amount due to him before they can divide the assets." Siburn v. Pearce, 44 Ch. Div. at p. 371 ; s. C. 22 63 L. T. 123 ; 38 W. R. 658 ; 6 T. L. Rep. 262. 3 United States Building and Loan Association v. Silverman, 85 Pa. St. 394 ; Carter v. iEtna Loan Co., 61 Mo. App. 218; 1 Mo. App. Rep. 355; Engelhardt v. Fifth Ward Permanent Dime Saving and Loan Association, 25 N. Y. Supp. 835 ; s. c. 5 Misc. Rep. 5 1 s ; O'Rouke v. West Pennsylvania Loan and Building Association, 93 Pa. St. 308 ; s. c. 14 Pbila. 145 ; 37 Leg. Int. 27 ; Laurel Run Building Association v. Sperring. 106 Pa. St. 334; s. C. 3 Kulp, 67: Atwood V. Dumas, 149 Mass. 167 : 21 X. E. Rep. 236; Wetterwulgh V. Knick- erbocker Building Association, 2 Bosw. 381 : Baer v. Hudson, etc., Assn, 75 Hun. 419: S. C. 56 N. Y. St. Rep. 760; 27 N. Y. Supp. 102. Before suit brought the certifi- cate of stock must be surrendered ortendered. Ballouz\ Manhattan, etc., 45 N. Y. Supp. 10; s. C. 19 Misc. Rep. 698. 338 BUILDING AND LOAN ASSOCIATIONS. Ch. XV. payments, he shall, after one year, take what money lie has paid into the company as instalments and for stock;" it was held that the two by-laws must be construed together, and that a member who had not given notice of an inten- tion to withdraw until within less than a year before bring-inff suit, could not maintain his action for the amount of stock and instalments paid by him. 1 Actual insolvency, not mere apprehension of insolvency, 2 is a good defence, which must be pleaded, 3 and be shown affirmatively by the association, upon whom rests the burden of establishing that fact. 4 If the withdrawing member has assigned the balance due him, his assignee may recover it, although he be a member of the association at the time of bringing the suit. 5 The society may show as a defence that it has sustained losses at and before the time of the' withdrawal, and that the amount due the member could not then be ascertained ; but this will merely have the effect of postponing the day of trial or judgment until that amount can be ascertained. 6 Sec. 323 — Amount to be Withdrawn. The amount the withdrawing member is entitled to re- 1 Hartford v. Co-operative Home- 6 Wittman v. Building- Assucia- steadCo., 128 Mass. 494. tion, 7 W. N. Cas. 80; Hawley v. 2 Jungkuntz v. Building Asso- North etc., Ass'n. (Colo.) 52 Pac. ciation, 6 Wkly. L. Bull. 428. Rep. 408, 3 United States Building and In Maloney v. Real Estate, etc., Loan Association v. Silverman. 85 Association, 57 Mo. App. 384; it Pa. St. 394; Wittman v. Building was held that a withdrawing mem- Association, 7 W. X. Cas. 80. ber had only the right to proceed 4 National Building Association in equity, and could not do so al v. EJottenstein, 10 Pitts. L. J. (N. law. [t was also held that he could S.) 225. not sue at all if the association 5 I [ennighausen v. Tisher, 50 Md. was honestly applying thesharesof 583. Bui if the assignee be in its funds, required by the statute, debt to the security on stork ho to the payment of withdrawing holds (for which no notice of with- shareholders, there being no con- drawal has been given), no doubl troversy in regard to the losses. Such 30Ciety may plead or Bel oil' Ii has also hern held that as- to ill.' suit on thr withdrawn stock sumpsit lies to recover the with- anamounl mfncienl to cancel the drawal value, although H had been member's indebtedness to it. Td. fraudulently represented to the St. Louis, etc., < !o. v. Yantis, 72 111. plaintiff the stock belonged to an- A.pp.597; Dennison v. Alpena etc., other series. Prairie State, etc., ;;, n. \v. Rep. BOO. Ass'n v. Conic, 167 111. 414; s. c. § 323. WITHDRAWALS. '■'•■ ':» ceive is largely governed by the by-laws of the association. The ordinary by-law for withdrawals does not entitle the withdrawing member to withdraw his premium, interest, lines, transfer fees and charges. In such an instance he re- ceives back only the money he has paid in on his stock, usually paid in monthly instalments. 1 If there be a statute upon the subject, of course that will control. And where the constitution of a society provided that a withdrawing member " shall receive the amount of dues actually paid in, first deducting all fines and charges, 11 and the society ceased to lend its funds, which began to accumulate, and accord- ingly passed a by-law granting to each withdrawing mem- ber "the amount of dues actually paid in and 15 per cent. per annum interest thereon, first deducting all fines and charges ; " and this 15 per cent, was, at the time the by-law was adopted, a fair hona fide estimate of the accumulated profits ; it was held that it was a valid regulation under the statute, Avhich authorized withdrawing members to receive the amount paid in by first deducting all fines and charges " and such proportion of profits as the by-laws may deter- mine." 2 Sometimes it is left to the board of directors or committee to determine what amount, if any interest, the withdrawing member shall be entitled to receive; in which event the member will be bound by the allowance made him. 3 A fear on the part of the association that it will be- come insolvent will not justify it in withholding a part of the money otherwise due the withdrawing shareholder ; and if the association pay him part cash and give a note for the re- mainder, payable at the final winding up of the association, in the proportion due among all creditors, his taking the cash and the note, but not assenting to such settlement, 47 N. E. Rep. 739; affirming, 64 s. C. 16 W. N. Cas. 365; Seibel v. 111. App. 625 ; St. Louis etc., v. Building Association. -13 Ohio St. Yantis, 173 111. 321 ; s. c. 50 N. E. 371 ; s. C. 10 Amer. & Eng. Corp. Rep. 807. Cas. 460. 1 Security Loan Association v. 3 In re Sunderland, etc., Build- Lake, 69 Ala. 456 ; 1 Amer. & Eng. ing Society L. R. 24 Q. B. Div. 39 I ; Corp. Cas. 418; same case on s. c. 57 L. J. Q. B. 017; 62 L. T. second appeal, 72 Ala. 207. 293 ; 38 W. R. 509 ; 54 J. P. 613 ; 2 Booz's Appeal, 109 Pa. St. 592 ; 6 L. T. Rep. 199. uo BUILDING AND LOAN ASSOCIATIONS. Ch. XV. will not be an accord and satisfaction nor binding upon him. 1 See. 324 — Amount Standing to a Member's Credit. In a Scottish case the meaning of the phrase, " the amount standing to the credit of a member" was discussed. It was claimed that the amount depended upon the mode in which the society had invested the funds out of which the with- drawing member was to be paid, and that the sum standing to the credit might be a mere figure. The court held that the argument was entirely fallacious, that it was the amount standing at the credit of the member by reason of the monies which he had paid; and that although the society might have badly invested their funds, and therefore have a diffi- culty in obtaining the means of paying the amount stand- ing at any member's credit, that could not alter the amount standing to his credit, or justify the society in saying that 1 Jungkuntz v. West Liberty Building Association, 6 Wkly. L. Bull. 428. The by-laws of an association provided that any stockholder de- siring to withdraw unpledged stock should give thirty days' written notice, when he should be entitled to the amount actually paid in, with such interest or profits as the directors should determine, de- duct ing all dues and fines, and that, if the interest on any loan or any dues remain unpaid more than three months, the directors might compel the payment of principal, interest and fines by proceeding on l lie securil ies according to law. It was held, that where the asso- ciation proceeded under the latter clause to compel payment, the i tockholder was fn\ [tied to have credit for t lie u il lidra wal value of bis stock- under the prior clause. International Building anl Loan Association v. Biering, (Tex. Civ. App.) 23 S. W. Rep. 1025. As a rule it may be stated that withdrawing stockholder is not entitled to any interest on the sums he lxas paid in ; but the by-laws may provide for interest. Thus the constitution of a building asso- ciation provided that any borrower might repay a loan at any time, and, in case the repayment was made before the expiration of the eight years after the series in which his stock was issued, such borrower should be given credit for " whatever interest he may be entitled to receive in" a certain other article, which provided that OH withdrawal of a non-borrowing stockholder, he should be repaid the amount- of his instalments, to- gether with specified rates of in- terest. It was held that aborrow- Lng member, who had mad" ad- vance payments on his loan, was cut it led, on withdrawal, to interest on such advance payments, at the §324. WITHDRAWALS. 341 what did stand at his credit no longer stood at his credit. 1 In a Scottish case the society, on the 28th of July, adopted same rate as a withdrawing non- borrowing stockholder on his in- stalments. People's Building and Loan Association v. Furey, 47 N. J. Eq. 410 ; S. C. 20 Atl. Rep. 890. Under a by-law which gives to withdrawing stock five per cent, interest, unless the directors fix a larger sum, borrowing stock- holders are entitled to such inter- est as well as non-borrowing mem- bers. Winterer v. Fairmont Build- ing Association, 44 Leg. Int. 122. The plaintiff was a member and a shareholder of the defendant building society, and in March 1887, was the holder of £250 paid up investment shares. On 22d March he gave notice of with- drawal of £125, part levy at a month's date, and that sum was duly paid to him. On the 15th July, 1887, the directors apportioned to the paid up investment shares then on the register, an interim dividend at the rate of 5 per cent per annum, for the half year ending the 30th June, 1887 ; but they refused to pay any interest or dividend to the plaintiff on the £125 withdrawn. Thereupon the plaintiff claimed 15s. as interest on that sum from the first of January, the date of the last dividend, to the 22d March, 1887, the date of notice of with- drawal, at the rate allowed on de- posit, namely 4 per cent, pursuant to rules, 19 and 21 of the society. The directors had passed the fol- lowing resolutions, on the 5th November, 1886, that, " subject to the rules the interest allowed on moneys withdrawn do not for the present exceed 2£ per cent per an- num ; " and on the 18th February, 1887, that " no interest be allowed upon interim withdrawals until further consideration." The plain- tiff had no notice of the resolution. By rule 9 of the society, "paid up shares may be withdrawn or re- paid upon the terms set forth in rule 21." By rule 19 " interest shall be allowed on investment shares at such rates as the board shall from time to time fix." By rule 21, " any member may with- draw the subscriptions in respect of investment shares, subject to the conditions specified below, af- ter one month's notice in unity. * * * A member withdrawing a portion only of the amount at the credit of his share account, shall not be paid interest thereon at a rate exceeding that for the time being allowed on deposits. Inter- est on all shares shall cease at the date of notice of withdrawal." For the defendants it was con- tended that, as there was no con- tract to pay interest, the only in- terest fixed by the board, and here the board had fixed no interest, and that the resolution of the 18th Febuary. 1887, was fatal to the plaintiff's claims. It was held the plaintiff was entitled to interest on the £125 withdrawn, from the date of the last dividend up to the date of notice of withdrawal, and that such interest ought to be at the 1 Auld v. Glasgow Working- 776 ; 35 W. R. 632 ; 14 Rettie men's, etc., Building Society, 12 H. L.) 27; 24 Scot. L. R. 486. App. Gas. at p. 204 ; s. C. 56 L. T. 342 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. an amended balance-sheet, showing the true state of the society's affairs for the year ending on the previous January 31st. It was held that the claims of unadvanced members, whose notices expired previously to the issuance of such amended balance-sheet, must be dealt with on the basis of such accounts. According]} 7 , the particular amounts standing to their credit were subject to deduction on ac- count of loans, and were not to be dealt with on the basis of an incorrect balance-sheet showing a profit, issued by the directors prior to the amended accounts. 1 Sec. 325 — Interest on Withdrawal Amount. If a considerable time elapse between the time of with- drawal and the payment of the money the question of interest becomes important. In every case the rules of the company must be examined to determine if they pro- vide for interest in such an instance, or if they deny it. If rate allowed on deposit, namely 4 per cent. Perratt v. London Scot- tish Permanent Benefit B. S., 59 L. T. 31. A member of a building associa- tion alleged that he had paid on his stock a certain amount, and given the notice of withdrawal re- quired by the by-laws; that tlie directors had failed to ascertain the withdrawal value of his stock ; and that, under the by-laws, he was at least entitled to all he had paid ; and prayed judgment there- for and general relief. The de- fendant had thereunder ascer- tained the value of the stock at a certain sum. It was held that I he coiiit properly allowed the plain- tiff such admitted value, though more i ban t bal alleged by him. [nternationa] Building and Loan \ ocial ion v. Biering, 86 Tex. 176 ; s. c. 26 S. W. Rep. 89. A ay < i < • I >t the a i icial ion had t the withdrawing member may be sef -off againi I the wii h- drawal value of the stock, even in the hands of an assignee for the benefit of creditors. Wetherell v. Thirty-First St. Building and Loan Association, 153 111. 361 ; s. C. 39 N. E. Rep. 143. 1 Scottish Property Investment Company Building Society v. Stewart, 12 Rettie 925; S. C. 22 Scot. L. R. 019. Where a mortgage was to secure a loan made on stock, with a pro- vision that upon failure to pay any monthly dues on the stock or in- terest continuing for three months, the whole loan might, at the elec- tion of the association, be declared due, an election to mature the loan for such default, whenever actually made, must be as of the date of three months after such default, and the amount due on the stork and the withdrawal value of the shares must, be calculated as of that date. United Stales, etc., Co. V. Sullivan., SI) Fed. Rep. 762. Loses, may be deducted. I I.iwley v. North, § 326. WITHDRAWALS. 343 they make no provision upon the subject, it would seem that interest cannot he successfully demanded. If there be a rule that a withdrawing member shall receive interest at a designated rate on the amounts withdrawn, such member ■will be entitled to interest, as well as to their subscription monies, in priority to members who have not withdrawn. A rule providing that withdrawing shareholders should be entitled to receive interest at the rate of five per cent, per annum, entitles such holder to compound interest under a winding-up order. 1 Under a similar rule interest was allowed, in winding up the company, until the date of pay- ment of the money due. 2 So have preference shareholders been alio w r ed interest in winding up the company. 3 In a case the rules of the society provided that interest should be allowed on investment shares at such rates as the board should from time to time fix, and that a member withdraw- ing a portion only of the amount at the credit of his share, should not be paid interest thereon at a rate exceeding that for the time being allowed on deposits. A member with- drawing part only of his shares was allowed interest up to the date of the last declaration of dividend, but nothing- after that date, the court holding that interest at four pen- cent., being the deposit rate, was to be allowed to the mem- bers, and that certain resolutions of the directors that interest should not be paid on interim withdrawals were in- operative. 4 Sec. 326 — Payment of Amount Due. If the withdrawing member owe the association, that may be deducted from what would be otherwise due him ; 5 but when that is done the remainder must be paid in cash. etc., Ass'n, (Colo.) 52 Pac. Rep. 408. fit Building Society. 61 L. J. Ch. Vincent v. Harrison B. & D. Co. 5 453 ; s. C. 66 L. T. 823 ; 8 T. L. R. Ohio N. P. Rep. 273. 525. 1 In re Doncaster Building So- 4 Perratt v. London Scottish ciety, 14 L. T. 13. Building Society. 59 L. T. 31. - In re Middlesbrough Building 5 Wetherell v. Thirty-First Street Society, 53 L. T. Rep. 203. Building and Loan Association, 8 In re Reliance Permanent Bene- 153 111. 361 : s. c. 39 N. E, Rep. 143. 344 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. and lie cannot be required to take payment in the assets of the association. 1 Sec. 327 — Withholding Right to an Execution to En- force Judgment. The relation of a withdrawing member as compared with an outside creditor of the association is more sharply brought into contrast than in any other manner by a comparison of their respective rights to an execution upon a judgment re- covered by them, — the one on a judgment to recover the value of his stock withdrawn, and the other on a general debt. The latter is entitled to have an execution forth- with, or as soon as a creditor of an individual ; but such is not the case with the stockholder. In his case the judg- ment is confined to the funds which the statute subjects to the payment of withdrawing stockholders, and the court may reasonably suspend the issuance of an execution until a fund sufficient to pay the judgment can be accumulated in the ordinary transaction of the business of the associa- tion. 2 1 Mercer v. Ami )ler Building and W. N. Cas. 546; 35 Leg. Int. 51. Loan Association, 10 Pa. C. C. 51; In re National Saving Loan and S. C. 48 Leg. Int. 277: Plymouth Building Association, 9 W. N. Cas. Building Association v. Mangan, 79 ; S. c. 37 Leg. Int. 299, the fol- 2 Kvdp. 210. lowing quotation is made from 2 Maloney v. Real Estate, etc. Silverman's case : " The design of Association, 57 Mo. A pp. 384; En- the act can be better met by giv- gelhardl v. Fifth Want Permanent ing the plaintiff judgment, and Dime Saving and Loan Associa- then, should it seem equitable to 1 ion. 25 N. V. Supp. 835; S. C. 5 the court below, it may restrain Misc. Rep. 518 ; Chapman v. Young, execution in order that the defend- 65 111. App. 131 : Christian's Ap- ant may have a reasonable time peal, 102 Pa. St. 184. within which to raise the money Touching upon the point under for the payment of such judgment, di cussion, the following cases so that there may be no undue de- may be examined. Banney v. rangement of its affair. Building Association, 16 W. X. A different rule seems to pre- 150; Eennighausen v. Tisher, vail in Australia. Browne v. 50 M'. Eq. 18 Vict. (Aus- tioii. 2 I'.osw. 881; United Stales t ia 1 ia ) 397. See a recent Pennsyl- Building and Loan Association v. vaniacase. Lepore v. Twin Cities Silverman, 88 Pa. St. 894; B.C. I etc., Ass'n, 5 Pa. Sup.-. Ct. 276; § 329. WITHDRAWALS. 345 Sec. 328— Pledged Stock. Stock that the owner has pledged to the association in order to secure a loan or advance cannot be withdrawn until he first pays off his loan. 1 Sec. 320 — Insolvency of Association. The rig-ht of withdrawal is subject to the condition that the association is solvent. We have already seen 2 that the association cannot set up as a defense that it may become insolvent; for that would allow a judgment to stand upon. a mere probability, or even on a possibility. But if the association be insolvent at the time judgment is to be entered, or at least when the trial is had, that will be a good defense ; for to allow the withdrawing member to obtain a judgment for the par value of his stock and then enforce its payment would be manifestly unjust to the remaining stockholders, who would not receive the full par value of their stock. 3 " The right of withdrawal," said the Supreme Court of Pennsylvania, " presupposes that at least a relative proportion of the assets will remain for the benefit of those who continue to be active members of the association." 4 In an English case it was said : " It would be altogether unreasonable to suppose that it was intended in the event of insolvency to permit one set of members to escape from liability at the expense of the others. " :: " * * The rule [as s. c. 40 W. N. C. 548; Gasparo v. 334; S. C. 15 W. N. Cas. 340; 32 Same, 40 W. N. C. 551. Pitts. L. Jr. 394 ; Stater. Redw 1, The association is chargeable in Falls Building and Loan Associa- attachment as trustee of a mem- tion, 45 Minn. 154 ; s. C. 47 N. W. beratthe withdrawal of his shares, Rep. 540; 35 Amer. & Eng. Corp. although lie has given it no notice Cas. 244; 10 L. R. A. 752; Ply- of his desire to withdraw such mouth Building Association v. shares. Atwood v. Dumas, 149 Mangan, 2 Kulp. 210. Mass. 167 ; s. c. 21 N. E. Rep. 236 ; 2 Jurngkents v. West Liberty Atwood v. West Roxbury, etc.. Building Association, 6 Wkly. L. Bank. 156 Mass. 160 ; S. C. 30 N. Bull. 428. E. Rep. 558. 3 Friel v. Gilberton Savins As- 1 Wadlinger v. Washington, sociation, 1 Leg. Rec. (Pa.) 217. etc., Building Association, 153 Pa. 4 Christian's Appeal, 102 Pa. St. St. 622 ; s. c. 26 Atl. Rep. 647. 184 ; Hanney v. Building Associa- See also Laurel Run Building As- tion, 16 W. N. Cas. 450. sociation v. Sperring, 106 Pa. St. 346 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. to withdrawals] seems * * * not to contemplate any such contingency as a suspension of its business, and, there- fore, only provides for a withdrawal from the society while it was, or was believed to be, still solvent." 1 But where the society is solvent when the notice of withdrawal is given, and insolvency subsequently intervenes before payment is made, the stockholder so giving the notice is entitled to be paid in full, although the members not having given notice will not be paid in full. 3 Nor is a stockholder who has withdrawn and been paid in full liable to refund any part of the amount received when it is subsequently discovered that the association is insolvent. 3 A building association has the right to retain from a withdrawing stockholder his proportion of the probable loss sustained even before the loss it has sustained has been finally determined. 4 In a recent (1896) English case the question under consid- eration in this section was discussed at length. There the directors issued a balance-sheet which showed a surplus, and also a report, in which they suggested that the society should be dissolved by reason of withdrawals which had been made, and the failure to get new business. This report was dated 28th January, and on the 5th of the next month the secretary sent notice to the members convening a meeting > In re Sunderland, etc.. Build- s. C. 58 L. J. Q. B. 263; 60 L. T. ing Society, L. R., 24 Q. B. Div. 186; 53 J. P. 375; 5 T. L. R. 192; 394 : Kemp v. Wright [1894] 2 Ch. Christian's Appeal, 102 Pa. St. 184; 462. Browne v. Sanders, 20 D. C. 455; - Walton r. Edgar, L. R.,10App. s. c. 20 Wash. L. Rep. 277. Ca .33; S. C. 54 I,. J. Ch. 362 ; 52 Upon the binding effect of ;i L. T. (N. S.) 666 ; 33 W. R. 417 ; 49 compromise and subsequent dis- .1. P. 468 ; affirming same ad nom. covery of a prior insolvency, In re Blackburn Building Society, sec Wangerien v. Aspell, 42 L. R., '.'I Ch. Div. 121 ; 52 L. J. Ohio St. 655; s. c. 24 N. E. Rep. Ch. 894 : I'.) I.. T. 730; 32 W. R. 405. 159; s. P. In re Mutual Society, l Knoblanck v. Blum Building L. R. 24 Ch. Div. \5&5,note; Bar- and Loan Association, 25 I'iits. L. nard v. Thomson [1894], 1 Ch. 374. Jr. 39; Pafferi y. Blum Building Contra. In re Progressive [nvest- and Loan Association, 25 Pitts. L. mentand I ',\ i i Id ing Society, .">! L. Jr. K). But see contra, McKei y T. 15. V. Diamond State Loan Associa- Tn re Sheffield, etc., Building tion, 8 Houst. 557; s. c. 18 Atl. Society, L. R., 22 R. B. Div. 170; Rep. 905. § 329. WITHDRAWALS. 347 on the 12tb of the same month to consider resolutions for the dissolution of the society. Ultimately the society was wound up under the proper supervising- officer, and the assets proved insufficient to pay all the members in full. The court held that a notice of withdrawal which expired before the date of the meeting was effectual and conferred priority. Justice Vaughan Williams, after stating the cita- tion of many cases often tending to confuse a judge rather than aid him, refers to a case by name 1 and says : " I do not propose to go into the facts of that case at length, be- cause when one looks at the judgment delivered in it by North, J., it is evident that he is only recognizing and act- ing on the principles laid down in the judgment delivered by Matkew, J., in In Re Sunderland 26th TJnvOi rsal Bu tid- ing Society! 1 But it would seem, if North J.'s, judgment is carefully considered, that the view which he takes is that the line ought to be drawn at the time when there is a stoppage of the business of the society, or it is recognized that the business must be stopped. There had in that case been a report by an accountant, and a defalcation by a secretary had been discovered. The society had sustained great losses, and it might very well be a question whether the society ought not to dissolve and stop its business ; but the officers of the society in their report to the members did not recognize the necessity for the society stopping, but thought it ought to go on, for in one clause of their report they said : ' There is no reason why the society should not, with careful, judicious and economical management, have a good future before it.' That being a case in which a ques- tion had obviously been raised as to the desirability of stopping business, and the officer had reported against it. North, J., says : 'The result is, that I find nothing what- ever, prior to the instrument of dissolution, to indicate such a state of things as would put an end to the operation of the existing rules upon the principles laid down in the case to which I have referred. I have no material for drawing 1 Barnard v. Thomson, 8 Rep. 2 24 Q. B. Div. 394 ; .7.) L. J. Q. 585 ; s. c. [1894] 1 Ch. 374 ; 63 L. B. 217 ; 62 L. T. 293 ; 38 W. R. J. Ch. 488 ; 70 L. T. 306. 509 ; 6 T. L. R. 199 ; 54 J. P. 613. 348 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. a line earlier than the date of the instrument of dissolution. It seems to me, therefore, that all the notices to withdraw are good down to that time.' What were the materials for which North, J., looked, and which he could not find ? He means that there had been neither a stoppage of business in fact, nor a recognition by the officers of the society of the necessity for stoppage of its business. The question whether the society was solvent or insolvent at the date of a notice of withdrawal was evidently not one which appeared to him to be material. North, J., follows the decision in In He Sunderland 36th Universal Building Society. 1 In that case Mathew, J., who delivered the judgment of the court, states what the question was, namely, whether the mem- bers who had withdrawn from membership before the winding-up order had thus become creditors, or whether, as the liquidator contended, the notices became inoperative, because insolvency had become notorious before the notices had been given, or become effective. After referring to the rule as to withdrawal, the answer is given as follows : ' We are of opinion that this rule was not intended to apply, where the society was no longer able to carry on its busi- ness, and when it had become notorious that the society could not meet its liabilities. It would be altogether un- reasonable to suppose that it was intended in the event of insolvency to permit one set of members to escape at the expense of the others. There would seem to be no adequate consideration or motive for such an arrangement. The rule seems to be not to contemplate any such contingency as to a supension of its business, and, therefore, only to provide for a withdrawal from a society while it was, or was believed to be, still solvent.' A great deal of argument has been addressed to me as to the meaning of that judg- ment, and in particular as to what was meant where it re- ferred to the insolvency of the society being notorious, or the society being no longer able to carry on its business. The court did not mean to define in this portion of the judgment the conditions the happening of which would bring to an end the power of members to withdraw. The 1 8 B. at p. 596. § 829. WITHDRAWALS. 349 judgment means that the society in that particular case was unable longer to carry on its business, and that it was notorious that it was unable to meet its liabilities ; but it docs not lay down a rule that the right to withdraw depends on the knowledge of the members or officers of the society that the society is in an insolvent condition, although that condition was, no doubt, present in that case, and the society must be considered as having at that time stopped business. That is how I understand the judgment in the Sunderland Case • and when I refer to Walton v. Edge} and Carriek v. North British Building Society? on which the judgment in the case of the Sunderland society is based, I find that the real question proposed by the judges was : ' Had there been a stoppage of the business, or any- thing equivalent to it?' And they decided that, if there had been, the right to withdraw was determined. But it has not been held that insolvency of the society, even if known to its officers, is equivalent to stoppage of business; and I propose to deal with the present case on that basis. Lord Shandy in Carriek v. North British Building Society, says: 'In the case of Tennent v. City of Glasgow Bank, 8 in which a number of authorities were cited and considered as to the effect of the stoppage of a business on the declared insolvency of the company, it was held that no change could thereafter be made in reference to the rights or status of the members of the company, so that at least the rights of creditors might be preserved.' That seems to me to show that he recognized that the condition which would deter- mine the right to withdraw, was the stoppage of business, or its equivalent. When it is considered who are the per- sons whose mutual rights are intended to be regulated by Rule 2f [the rule relating to withdrawal], it seems plain that stoppage of business or recognition of the fact that it is inevitable — and not insolvency — is the proper point at which to draw the line. The relations of these persons 1 10 App. Cas. 36 ; s. c. 54 L. J. 3 4 App. Cas. 615 ; s. c. 40 L. T. Ch. 36 ; 52 L. T. 66 ; 33 W. R. 417. 694 ; 27 W. R. 649. 2 12 Rettie, 1271 ; s. c. 22 Scot, L. R. 837. 350 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. must be borne in mind. They have in common put their capital into an adventure or concern, which it was hoped would yield a profit. There is a proviso enabling capital to be withdrawn. How long is the right to withdraw capital to continue ? It must continue so long as the adventure continues, or its continuance is contemplated ; but as soon as the adventure comes to an end, or the adventurers or their officers recognize that it must come to an end, from that moment every principle of justice requires that all who have joined in the common adventure shall in common bear the loss — and from that time the rule as to withdrawal ceases to operate, and there ought to be.no applications for withdrawals. Had that point been arrived at in any of the cases now before me ? It clearly had been arrived at on February 12, when the resolution for dissolution was passed ; but had it been reached before that date ? It did not arrive simply because the society was insolvent, for a company which is insolvent ma}^ still, in the hands of san- guine adventurers, carry on its business. It did not arrive when the directors published their report on January 28, because, although the directors did not, as in Barnard v. Tomson} positively recommend the continuance of the busi- ness, they clearly put the case before the members as one in which it was perfectly reasonable for them either to go on or dissolve. Therefore, the report does not show any recog- nition of the necesshvv for stopping the business. Then what is the effect of issuing the circular ? The report con- templated that the members would be called together to decide the question one way or another, and the fact that the meeting was convened to consider it leaves matters exactly where the report Left them." 2 1 Supra. W. Rep. 948. In re Corporation, 2 In re Ambition Building So- etc., Society, 22 Vict. L. Rep. (Aus- ciety [1896J, I Oh. 89; B.C. 65 L. tralia) 47; Gibson v. Safety, etc., .1. ( !h. l L3 ; 73 L. T. 508 : 1 1 W. R. Assn. 170 111. 44 ; s. c. 48 N. E. III. Rep. 580. The recent cases have followed The right cannot, of course, be the rule then laid down in this exercised after the association has quotation. Bohenshell v. Home, been judicially declared insolvent. c\<-.. Ass'n, no Mo. •"»('.(•>; s. c ll S. Chapman v. Yonng, G5 111. App. § 330. WITHDRAWALS. 351 Sec. 330— Matured Stock. When stock has matured, an unadvanced stockholder is entitled to have his stock paid off and canceled. In the case of a terminating society, this period happens at the end of the existence of the society; but in the case of a serial association, where the series to which the stock belongs has come to a termination according to the by-laws and plan of the association. If the charter, a statute, or the by-laws require a share of stock to be paid at its maturity, the holder of it cannot be required to compete with other stockholders for a preference in payment, according to a rule adopted by the directors after they had declared the shares fully paid up. 1 And if a shareholder has the right to demand pay- ment in full in cash, he cannot be compelled to elect between a less sum in cash and mortgages of a subsequent series, or take other securities in place of cash. 2 Nor can a stockholder be compelled to submit to a postponement of the date of his payment so that real estate held by the society will ad- vance, his payment of dues in the meantime going on. 3 If stock in one series has matured, the holders of it cannot 131. A member who has obtained held, that where the association a judgment on a notice given after was insolvent and more than the insolvency has intervened is in no 30 per cent had been paid out when better position than if he had no notices of withdrawals had been judgment. Id. Belief in solvency given, shareholders giving such when notice is given, does not notices were not creditors with change the rule. Id. The associa- claims, and entitled to be paid in tion must be a going concern when full the amount by them paid to the notice matures. In reCorpor- the loan fund before other share- ation, etc., Society, 22 Vict. L. Rep. holders were entitled to anything, (Australia) 47. but were on a parity with them. The by-laws of an association Rabbitt v. Wilcoxen, 103 la. 35 ; provided for a loan fund and an s. c. 72 N. W. Rep. 306. expense fund, and that any share- 1 Appeal of Mechanics and Work- holder, after giving 30 days' notice, ingmen's Building Association might withdraw the full amount (Pa.) 7 Atl. Rep. 728 ; 6 Cent. Rep. of his payments to the loan fund, 580. with earnings up to the last div- 2 Mercer v. Ambler Building and idend period ; and that the asso- Loan Association, 20 Phila. 351 : ciation should not be liable to pay s. c. 48 Leg. Int. 277 : 10 Pa. C. C. out on account more than 30 per 51. cent of the cash receipts of the loan 3 Burns v. Metropolitan Building fund during such month. It was Association, 2 Mackey (D. C.) 7. 352 BUILDING AND LOAN ASSOCIATIONS. Cll. XV. be required to compete for payment with holders of stock in a later series, which has also matured ; but a provision in the articles of association that the amount applicable to the holders of matured stock in a series shall be limited-to one- half of the association's revenues and giving priority in pay- ment to those willing to bid the highest premium therefor, in the mean time denying interest on the unpaid amounts, is valid, unless some statute forbids it. " He is obliged to forego interest," said Yice-Chancellor Bird. " This surely is sufficient penalty for delay. In addition to this, he should not be subject to the hardship which might ensue if he were obliged to yield to the exactions which subsequent share- holders might impose, who perhaps could afford, since they lose no interest, to supply their necessities by offering high premiums for the money. If the principle contended for by the defendant should prevail, then the owner of the stock in the first series might be postponed until the owner of the stock in the last series was satisfied. In such case, were there to be eight or ten series, the owner of stock in the first would not only be deprived of his principal until the liquida- tion of the owners of stock in the last series, but also of his interest; so that, in case each series should not commence until the expiration of two years after the last, the loss of interest to the owner of stock in the first series would ex- ceed the amount of his principal. Certainly there is not only nothing mutual in this, but it is in every respect highly inequitable." 1 Suit to recover the amount due on matured or prepaid stock must be brought in equity and not at law. 2 " It is not necessary, or at least not indispensable, that the as- sociatioi] should resolve that the shares have matured; if it, does any act which it could not do except upon the basis that the shares have matured, then the implication is irresistible 1 Deering v. Bishop Bale; Build- 2 O'Rourke v. West Penn. Loan inguml Ln.in Association (N..J.), and Pudding Association, N AV. N. '.'I At I. Rep. 575. Cas. 170; S.C. 37 Leg. Int. 20; af- In tin's case the company was firmed, !»:; Pa. St. 308 ; S. 0. 37 Leg. rcxtrnhietl from accepting bids of- Int. 190. I'i red l>y ;niy members of any sub- equenl series. § 331. WITHDRAWALS. 353 that they are matured." l The stock can only be paid off in cash. 2 Sec. 331 — Foreign Associations. An Illinois statute declares that " foreign corporations doing business in this state shall be subjected to all liabili- ties, restrictions, and duties that are or may be imposed upon corporations of like character, organized under the general laws of this state;" and the statute for incorporation of homestead loan associations provides that any stockholder may withdraw from such corporation on thirty days' notice. It was held that an Illinois stockholder in a foreign home- stead loan association doing business in that state might withdraw his stock on thirty days' notice, regardless of the provisions of his stock certificate. 3 1 Mercer v. Amber Building and Loan Association, 10 Pa. C. C. 51 ; s. c. 48 Leg. Int. 277. 2 Id. ; Plymouth Building Asso- ciation v. Mangan, 2 Kulp. 210. Where a by-law provided that " The certificate of any member is redeemable in cash after twenty- four payments thereon have been made, the shareholders being en- titled to receive the amount paid in on his shares, together with six per cent ; " this was held to render the stock as redeemable only at the op- tion of the association. Peters v. As- sociation, 12 Pa. C. C. 192. Where the rules provided a member might withdraw if he had a certain cause 23 and the trustees were satisfied such cause existed, it was held that they could not arbitratily refuse him the permission. Wettervvoulgh v. Knickerbocker B. Ass'n, 2 Bosw. 381. 3 Granite State Provident Asso- ciation v. Lloyd, 145 111. 620 ; s. C. 34 N. E. Rep. 142 ; affirming, 48 111. App. 429 ; Granite State Prov- ident Association v. Sonderman , 48 111. App. 433 ; affirmed, 145 111. App. 624 ; s. C. 34 N. E. Rep. 143 ; St. Louis etc., Co. v. Yantis, 72 111. App. 597 ; S. C. 173 111. 321 ; s. C. 50 N. E. Rep. 807 ; Rhodes v. Missouri, etc., Co., 173 111. 621 ; s. C. 50 N. E. Rep. 998 ; reversing 63 111. App. 77. CHAPTEK XYI. REDEMPTION AND THE EIGHT TO EXERCISE IT. Sec. 332. Right to Redeem a Valuable One. 333. Terminating and Permanent Societies. 334. The Right of Redemption— English Cases. 335. Right to Property Released. 336. Rules as to Redemption. 337. Equitable Scheme for Redemption. 338. American Scheme. 339. Redemption Discouraged. 340. Permanent Societies. 341. Whole Premium Charged with Interest. 342. Provision for Losses. 343. Costs of Redemption Action. Sec. 332 — Right to Redeem a Valuable One. It is evident that the right to redeem a mortgage before it becomes due is quite a valuable one; for thereby the mortgagor is able to relieve his land of the burden imposed upon it by the loan. But it is also equally clear that unless either the terms of the mortgage reserve the right, or the rule or some statute give it, the mortgagor cannot exercise the right to redeem, unless the society consent. 1 Sec. 333— Terminating and Permanent Societies. In the case of a permanent association the date when the mortgage will become extinguished is well known; but not so with a terminating association. From the very nature of these latter associations it is impossible to know with cer- tainty how long it may be necessary to continue the period- ical payments. These must be made until the sum necessary to give every unadvanced member the full amount of his share has hern accumulated. The time required for this 1 See Ch.-ipttT XV. <>n withdrawals. 354 § 334. REDEMPTION OF MORTGAGES. 355 purpose would be more or less, according to the amount of beneiit which the society may derive from the discount given on the shares, and from the interest made by the in- vestments — in other words, as the profits realized by great or small. " If the society be successful, and the tables upon which its operations are based have been properly calculated, the object of its existence will be accomplished within the tonus originally contemplated by its members. If, on the other hand, it be unfortunate, the society may last for years beyond the time when it w T as expected to close. The settle- ment of the terms upon which a member should be allowed to redeem before the close of the society will therefore de- pend upon the position and prospects of the society ; and unless the rules be very clear some intricate calculations may be required." 2 Sec. 334 — The Right of Redemption — English Cases*, The right to redeem a mortgage or other security given to secure an advancement or loan has been before the Eng- lish courts quite frequently, and received careful considera- tion at their hands. A resume of these decisions has been so well stated in a recent English work, that we beg the reader's indulgence because of the following lengthy quotation : Mosley aga/inst Baker. — "The first case on the subject was Mosley v. Baker. 2 There, a rule of the society pro- vided, ' That if any member of this association shall be de- sirous of paying off and redeeming any security or securi- ties which he shall have given to this association, and shall give notice of such his desire to the manager, the direc- tors 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 1 Davis on Building Societies, 2 Davis on Building Societies, (4 ed.) p. 238 ; Flemming v. Self, (4 ed.) pp. 238-256. 3 De G-. M. & G. 997 ; s. c. 24 L. J. 3 12 Jur _ 551 . 10 L . T. O. S. 461 ; Oh. 29 ; 24 L. T. O. S. 101 ; 3 W. R. 6 Hare, 87 ; 17 L. J. Ch. 25 ; on 89 ; 1 Jur. N. S. 25 ; 3 Eq. Rep. 14 ; appeal 18 L. J. Ch. 457 ; s. C. 13 18 J. P. 772. L. T. O. S. 317 ; 1 Hall. & T. 301. 356 BUILDING AND LOAN ASSOCIATIONS. Cll. XVI. secured in and by the mortgage ; and the directors are hereby authorized and empowered to receive the balance, * * * 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 * * * indorse a receipt. * * * Mosley became an advanced member, and executed a mortgage deed whereby, after re- citing that he (plaintiff) was, according to the rules, entitled to receive a certain sum, it was Avitnessed, that in considera- tion of such sum he assigned to the trustees the property in question, to secure the monthly subscriptions, etc., upon trust that if Mosley should duly pay, observe, and perform all the subscriptions, payments, redemption monies and regulations according to the articles of the association, to permit him to hold and enjoy the premises, and to receive the rents and profits thereof for his own benefit ; but if Mosley should fail to do this, then it should be lawful for the trustees to appoint a person to collect the rents and profits thereof, and thereout to pay, satisfy, and effect all the purposes before mentioned ; but in case the rents and profits of the premises should be insufficient to satisfy such purposes, then upon trust that the trustees, with or without the concurrence of the mortgagor, should sell the premises. The trusts of the money to arise from such sale were de- clared to be, first, to retain and pay all expenses of execut- ing the trust ; then to retain for the association ' all such subscriptions and other payments as shall be then, or si 1 all hereafter become due and owing and payable in respect of the said shares by him the said (J. Mosley, his executors, etc., calculating the probable duration of tin' said associa- tion, it being hereby declared and agreed, that in case such sale as aforesaid shall take place, all monies 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 thai the same shall be fully deducted and paid out of the monies received by virtue of the aforesaid powers or trusts, and t hat t he said trustees, or board of directors of t he said assoeiat ion, shall calculate the amount accordingly,' and upon trust to |>ay the surplus, if any, to the mortgagor. § 334. REDEMPTION OF MORTGAGES. 357 Mosley 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 cer- tain 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 monies, subscrip- tions, fines or other payments on his said shares accruing after such tender, the plaintiff offering to confirm the sale that had been made, and to pay what should be found due from him ; and that, upon such payment, the trustees might indorse a receipt or acknowledgment upon the mortgage 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 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 accord- ing to the terms of the deeds. This decision was after- wards affirmed/' 1 Seagrave against Pope. — " In Seagrave v. Pope 2 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 repa\^ment 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 mort- gage should be indorsed as satisfied. The rule which pro- vided for the case of an advanced member being desirous to redeem, was nearly the same as that in Mosley v. Baker (ubi supra). Lord Truro, L. C, held, that an advance made i 18 L. J. Ch. 457 ; 13 L. T. O. S. Ch. 258 ; 16 Jur. 1099 ; 20 L. T., O. 317 ; 1 Hall & T. 301. S. 173. 2 1 De G., M. & G. 783 ; 22 L. J. 358 BUILDING AND LOAN ASSOCIATIONS. Cll. XVI. to the plaintiff upon bis shares was not a loan, but an an- ticipatory payment, by way of discount, of the shares he would otherwise have been entitled to at the termination of the society ; and that the deed was to secure his future sub scriptions, etc., until that period, and that ho was entitled to redeem upon the terms of repayment of the advance, minus the amount of subscriptions paid by him up to the notice to redeem ; and the bill was dismissed, on the ground that the plaintiff was bound to continue his payments until every member had satisfied his shares, there being no cove- nant for repayment or proviso for redemption in the deed. This case is considered to have decided that the member could only redeem upon payment of his 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 Finn in'j against Self. — "In Fleming v. Self, 2 the 14th rule provided, ' That if any member should be desirous of satisfying the securities which should have been given for any shares which he might have purchased, and should give notice of such desire, then that the directors should, within one month, award him the same proportion of profit per share ;is was allowed on the withdrawal of unpurchased shares ; and the directors should 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 tin' mortgage; and the directors were thereby authorized to receive the same, etc' By the 33d rule, 'When all the payments mentioned in the rules hereinbefore contained, that is to say, when the full sum of £100 for each share, with nil other expenses and liabilities of the society, shall be fully paid and satisfied,' the society should then cease. By the h'-th rule, members wishing to withdraw unpurchased shares were to be allowed such bonus upon withdrawal as the directors should from time to time appoint. The plain- till' became an advanced member, and subsequently the directors passed a resolution that the society should termi- 1 See 2 I !.. .1. < li. 81. R. 89; 1 Jur. N. S. 25 ; 3 Eq. Rep. .; De <;.. M. & <;. 997; -M I- •»• 14; 18 J. P. 77'.'. Ch. 29; -M l>. T. 0. S. 101 ; 8 W. § 334. REDEMPTION OF MORTGAGES. 359 natc 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 allowed to withdrawing- members should be £32 per share.' At the end of the term of eleven y<';w>, from the formation 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 fur- ther 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 payment of £180, that sum being the calculated amount payable by him from the time of his giving notice 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 the payment of the same. It was eventually held that the plaintiff could only redeem upon the terms of pay- ing the amount of subscriptions and redemption money, which would become payable by him, during the longest period that the society could possibly last, having regard 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 the last part of the order, the Lord Chancellor, in making it, varied the decree of the court below, where the Y ice-Chancellor had decided that the plaintiff was not en- titled to any share of the profits." Mosley against Baker Distinguished. — " In the case just cited, the Lord Chancellor referred to Mosley v. Baker ( ubi supra) ; he pointed out 1 that in that case no question as to profits in fact arose, inasmuch as the bill to redeem was filed before the expiration of the period required to run be- fore the member would be entitled to profits. Also, that as to the period during which the plaintiffs liability to con- i Fleming v. Self, 3 De G., M. & G. at p. 1028. 360 BUILDING AND LOAN ASSOCIATIONS. Cll. XVI. tribute was to be treated as enduring, the mortgage there expressly stipulated that in case the mortgagees should ex- ercise their power of sale, they should out of the proceeds retain the full amount thereafter to become due from the mortgagor, calculating the probable duration of the associa- tion. There the mortgagees did exercise their power of sale, and the decree gave to both parties, mortgagor and mort- gagees, the precise benefits for which they bargained. Assuming, therefore, such provision in the mortgage deed to have been not inconsistent with the rules of the society, it did not seem to the Lord Chancellor to govern the case (Fleming v. Self) then under consideration, where profits were payable to withdrawing members, and where the power of sale had not been exercised, nor, on its being ex- ercised, was there the provision as to calculating the prob- able duration of the society.'" Archer against Harrison. — " In Archer v. Harrison 1 the question involved was the same as that which arose in Flem- ing v. Self, namely, the right of a borrowing member, when he redeems, to the benefit of any bonus that had been de- clared on the shares prior to the notice to redeem, and the rules were similar in all respects. 'A bonus of £23 per share had been declared 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 en- titled to participate in the bonuses. The calculation was consequently erroneous ; and accordingly, after the decision in Fleming v. Self, but subsequently to the plaintiff's notice to redeem, the directors made another calculation, and de- termined that 67 per share was the proper amount of the bonus, in older to enable the directors to pay all borrowing members, subsequently coming to redeem, the same bonus of L'7 per share. The defendants offered the plaintiff this bonus, but he declined to lake it, contending that, upon the principle of Fleming v. Self, he was entitled to the amount of the bonus declared prior to his giving notice to redeem. The Lord Chancellor held that he was entitled to the actual i 7 Do G. M. &<:. W4; 8 Jur. N. S. 194; 29 L. T. O. S. 71 ; 21 J. P. 515. § 334. REDEMPTION OF MORTGAGES. 361 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 ulti- mately 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 existence of the society.' " Smith against Pilkington. — "Smith v. Pilkington 1 was another redemption suit, in which the point was, whether credit should be given for redemption monies which had been paid by the plaintiff. Smith in 1846 became a borrow- ing member of ' The Gloucestershire and Cheltenham Mu- tual Benefit Society,' the rules of which were similar to those in Fleming v. Self ( ubi supra). 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 accordance with the rules of the society. In July, 1S56, meetings of the society were held, Smith, who was a director, being present, at which redemption of the securities was proposed upon certain terms, and all the borrowing members, some of whom Smith had con- sulted, 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, whereby he prayed that it might be declared that he was, on the 24th of Oc- tober, 1856, on redeeming his mortgage security, entitled to the bonus of £25 per share on each of his shares in the society ; that certain accounts might be taken and the plain- tiff credited with the amount of the said bonuses ; that the defendants might be decreed to pay 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 conduct precluded from redeeming, except upon the terms proposed at the above-mentioned meetings, and granted to all other borrow- 1 4 Jur. N. S. 56 ; 30 L. T. O. S. De G. F. & J. 120 ; 29 L. J. Ch. 196 ; 22 J. P. 5 ; S. C. on appeal, 1 227 ; 24 J. P. 227. 362 BUILDING AND LOAN ASSOCIATIONS. Cll. XVI. ing 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 retiring members; 1 that there was no new agreement entered into between Smith and the directors ; and therefore that the plaintiff was entitled to the relief pra} T ed for, the ac- counts to betaken upon the principle of the decision in Fleming v. Self. 2 " The accounts were taken, and it appeared that a sum of about £28 was required to make up the amount payable by the plaintiff in respect of his shares from October, 1856, up to the calculated time of the expiration of the society. This being deducted from £100, the amount of bonuses on the plaintiff's four shares left a sum of £72 due to him. The defendants, however, contended that the redemption monies, amounting to £96, and payable by the plaintiff in respect of the advance made to him, must be brought into the account and charged against him ; and accordingly they appealed from the Yice-Chancellor's decision. If the ac- count were made out according to the defendants' conten- tion it would be thus: — Dr. Cr. Subscriptions £240 Subscriptions paid £240 Redemption monies 96 Profits on the four shares 100 Amount to be made up 28 Balance due lrom plaintiff. . . 24 £364 £364 But if the account were made out in accordance with the Vice-Chancellor's decree, it would stand thus : Dr. Or. Subscriptions £240 Subscriptions paid £240 Redemption monies 96 Redemption monies paid 96 Amount to be made up 28 Profits 100 Balance due to plaintiff 72 6436 6436 "The full Court of Appeal in Chancery held, 3 affirming 1 See ^.rmitagev. Walker, 2 Jur. 2 Ubi, supra. N. S. 13 : .'<; L. T. L82 ; 2 Kay .V .1. ; I De Building Societies, etc., p of Redeeming Property Mortgaged 53. § 337. REDEMPTION OF MORTGAGES. 365 (assumed in the tables which are the basis of the society), for half the period during which the society has been in operation, would reach; treat that amount as positive present loss, and therefore to that extent a diminution of the subscribed capital, which must be made good. In such case, according to the number of years which are unexpired out of the anticipated term of operation, add to this loss, in like manner, a proportionate sum in respect of further loss for those years. In accordance with the primary principle adopted in these societies, namely, that oC the subscriptions accumulating at compound interest, no such accumulations, or any moneys received in respect of interest, must be passed to the management or contingent fund, these ac- cumulations being strictly portions of the capital fund. In the rule suggested for ascertaining profit or loss, it is sup- posed that, where losses do occur, they arise at intervals ; and therefore it is deemed sufficient to take the sum of such loss to be accumulated during half the period in which such loss has occurred. Thus, if we ascertain its amount up to the time of inquiry, and allow a proportionate sum for the future unexpired term, it is reasonable to suppose that such sums, put together, will cover the total deficit for the whole period of the society's anticipated existence ; and by deduct- ing at the time of inquiry this amount from the amount of the existing investing shares in force, that is, from their gross ultimate value, we shall find an approximation to the actual amount of capital which will subsist at the end of the term, and consequently, by comparing this loss with the proportion of capital which ought, on an arithmetical ratio, to accumulate in each year, the additional time, if necessary, may be found which, would require to be superadded to the original duration of the society, and within which, in all likelihood, it would really terminate. It will then be neces- sary to ascertain the source of this deficit, whether it arises from the investments (loans) or from an excess of expenses over the receipts from the fee fund, or their relative pro- portions. Then assess as a present charge upon all the shares, whether investing or anticipated, a proportion of the loss accruing from management expenses ; and upon the 366 BUILDING AND LOAN ASSOCIATIONS. Cll. XVI. advanced (or borrowed) shares exclusively, a proportion of the loss derived from investments. Then proceed to dis- count, at the given rate of interest, the future payments of the borrowing members about to redeem, for the unexpired term ; this will give the present value of such payments ; to the present value of the sum so found add their proportions of the loss accounts respectively, as previously ascertained, and let the amount be the value or price of the redemption of the property mortgaged. In case of a balance of profit accruing as before explained, the same will be retained on behalf of the society, and the present value of the future payments of the borrowers, without such addition, will of course be the sum to be paid by them.' " Sec. 338— American Scheme. " The following is the plan of redemption in the State of Philadelphia, where the societies receive a premium at the time of the advance being made ; the shares being issued in series, and continuing in force until completion. First of all, the member is credited with the amount of the subscrip- tions paid by him, and of the profits thereon allowed by the rules of the society. Then he is credited with a certain proportion of the premium originally paid by him, this being determined by the number of years the mortgage has been on foot, and decreasing every year. The sum ascer- tained to be the total amount of subscriptions and profits to which the member is entitled, plus the portion of the premium returned, is deducted from the amount of the original loan, and the balance remaining is the amount of cash required to pay oil' the loan. 1 A slight modification of this plan would render it available for those societies which put up i heir approprial ions for sale to the members." Sec :{:>'.> Redemption Discouraged. "Iu all terminating societies the practice of redeeming mortgages is discouraged ; ' it is by staying in and holding on to the loan and working through the shares until the ultimate value is reached, that the prolits and losses are 1 Wrigley on Building Associations, 6th ed. 68. § 340. REDEMPTION OF MORTGAGES. 367 equalized, and the advantages gained, which reduce the premium and interest paid on a loan to an equality with a transaction made in the ordinary way.' ' It is a system re- quiring a certain period of time, certain combinations, and tin 1 united and harmonious action of its members to work out its results, and it is very apparent that to pay bade a loan before the ultimate result is attained, disturbs the even flow of the scheme, and therefore it is not desired, and is required to be paid for as a privilege by the repaying member.' " *• Sec. 340 — Permanent Societies. " In a permanent society the question as to redemption is generally very simple. For although the particular rules of the society, especially as to any provision for losses, must in each case be considered in order to arrive at the terms upon which an advanced member may redeem, yet as the payments are fixed independently of the period of the existence of the society, it is always easy to calculate the amount which ought to be paid as the price of redemption." Browrdie against Russell. — "In Brownlie v. Russell? the position of an advanced member, who sought to redeem after the society was ordered to be wound up, was considered by the House of Lords. The respondent Russell was the holder of twenty-eight shares in a Scotch incorporated society. In respect of these shares he received an advance of £700, giv- ing what is known in Scotland as a disposition in security, the effect of which was to charge certain real estate with the payment of £700, and interest at £'5 per cent. There was also a bond for payment of principal and interest ; and at the same time the respondent received from the society a memorandum in which it was stipulated that the bond was not to be enforced so long as he continued the regular pa}nnent of the instalments, interest, and other sums to be- come due on his shares, as provided by the rules. For some years, and down to the date of the winding-up order, he, by monthly instalments, regularly paid up to the society interest 1 Wrigley, p. 66. 47 J. P. 7-->7 : 10 Rettie (H. L.) 19 ; 2 8 App. Cas. 235 ; 48 L. T. 881 ; 20 Scot. L. R. 481. 368 BUILDING AND LOAN ASSOCIATIONS. CI). XVI. at £5 per cent, on the full sum of £700, and also all subscrip- tions and other payments on account of his shares, as pre- scribed by the rules, and in his share account in the ledger, and in a separate account at the end of his pass-book, he was credited annually with a share of what was termed contin- gent profits, which were allocated to him in proportion to his capital arising from subscriptions and profits, and to the time such capital has been in the society. The shares were to mature when the subscriptions paid, with the profits allo- cated thereon, amounted together to £25. " It may be observed that although the rules seem to have been very loosely drawn, and to have been silent as to re- demption by advanced members, in the sense usually under- stood in England, there was a rule (the 12th), which was much referred to in the course of the case. It provided that all advances should be repaid by monthly instalments, with interest at the rate of £5 per cent, per annum, such interest to be paid monthly, in advance, and at the same time as the instalments ; that any member failing to pay his instalments or interest should be fined, and that it should be lawful at all times for a member who had obtained an advance to withdraw from the society upon giving the manager one month's notice in writing, and paving up the whole of his debt, interest, and fines, after deducting the amount of the monthly instalments paid upon his shares, with interest thereon calculated as provided by the rules. There was a corresponding rule empowering unadvanced members to withdraw their shares at any time after twelve months from the date of entry on giving one month's notice, when the whole instalments were to be repaid with interest. Mem- bers—both advanced and unadvanced — withdrawing before the completion of their shares, forfeited the contingent profit allocated to them, but in lieu thereof they received interest on their subscriptions, at certain varying rates according to the duration of their membership. '• As events turned out, although in the earlier years of the currency of the security the society made profits, a pro- portion of which was carried to. the credit of the borrowers' Bhare account, losses ultimately ensued, and a winding-up § 340. REDEMPTION OF MORTGAGES. 369 order was made. The liquidators of the society toot this view of the dealing - , between the respondent and the society : That the advance of £700 was an absolute loan at £5 per cent, made upon the bond and disposition in security, and continuing all along as a debt due from the respondent to the society. That, simultaneously with this, but virtually as a separate transaction, the respondent was subscribing for shares in the society, which were entitled to share in its profits, and were liable to share also in its losses, but which he hoped and expected would within a certain number of years entitle him to receive from the society a sum suffi- cient to discharge all liability in respect of the bond and disposition. " Further, that the society not having succeeded accord- ing to the hopes and expectations of the members, and a winding-up order having been made, the respondent, if he wished to obtain a release of his property after the winding- up order, could not withdraw his shares, but must pay back to the society the full amount originally borrowed (£700), leaving the subscriptions paid by him upon his shares as his stake in the society, and taking his chance equally with the other members of obtaining a dividend upon the amount thus invested. " The court of sessions held that the advance of £700 obtained by the advanced member (Mr. Eussell), had been pro tanto extinguished by the sum of £414, being the amount of the instalments paid by him down to the date of the w T inding-up order, and that the liquidators were bound to impute towards reduction of the advance all instalments paid or that might yet be paid subsequent to the date of the winding-up order; and further, that Mr. Eussell was enti- tled, under the rule above referred to, to withdraw from the society upon payment of the difference between the advance of £700 and the amount of the instalments paid by him in respect thereof, with interest added to these instalments in terms of the rule. 1 The House of Lords practical ly affirmed this judgment, but their judgment is based on slightly dif- ferent grounds. Their lordships held that after the wind- 1 8 Rettie, 917. 24 370 BUILDING AND LOAN ASSOCIATIONS. Cll. XVT. ing-up order the advanced member had no better right to withdraw than the unadvanced member; that the winding:- up order was equivalent to a compulsory withdrawal against all members; but that it could not take away from an ad- vanced member his right to redeem his mortgage by paying- all that was due upon it. ' I cannot but think,' said the lord chancellor, ' that the true effect of the winding-up order is very much that which was put to } T our lordships by Mr. Davey in his able argument. I think the winding-up order prevents the exercise of those options of retirement or with- drawal given to all members, to the unadvanced members under the 9th rule, and to the advanced members under the 12th rule ; as to which the rules must, I think, be taken to contemplate a going concern. That is perfectly consistent with the opinion of Yice-Chancellor "Wood in the Doncaster Case, 1 who spoke of the winding-up order as substantially putting a stop to the whole affair. But, my lords, what is the effect of a winding-up order ? It takes away the option of retirement or withdrawal, which otherwise while the con- cern was going would have belonged to each member. If a vis 'major, as the vice-chancellor said, puts a close to the whole concern, it terminates at the date of the winding-up order the account on each share. * * * It is really equi- valent not to an optional withdrawal or retirement by the member, but a compulsory withdrawal by the operation of the winding-up order against them all. But it cannot take away from a shareholder the right to redeem his mortgage by paying up all thai is due upon it, of course in that way getting rid of future interest.' "In Brownlie v. Russell, above cited, the society was in- corporated, but from the subsequent case of Tosh v. North British Building Society? which also went to the House of Lords, ii appears that the principles as to the redemption laid down in the former case, apply equally to an incorpo- rated society." 1 3 Eq. 158; S. 0. 15 L. T. 270; 413; 14 Rettie (H. L.) 6; 24 Scot. 15 W. I.\ L02 ; 81J. P. 810. L. R. 128. - II A pp. Cas. ts'.i; 85 W. R. § 343. KEDEMPTION OF MORTGAGES. 371 Sec. 341 — Whole Premium Charged with Interest. " Where the borrowing member agrees to pay a premium for his advance as part of the capital sum, the payment of such advance and premium being spread over a number of years, the society is entitled, on redemption, to require pay- ment of the whole of the premium, making no rebate to the member in respect of any unexpired period; also, in such a case, interest up to the date of redemption will be payable upon the total amount made up of the cash advanced, and the whole premium charged." 1 Sec. 312 — Provision for Losses. " If there is any provision made in the rules that ad- vanced members shall contribute to losses suffered by the society, this will of course have to be taken into considera- tion when settling the amount to be paid on redemption. It is to be observed that such provision need not necessarily be contained in the rules in force at the time the mortgage was executed, but the member's position may be affected by alterations of rules made subsequently to his receiving an advance." Sec. 343 — Costs of Redemption Action. " Generally the costs of a redemption action are borne by the mortgagor, 2 but they may be specially dealt with by the court. This was done in Durham, etc., Working Men'* Building Society v. Davidson? when Lindley, L.J., said that under ordinary circumstances a mortgagor seeking to redeem pays the costs of an action to redeem. But the case before the court was peculiar and exceptional. The costs of the counterclaim were entirely caused by the unten- able position taken up by the society. The society refused 1 Harvey v. Municipal Perma- redemption suit against a building nent Investment Building Society, society. See also Morgan and 26 Ch. D. 273 ; 52 L. J. Ch. 349. Wurtzburg on costs, p. 221, et seq. 2 See Cotterell v. Stratton, 8 Ch. 3 61 E. J. Q. B. 473 : s. C. 67 E. 295 ; 45 L. J. Ch. 417 ; 28 L. T. J. 269 ; 56 J. P. 660 ; 8 T. L. R. 218 ; 21 W. R. 234; 37 J. P. 4 ; a 428. 372 BUILDING AND LOAN ASSOCIATIONS. Ch. XVI. to allow the defendant to redeem unless he complied with their terms, and those terms were wholly inconsistent with any fair construction of the rules of the society. Under these circumstances the society ought to pay to the de- fendant his costs of his counterclaim, and of his appeal." CHAPTER XYII LIABILITY OF MEMBERS TO CONTRIBUTE WHEN LOSSES OR INSOLVENCY INTERVENES. Sec. 348. Different Relations of Members to Association. 349. Members Must Contribute to Losses — Amount. 350. Compromise with Members and Release from Liability. 351. Cannot Evade Liability by Transfer of Stock. 352. Insolvency Intervening after Notice of Withdrawal Given. 353. Members Who have Withdrawn. 354- Withdrawal Members Preferred to Those Remaining by Rules of Society. 355. Borrowing Members Equally Liable with Unadvanced Members. 356. Borrowing Members Equally Liable with Unadvanced Mem- bers, Continued. 357. Advanced Shareholder Ceasing to be Member of Society — Paid-up Stock. 358. Preference Shareholders. 359. Amended Rules Imposing Liability. 360. Liability of Borrower on his Note and Mortgage. 361. Liability of a Minor or Married Woman to Contribute to Losses. 362. Liability of Deceased Member's Estate to Contribute to Losses. 363. Outside Creditors Paid First. 364. Director Postponed to Stockholders. 365. Subrogation of Shareholder having Advanced Shares. See. 348 — Different Relations of Members to Associa- tion. The liability of members, and their liability to contri- bute to the general fund of the society when it becomes insolvent or suffers losses may be considered with reference to the six different statuses members may have assumed when insolvency intervenes, viz. : First. — Those who are members in full standing when insolvency intervenes. 373 374 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. Second. — Those who have given notices of an intention to withdraw before insolvency intervenes, but who have not yet withdrawn, either by reason of their own failure to complete it, or by reason of the failure of the association to perfect it. Third. — Those who gave notices after insolvency of an intention to withdraw, but before the insolvency was ascer- tained or known. Fourth. — Those who had given notices and completed their withdrawals before insolvency was known, although the association was either actually insolvent before the notice was given or the withdrawal perfected. Fifth. — Those who had given notices and completed their withdrawals before the association became insolvent. Sixth. — Those who have become borrowers. Sec. 349 — Member Must Contribute to Losses — Amount. Inasmuch as every member is entitled to share in the profits of his building association, he is justly held liable to contribute to its losses and the expense incident to its man- agement. 1 The extent of this liability is the amount of the par value of the stock standing in his name on the books of the association, and the amount of unpaid subscription he owes on such stock. 2 If he has not paid anything on the stock he is liable then to pay, if it be necessary to cancel the debts of the association, the full amount he would 1 McGrath v. Hamilton Building Association v. Zucker, 48 Md. 448 ; Association, 44 Pa. St. 383 ; In re Wohlford v. Citizens' Building, Saint John Building Society, 28 Loan and Savings Association, 140 N. B. 597; Mechanics' Mutual So- Ind. 662 ; s. c. 40 N. E. Rep. 694; i-i'ty v. Lefebvre, 12 Rev. Leg. Browne v. Sanders, 20 D. C. 455 ; 294; Wilson v. CTpper Canada Brown v. Archer, 62 Mo. App. 277 ; Building Society, 12 Grant Ch. S. C. 1 App. Mo. Rep. 165. Hut see 206; fn re National Saving Loan Brownlie v. Russell, 8 App. Cas. and Building Association, 9 W. N. 235; s. c. 48 L. T. 881 ; 47 J. P. ('as. 79; s. C. 37 Leg. Inf. 299; 757; 10 Rettie (H. L.) 19 ; 20 Scot. Chri tian's Appeal, 102 Pa. St. L. Rep. 481, on this point. 184; s. c. L8 W. \. Cas. L81 ; 30 * In re West London and Gen- Pitts. L.J. 435; 40 Leg. Int.. 261; era] Permanent Benefit Building Hanney v. Enterprise Saving Fund Society [1894] 2 Ch. 352 ; s. c. 63 and Building Association, If. W. L. J. Ch. 506; 70 L. T. Rep. 146. >'•'. Ca . 150; Low Street Building 349. CONTRIBUTION TO LOSSES. 375 otherwise have been liable to pay ; and if he has paid the stock up in full, then that stock is liable to be sold if neces- sary to pay the debts ; but if any of the proceeds of the sale remain after the debts have been satis lied, then he is entitled to the return of such amount. 1 En an English case the rule 1 State Savings Association v. Kellogg, 63 Mo. 540. In re Saint John Building Society, 28 N. B. 597 ; s. c. 9 Occ. N. 348. After declaring that all the mem- bers of a building society were partners in relation to each other. it was declared by a Canadian court " and losses, as well as the profits, all the partners or mem- bers must share. The borrowing or advanced members have no equity as against the non-borrow- ing or unadvanced members. Both classes have the same control over the operations of the society. Both have the same right of voting for directors ; and both have, in proportion to their shares, the same number of votes at all gen- eral meetings of the society. The borrowing members did not cease to be members when they obtained payment, or what they accepted as payment, of their shares in ad- vance." Wilson v. Upper Canada Building Society, 12 Grant. Ch. 206. There is no order of priority in their liability to contribute towards outside creditors, as between the holders of fixed or permanent cap- ital stock, holders of unmatured investing stock, and holders of matured shares who have accepted dividends. In re Saint John Build- ing Society, 28 N. B. 597 ; S. C. 9 Occ. N. 348. A member cannot escape liabil- ity by pleading that no account has been rendered him, and that he has not been offered any ex- planation why the liquidation is necessary. Mechanics' Mutual So- ciety v. Lefebvre, 12 Rev. Leg. 294. The double liability of a stock- holder only arises when there are outside creditors. In re Provincial Building Society, 30 N. B. 628. An officer of the association can- not secure a preference. Quein v. Smith, 108 Pa. St. 325 ; s. C. 42 Leg. Int. 386. A member borrowed on 5 shares $800 and gave his bond for $1000 ($200 being for premium) secured by mortgage. The association made an assignment. The mem- ber had paid up all his dues and was able and willing and desirous to continue payment, It was held that the object of the association having failed, he was required to only pay back the $800 with legal interest thereon. " After this has been done he is entitled to the re- assignment of Ms shares of stock, upon which he may perhaps realize something after the creditors have been fully paid." State Saving and Loan Association v. Carroll, 15 Pa. C. C. 522. The English statute of 1874, pro- vided that " the liability of any member of any society under this act in respect of any share upon which no advance has been made shall be limited to the amount ac- tually paid, or in arrear on such share, and in respect of any share upon which an advance has been 376 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. was laid down as follows : " Where a compulsory winding- up supervenes, a line is to be drawn at the date of the wind- ing-up, and that thereupon, as it is put by Lord Watson, 1 the liability of the shareholder is put an end to, so far as regards all liability beyond the amount which he was bound to contribute up to that date. That is the time at which you are to ascertain the liability of the members and their interest in the society." 2 Sec. 350 — Compromise with Member and Release from Liability. A building association has power to compromise with a member and to release him from further obligation to it, whether the indebtedness has arisen from a loan or on a subscription for stock ; and if the parties to the compromise act in good faith, the transaction will not be rescinded be- cause the released member has been paid a greater sum than he would have received upon &pro rata distribution of the assets. 3 Nor can the members of the association im- pugn it if it has been acted upon in good faith. 4 But where the members passed a resolution that if every one would pay up his dues to June 2, 1879, the association might dissolve and each one would be paid off his share made shall be limited to the 47 J. P. 757 ; 10 Rettie (H. L.) 19 ; amount payable thereon under any 20 Scott L. R. 481. mortgage or other security or un- x Ubi supra. der the rules of the society," 37 & 2 In re Middlesbrough, Redear, 38 Vict. (1874), chap. 42 sec. 14. etc., Society, 58 L. J. Ch. at p. 778 ; In construing this section Lord s. c. 5 T. L. Rep. 51(5. Watson said : "The effect of the 8 Wangerian v. Aspell, 47 Ohio liquidation, so far as regarded such St. 250 ; s. c. 24 N. E. Rep. 405 ; 23 a shareholder (/. e., unadvanned], Wkly L. Bull. 380; State v. Ober- was, in my opinion, to put an end lin Buildingand Loan Association, to all liability on his pari beyond 35 Ohio St. 258. the amount which hie was bound 4 Hoboken Building Association tocontribute up to that date. So v. Martin, 13 N. J. Eq. 428 ; Miller far as he had paid, he was doI v. Jefferson Building Association, bound to pay again ; bui he was :,n Pa. St. 32; Booz's Appeal, lot) bound to pay so far as he had pre- Pa. St. 592; s. c. 16 W. N. Cas. vion-lv failed to pay In terms of 865; 42 Leg. Int. 501 ; 38 Pitts. L. the ml.-." Brownlie v. Russell, 8 Jr. 389. Contra, Heggie t>. Build- App. ('as. 275; S. C. t M L. T. SSI ; ing and Loan Association, 107 N. C. r,si ; s. C. 12 S. B. Rep. 275. § 351. CONTRIBUTION TO LOSSES. 377 with a premium ; and, in accordance with this resolution, most of the members having paid up their dues, were so paid off and went out of the association ; but approaching the time of final distribution, it was found that there were not sufficient funds in the treasury to pay off all the mem- bers; it was held that the case being one of mistake of cal- culation, and there being no element of fraud in the trans- action, those who were not paid could recover their share from those who had gone out; that all who had not paid should pay in an amount that would pay thorn up to June 2, 1879, and as there were different classes, if the amount paid in by requiring all to pay up to June 2, 1879, was not sufficient to pay off, those who had received the highest amount of profit were to be first assessed until they had been assessed an amount which would reduce their profit down to those who had received the next highest amount, and so on. 1 Sec. 351 — Cannot Evade Liability by Transfer of Stock. It is a well-settled rule that a stockholder cannot evade his liability to contribute to the association's indebtedness by a transfer of his stock, even for full value, after such indebtedness has arisen or been incurred. 2 But a statute may provide that if the transfer is executed according to certain rules to be adopted by the society, and those rules are adopted and the transfer made according to their pro- visions, the transferer of the stock will not be liable for debts owed by the association at the time of the transfer. 3 And the exemption extends to him, even though he made the transfer to escape liability, knowing that the debts had been previously incurred, that the society was insolvent, 1 McKeown v. Irish B. A., 12 Building, Loan ami Savings Asso- Wkly. L. Bull. 6. And see also ciation, 140 Ind. G62 ; s. c. 40 N. E. McKeown v. Irish Building Asso- Rep. 694. ciation. 5 Wkly. L. Bull. 52. 3 In re Saint John Building So- 2 McGrath v. Hamilton Building ciety, 28 N. B. 597 ; s. c. 9 Occ. N. Association, 44 Pa. St. 383 ; Friel 348. Of course, if the transfer be V. Association, 1 Leg. Rec. Rep. not made according to the rules he (Pa.) 217; Wohlford v. Citizens' will be liable. 378 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. that the transferee would not be able to meet the calls, and though he paid such transferee to accept the stock. 1 If a member has been illegally released by the association, that will not discharge him from liability to the creditors. Such an instance is where he has received a sum that should have been applied to then existing losses. 2 And if an associa- tion has suffered losses by real estate having depreciated which it had bought in on foreclosure sales against its mem- bers, it has a right to deduct a withdrawing member's pro- portion of the loss, his proportion being determined by the association having the real estate appraised by a committee and then a pro rata amount assigned to each of his shares. 3 A society may, however, provide that a member may with- draw in a specified manner, so as to be free from all liability in the event of winding up ; and it would seem that a statute is not necessaiy to authorize the adoption of a by-law to that effect. 4 See. 352 — Insolvency Intervening after Notice of With- drawal Given. If a stockholder has given notice of his intention to with- draw, and insolvency intervene before he has perfected his withdrawal, he must stand upon a footing with those who have given no notice, and is not entitled to a preference. 5 1 In re Provincial Building So- Pitts L. Jr. 39; Paffert v. Some, ciety, 30 N. B. 628. Of course, the Id. 40. transfer must be bona fide ' In re Borough Commerce and ited Slides Building and Building Society [1893], 3 Ch. 242. Loan Association v. Silverman, 85 It lias been held, however, that Pa. St. 394. It has been elsewhere after a society is known to he in- stated thai a plea of insolvency solvent, an advanced shareholder is a sufficient bar to a withdrawing cannot withdraw and (-scape lia- member's action to recover whal is bility. Sunderland, etc., Society due him. Wiiimaii v. Building v. Rawlings, etc. , Society L. R. 24 A ociation,7 W. N. Cas. 80 ; Han- Q. B. 394 ; 59 L.J. Q. B. 217; 62 v. Enterprise Saving Fund and L. T. 293; 38 W. R. 509 ; 54 J. P. Building A.ssocia1 ion, 16 W. N. ( 'as. 613 ; 6 T. L. R. 199. 150. 6 In re Progressive Investment a Cason v. Seldner, 71 Va. 298. and Building Society, 54 L. T. 45 ; :; Knoblauch v. Roberl Blum Mechanic's Mutual Society v. Le- Buildingand Loan Association, 25 febvre, 12 Rev. Leg. 294; TTanney § 352. CONTRIBUTION TO LOSSES. 379 But where the rule provided that the investing shares (both paid-up and monthly) should mature in four years, when the holders were entitled to withdraw ; by statute, joint stock and property of the society were responsible for the debts thereof, and "the holder of stock in any such society shall be chargeable in their private and individual capacity for all debts and liabilities of any such society in which they may hold stock, in proportion to the stock they respectively hold ; provided, however, that in no case shall any stock- holder be liable to pay a sum exceeding the amount of stock actually held by him;" it was held that holders of shares of investing stock which had not matured at the time of the winding-up proceedings were liable to be placed on the list of contributions for any balance due on their shares, and also for a sum equal to the shares held by them ; that hold- ers of such stock which matured previous to the commence- ment of the winding-up proceedings, but who never de- manded payment thereof, were not liable ; that holders of such matured stock, who had made a demand of payment of such stock after maturity, but, alter making such de- mand, accepted payment of dividends, and never in any other manner did anything to determine their connection with the society, were liable ; and that holders of such ma- tured stocks who had, since the maturity of the stock, demanded payment and had refused to accept any new certificates or dividends, but had done nothing further to determine their connection with the society, were not liable. 1 v. Enterprise Saving Fund and A member giving notice of with- Building Association, 16 W. N. drawal is not liable for losses oc- Cas. 450 ; Vincent v. Harrison, B. curving aftev he has given such no- & D. Co., 5 Ohio N. P. 273. tice. Christian's Appeal, 13 W. N. In Laurel Run Building Associa- Cas. 181 ; S. C. 102 Pa. St. 184 ; 40 tionv.Sperring,106Pa. St. 334; s.c. Leg. Int. 261; 30 Pitts. Leg. Jr. 15 W. N. Cas. 340 ; 32 Pitts. L. Jr. 435. But he would as to outside 394 ; it would seem that the court creditors. In re Saint John Build- was of the opinion that if insol- ing Society, 28 N. B. 597 ; s. c. 9 vency intervened after notice of an Occ. N. 348. intention to withdraw and before x In re Saint John B. S. 28 N. B. actual withdrawal, the withdraw- 597 ; s. c. 9 Occ. N. 348. ing member would not be liable. The rules of a benefit building 380 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. Sec. 353 — Members who have Withdrawn. Where a member has, in good faith, withdrawn from and severed his connection with the association before insolvency intervened, and perhaps before a receiver for the association is appointed, or there is a formal declaration of insolvency made by the directors of the association, he cannot be re- quired to contribute to the losses of the association. 1 If the effect of borrowing money from the association is to cancel the borrower's stock and sever his relationship as a member with the association, he cannot be required to con- tribute to losses that afterwards are incurred. 2 So where a stockholder, under a resolution of an association permit- ting borrowers to withdraw on the payment of a stipulated society, under the building societies act, 1874, provided that the unad- vanced members might withdraw the sum of their credit in the so- ciety's books after certain notice. The society's property fell in value, and a majority of the members I a resolution that 7s. 6a 7 . per i x >und should be deducted from the amounts at the credit of the mem- b rs and placed to an expense ac- • ,iiiit. No proceedings for wind- ing up the society had been com- menced ; ami there was no rule as to the manner in which losses were to be borne ; it was held that the ill ion was ultra vires : and i hal the members who had .- notice of withdrawal after the i i ilution were entitled to be paid the whole amount ;it 1 heir credil . ViM /■. Glasgow Working Men's B. S.. I'.' A|>|>. Cas. 197; s. c 56 L. .1. P. C. 57; 56 I- T. T7C ; 35 W. R. ' Eversmann v. Sohmitl (< »!ii.. , 1 1 N. E. Rep. L39. The language of the courl in thisca e i , hov <-\ er, ob- ■• Ii ishowever, found t hal ;i number of members, borrow- .1 non-borrowing, who such during the time the losses oc- curred, had withdrawn prior to the time the association went into the hands of a receiver. In the absence of bad faith, such persons as had, according to the constitution and by-laws of the association, with- drawn or ceased to be members, can not be brought into the association forthe settlement of losses. The withdrawal, being an executed transaction, can only be recalled by the association,- and a remedy had in conformity to the rules of equity jurisdiction. See preceding sec- tion. Christian's Appeal, 102 Pa. St. 184; s. c. 13 W. N.Cas. LSI : 30 Tills. L. dr. |:;.-> : 40 Leg. int. 2 Bowker v. Mill River Loan Fund Association, 7 Allen, 100; In re West Riding of Yorkshire Permanenl Building Society L. R., 45 Ch. Div. 163; S. C. .V.) L. Jr. Ch. 823; 63 L. T. 483; 39 W. R. 71. In re Sheffield iV- South Yorkshire Building Society, 22 Q. B. Div. 470; s. c. 58 L. .1. (,). B. 265; 00 L. T. ISO; 53 J. P. 875; 5 T. I.. Rep. 192; In re I >oncaster Permanent Bene- lii Building Society. 4 Eq. 179 ; s. c. :;;; L. J. Ch. 871 ; 32 J. I'. 3. § 353. CONTRIBUTION TO LOSSES. 381 amount, the stock to be then " withdrawn and cancelled," withdrew, paid off his loans and stock, which was then marked on the books as "canceled" and " withdrawn," it was held that the association could not afterwards recover for dues which subsequently accrued, the position of the parties being from thence debtor and creditor, and after an acceptance of the terms of the resolution, payment by the debtor of sums found thereby to be due, the new contract was executed, and a case of accord and satisfaction was made out. 1 A society resolved that its members might redeem their mortgages on payment of so much per share, and the defendant paid the amount and secured a release of his mortgage. It was held that his shares were extinguished by the payment, and he was released from any further liability to the society, and, consequently, that he could not be called on under the covenant in his mortgage to pay all subscriptions and other payments to become due in respect of the shares by the rules of the society, to contribute to- wards a deficiency afterwards found to be occasioned by the society having fixed the amount to be paid at too low a figure. 2 If the withdrawal of a shareholder be illegal, he will be liable for losses occurring after such with- drawal. 3 Where the constitution of a building society provided that all shareholders must remain members until the association was dissolved, it was held that a member could not withdraw and escape liability to an assessment to equalize the members remaining in the association. 4 1 Miller v. Second Jefferson Build- Div. 463 ; s. c. 59 L. J. Ch. 823 ; 63 ing Association, 50 Pa. St. 32. L. J. 483 ; In re Britannia, etc., 2 Priestly v. Hopgood, 10 L. T. Society, 65 L. T. 196 ; s. c. 39 W. (N. S.) 646 ;4N.R. 239 ; 28 J. P. R. 74. 268 ; 12 W. R. 1031. See also Archer 4 McKeown v. Irish Building As- v. Harrison, 7 De G. Mac. & G. 404 ; sociation, 5 Wkly L. Bull. 52. S.c. 3 Jur. (N. S.) 194; 21 J.P. 515. By statute in Ohio advanced 3 Carson v. Seldner, 77 Va. 293. members who have made full pay- That if the withdrawal is legal ments in dues and dividends of the there is no liability, see Tosh v. amount loaned to them are not British, etc., Society L. R., 11 App. thereby relieved of personal liabil- Cas. 489 ; s. C. 34 W. R. 413 ; 14 C. ity on such shares, until there has of S. Cas. (H. L. ) 6; In re West been an actual adjustment between Riding, etc., Society L. R., 45 Ch. the shareholder and the association 382 BUILDING AND LOAN ASSOCIATIONS. Ch. XVII. Holders of orders on the treasurer of the association, issued to withdrawing stockholders more than six months before the date of the assignment of the association, and also stockholders who gave notice of their intention to withdraw several months prior to the assignment, but re- ceived no order for the amount of their stock, were held not to be liable to share their losses resulting from bad in- vestments made after they withdrew from the association as active members. 1 Sec. 354 — Withdrawal Members Preferred to those Be- maining by Rules of Society. It is no uncommon thing to find that those who have withdrawn from an association, or who have given notice of an intention to withdraw, or have taken steps entitling them to withdraw, if they have received or will receive the full amount of their shares there will not be a sufficient amount of assets to pay off in full those remaining in the association until the limited period of its existence, or whose shares have subsequently matured, although there are no outside creditors. In other sections of this chapter a num- ber of illustrations have been given where advanced share- holders have been compelled to pay in or refund an amount sufficient to equalize all the shareholders of the association or all the shareholders of the series to which they belonged. But the rules of the association may be such as to release the retiring members from all liability to contribute to the deficiency of assets, so that their fellow non-retiring mem- bers may be put on an equal footing with them. This is as provided by the statute. Ever- ration were solvent. It was in fact m.iii r. Schmitt (Ohio), 24 Wkly. insolvent at the time. The judg- L. Bull. 56. ment, by neglect of the attorney, 1 Christian's Appeal, 13 W. N. was not satisfied. It was held Cas. L81 ; s. c. 102 Pa. St. 184 ; 40 that, after the insolvency was Leg. Iiit. 261 : 30 Pitts. L. Jr. 135. shown, he was not entitled to have \ borrowing stockholder paid to the judgmenl representing the a building association his debt, as debt satisfied. Mecbanies' & shown by a judgmenl note, on the Workingmen's Building & Loan basis of a settlemenl in which be Association r. Swart/, 2 Lack. Leg. allowed credits for payments N. 120; s. c. 5 Pa. Dist. R. 318. on hia tock a - I hough t he oorpo- § 354. CONTRIBUTION TO LOSSES. 383 particularly true of a number of instances involved in English decisions. Thus a building society, registered under the Building Societies Act, 1874, had for its objects — 1, to form a good investment for investors ; 2. To advance to shareholders money for building and other purposes, to a not greater extent than the amount of their shares, on their granting- a bond for the same over heritable security. The rules provided that the shares were to be limited to £25 ; that a shareholder who had not received an advance was to pay up his shares by monthly instalments; and when such instalments with profits amounted to £25 per share he was to be paid out. As to a member who had received an ad- vance, it was provided that he should pay up his advance by monthly instalments on his shares with interest at the rate of 5 per cent, on the loan. It was also provided that members could withdraw on giving a month's notice. On withdrawal by an unadvanced member, he was to receive the whole instalments paid on his share with interest. On withdrawal by a borrowing member, he was to pay up the whole of his debt, interest, and penalties, after deducting the amount of the monthly instalments paid upon his shares with interest calculated thereon. A. took shares for the sole purpose of obtaining an advance. He executed a bond in common form as security, and the society granted him a back-letter to the effect that they agreed not to enforce the bond so long as the regular payments of the instalments, interest and other sums due upon his shares were paid. A. regularly paid his instalments with interest charged on the whole sum lent. Losses having been incurred, the society was in February, 1880, ordered to be wound up voluntarily. There were no outside creditors. In July, 1880, A. gave notice, under the rules, of withdrawal to the liquidators, and claimed a discharge of his bond on his paying to them the difference between his loan and the amount in cumulo of the instalments paid by him, with interest added. The liquidators denied his right to withdraw after liquidation, unless he paid up the whole loan and left the instalments to be refunded according to the result of the liquidation. It was held that the advance had pro tanto been extinguished 384 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. by the total amount of the instalments paid by A. ; that from and after the date of the winding-up order A. had a right to redeem his security by paying to the liquidators the difference between his advance and his instalments, with interest added thereon, as against excess of interest which he had been charged ; and on payment of such difference, with interest thereon, he was entitled to be relieved of all further liability as a contributory or otherwise. 1 By the rules the directors were empowered to deduct annually from the amount standing to the credit of each member, whether unadvanced or advanced, such a sum as might be necessary to meet the current expenses and con- tingencies of the society, the amount of such deduction to be calculated pro rata, according to the shares or interest of the members in the societ}\ Upon discovery that the funds of the society had been misappropriated by a former secre- tary it was resolved by the society to make good the loss by deducting 27 per cent, from the amounts standing to the credit of the unadvanced shares, and by adding 27 per cent, to the amounts at the debit of the advanced members. It was held, that assuming that the loss was a contingency within the rules, and that it dated from its discovery, the directors had no power to compel members to contribute beyond the amount standing to their credit. 2 In another instance one of the rules of a society gave power to investing members to withdraw their money, if the funds permitted, on giving notice according to a pre- scribed form printed in the schedule. The society was ordered to be wound up, and it was found that the assets were not sufficient to pay investing members in full. Sev- eral of flu; investing members had given notice of with- drawal, and their notices had expired before the commence- ment of the winding-up, but they had not been paid. Some of those giving notice had not used the printed form, but 1 Brownlie v. Russell, 8 L. R. 2 Durham Workingmen's Per- A|.|>. Cas. 235 ; 48 L. T. X. S. 481 ; manent Building Society v. David- i; .1. r. 757. See also Tosh v. son, 61 L. J. Q. B. 473; s. c. 67 L. North British, etc., Society, li T. (N. S.) 369; 56 J. P. 660. A P|.. Cas. 189; 8. c. 35 W. R. 413 ; V4C. of S. Ca . 6. § 354. CONTRIBUTION TO LOSSES. 385 their notices had been accepted by the directors. The court decided that the rule as to the withdrawal of members must not be confined to the society as a going concern, but was applicable to adjust the rights of the withdrawing and continuing members inter se in the winding-up ; that the members who had given notice to withdraw, either in the prescribed form or otherwise, and whose notice had expired before the commencement of the winding-up, were entitled to be paid out of the assets next to the outside creditors, and in priority to the other investing members who had not given notice of withdrawal, notwithstanding that at the date of the winding-up there w 7 ere no funds in hand for their payment. 1 In another case the rules of the society allowed any investing member to withdraw, " provided the funds permit," upon giving notice ; and declared that " no further liabilities shall be incurred by the society till such member has been paid." In winding up the society it was found that the assets w r ere not sufficient to pay all the stock- holders, and it was decided that the investing members who had given notice of withdrawal, and whose notices expired before the w r inding-up had begun, w T ere en- titled, after the outside creditors, to pay out of the assets before the members who had given no notice of with- drawal, notwithstanding the fact that between the giving of the notices and the winding-up there never were any funds for payments. 2 An advanced member may be debarred from participa- tion in the surplus assets of the society when it is wound up ; and the test is whether he would be liable to assess- ments if the unadvanced shareholders are not paid in full. Thus, in a case where all the debts had been paid, and there 1 In re Blackburn, etc., Society, 9 App. Cas. 519 ; s. c. 53 L. J. Ch. L. R. 24 Ch. Div. 421 ; s. c. 52 L. 745 ; 51 L. T. 462 ; 33 W. R. 173 ; J. Ch. 894 ; 32 W. R. 159 ; S. P. In re Middleborough Building So- In re Mutual Society, L. R. 24 Ch. ciety, 53 L. T. 203 ; In re Sheffield, Div. 425, note. etc., Society, L. R. 22 Q. B. Div. 2 Walton v. Edger, L. R. 10 App. 470 ; s. C. 58 L. J. Q. B. 265 ; 60 L. Cas. 33 ; s. c. 54 L. J. Ch. 362 ; 52 T. 186 ; 53 J. P. 375 ; 5 T. L. Rep. L. T. 666 ; 33 W. R. 417 ; 49 J. P. 192. 468 ; S. P. Murray v. Scott, L. R. 25 386 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. was a surplus of assets for division, the rules provided that when it should be deemed advisable to bring the oper- ations of the society to a close, a general meeting should be held, which should have power to dissolve the society ; and when all payments due the society had been satisfied, and the debts of the society paid, the stock of the society should be divided among the members according to the respective number of unadvanced shares which each member might have standing to his credit on the books, and allowing the fair and proportionate rate of profit upon each such share according to the duration of their payments to the society. The court held that as the rules of the society did not expressly provide for the use of a compulsory winding-up, the assets must be divided, as near as could be, according to the interests existing at the commencement of the com- pulsory winding-up ; that the unadvanced members were free from all liability beyond what they were bound to con- tribute up to that date, but that they could not participate in the distribution of the surplus assets before paying or bringing into account all that was due from them down to the date of the winding-up ; and that the advanced mem- bers were not liable to be put upon the list of contributors, but were entitled to redeem upon the terms expressed in the rules, as if no winding-up order had been made. 1 Sec. .355 — Borrowing Members Equally Liable With Unadvanced Members. Borrowing members are equally liable to contribute to losses with unadvanced members ; and the fact that they have paid all the dues upon their slock assigned as collat- eral lor t he loan, and which lias been sunk or merged in the amount advanced, will not release them. " A large number 1 /// /(■ Middlchorough, etc.. So- hi re West Riding of Yorkshire ciety, 58 L. J. Ch. 771 ; B.C. 5 T. Permanent Benefit Building So- I.. Rep. 516. See also In re Nor- ciety, L. R. 45 Ch. Div. 463; s. c. wich and Suffolk Provident Build- 59 L. J. Ch. H23 ; 03 L. T. Rep. ingSooiety, L. R. I Ch. Div. 481; 488; 89 W. R. 74 (the rulesofthe Barnard v. Tomson, [1894] I Ch. association being a contract among 874 ; s. o. H Rep. 585 ; 68 L, j. < !h. the members). 488 j 70 L. T. 806 ; 48 W. R. 2 ; § 355. CONTRIBUTION TO LOSSES. 887 of borrowers, and a few non-borrowers, were left. Its re- maining assets were affected by the shrinkage and losses incident to all property at that time. All of this Loss fell upon those who remained in. The association could not wind up at the 102d meeting, as was a! one time contem- plated. The borrowing members now want their loanscan- celled and their liens satisfied, although their stock had not matured. This would let them out without having paid up in full, and throw the Avhole loss on the non-borrower. It needs no argument to show that this cannot be done. The appellants have no equity to make such a demand, nor have any power to grant it. The owners of the free shares pro- posed to pay up until the stock matured, and ask that the appellants do likewise. There is perfect justice; in this. 1 ' 1 In another case it was said : " The insolvency of the com- pany, as before observed, puts an end to its operations as a building association ; to a certain extent it also ends the contract between it and its owners respectively, and noth- ing remains but to wind it up in such a manner as to do equity to creditors, and between the members themselves. As regards the latter, care should be taken to adjust the burdens equalty, and not to throw upon either borrowers or non-borrowers more than their respective share. The result may be reached by requiring the borrower to repay what he actually received with interest. He would then be en- titled, after the debts of the corporation are paid, to a pro rata dividend with the non-borrowers for what he has paid upon his stock. He will thus be obliged to pay his proper share of the losses. To allow him to credit upon his mort- gage his payments on his stock would enable him to escape responsibility for his share of the losses, and throw them wholly upon the non-borrowers. In other words, the bor- rower would escape without loss. It will not do to admin- ister the affairs of an insolvent corporation in this manner." 2 1 Booz's Appeal, 109 Pa. St. 592 ; and Loan Association, 115 Pa. St. S. c. 16 W. N. Cas. 765 ; Wilson v. 273 ; S. C. 8 Atl. Rep. 843 ; 6 Cent. Upper Canada Building Society, Repr. 779 ; 34 Pitts. L. J. 327 ; 44 12 Grant. Ch. 206. Leg. Int. 103 ; 19 W. N. Cas. 200. 2 Strohen v. Franklin Saving 388 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. In Ohio a building association loaned a member $5,000, the estimated value of twelve shares held by him, and he then executed to it a mortgage on real property to secure the prompt payment of his weekly dues, interest, premiums and assessments, " until such time as the weekly dues paid and dividends declared and unpaid shall amount to said 83,000." All this was in accordance with the constitution. For sev- eral years he kept the conditions of his obligation and mortgage up to November 27, 1889, on which day, at a regular meeting, in good faith, he made the regular weekly payment of the dues, and so forth, owing to the association. "With this payment the aggregate of weekly dues paid by him and the dividends declared and unpaid, amounted to $3,000. Before the next meeting day the corporation was dissolved because it was insolvent, and placed in the hands of a receiver. By calculation it was ascertained that the losses were such as to require an assessment upon all the members of 31 per cent., to make an equitable adjustment and distribution of assets among all members, both the bor- rowing and non-borrowing. The receiver brought suit against this borrowing stockholder for 31 per cent, of $3,000, and a recovery was allowed. There was no fixing of the per cent, necessary to cancel the indebtedness of the board of directors, but that was done by the receiver. A stat- ute of the State provided as follows : " So much of the earn- ings as may be necessary shall be set apart to defray the cur- rent expenses of the association, and a portion of the earnings, to he determined by the board of directors, shall be reserved annually or semi-annually, for the payment of contingent losses, and the residue of such earnings shall be transferred as a dividend, annually or semi-annually, in such propor- tions t<> the credil of all members as the association, by its constitution and by-laws, may provide; also in case of a lo 3 all Losses shall be assessed in Hie same proportion and manner on all members after the amount in the reserve fund has been applied to the payment of such loss, and upon tin; cancelation of any share or shares that have been fully paid, the corporation shall pay t<» such member or members their jpro rata share of so much of the reserve fund as has § 356. CONTRIBUTION TO LOSSES. 389 been accumulated during the membership and remains therein at the time of the termination of the membership of such member or members." Another provision provided that " All adjustments of losses between such corporation and its borrowing members shall be upon the following terms, to wit : After the premiums for one year have been paid, and also the interest and premiums on such loan up to the day of settlement, the borrowing member shall pay to the corporation an amount, which, added to the shares and dividends credited, will equal the sum actually borrowed ; and also such fines and other assessments as provided by the constitution and by-laws of such corporation." In passing upon the case it was said by the lower court : " In the absence of any actual adjustment or compromise with the corporation, the borrower, however, as a stockholder, retains his right to participate in the earnings, in accord- ance with the Revised Statute [above quoted], and con- tinues under the obligation to pay his stock in full and his proportion of the losses. The contention of the defendant that his membership has ceased, and that he is not to bear his proportion of the losses, cannot, therefore, be sus- tained." 1 Sec. 356 — Borrowing Members Equally Liable With Unadvanced Members — Continued. In another Pennsylvania case it was said : " "While the plaintiff in error remained a member of the association, he was under obligation to contribute his share of the ex- penses. What he had invested in its funds was chargeable with its proportion of the necessary expenditure. In a limited sense, he was a partner with the other stockholders. Though, as a mortgagor, he could not be compelled to pay more than the sum actually borrowed by him, with legal interest thereon ; it was only as a member that he could claim a share of the profits of the company, or any benefits from payments made by others. If he may now set off against his mortgage a share of the profits made equal to 1 Everman v. Schmitt, 24 W. L. another point, (Ohio) N. E. Rep. Bull. 56 ; reversed in part, on 139. 390 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. the liability which he has incurred for expenses, he will, in effect, recover more than he has paid in, and will throw upon his associates the whole of a burden, which in truth is his as much as theirs. This cannot be. The association has a right to treat his payments while his membership continued, as his contribution, so far as they are needed, to the discharge of the expenses incurred in the management of the enterprise, in which he had a joint interest with others. Nor has he now any title to the premiums and fines paid by other bor- rowers." 2 Speaking of the right to retain from a withdraw- ing member's share a portion to meet losses, it was said in the same state : "Has a building and loan m association the right to retain or hold back from a retiring member a rea- sonable amount to meet his share of the probable losses that may arise from loans made while he was a member ? This is the question presented by the special verdict of the jury. Under the act of the assembly, and the by-laws of this asso- ciation, a member has the rig-lit to withdraw, after giving 1 thirty days' notice to that effect, and is entitled to receive back the money paid in, with a share of the profits during the time he was a member. But suppose the association made no profits and met with severe losses ? Shall the with- drawing members get back all they paid, and cast the whole burden of losses upon those who remain, or who may not know of losses, and not be so quick in giving notice of with- drawal \ Certainly not. That would be unjust and in- equitable. ' :: ' :: " * To allow a member, under such cir- cumstances, to retire and demand all lie paid in, without contributing anything to losses which are manifest and im- pending, would be unjust toward his fellow-members. And it would be bad faith in him. He has a right to share the profits while a member, and hie must also bear his propor- tion of the losses." 2 In Virginia it has been held that a court of equity, at the suit of members holding unredeemed 1 McGrath V. Hamilton Savings See ;i.ls<> I'.-iflVrt v. Robert Blum, and Loan Association. I! I'.i. St. etc., Associ.it ion, 25 Pitts. L. J. In, and Wittman r. Corncordia, 2 Knoblauch v. Robert Blum, etc., Association, 7 W. N. Cas. 80; etc., ,\ lociation, 25 Pitts. L. J. 89. 8. c. an Leg. Int. 72. §356. CONTRIBUTION TO LOSSES. 391 shares, may call those holding redeemed shares to an account and en force payment of what they respectively own, distri- bute the fund among the unredeemed shareholders, and wind up the association. 1 The rules of an English society pro- vided (1) that advanced members could redeem their securities on payment of the amount fixed by the tables of the society, together with the full amount which should then be due " for subscriptions, fines, and other payments;" (2) that surplus profits," after providing for all liabilities," should be appropri- ated equitably and equally between the investing and borrow- ing members ; and (3) that " in the event of the directors deter- mining," at a special meeting to be held every three years, that there was a deficiency of income by which the society might be prevented from meeting its anticipated expendi- ture and liabilities," the amount of such deficiency should be " apportioned b} r the directors between the investing and borrowing members." The assets being insufficient to pay investing members the full value of their shares (although i Edelin v. Pascoe, 22 Gratt, 826. See Wittman v. Building Associa- tion, 7 W. N. Cas. 80. A rule of a building society pro- vided that, in the event of a " de- ficiency of income by which the society may be prevented from meeting its anticipated expendi- ture and liabilities," the amount should be apportioned between the investing and borrowing members. It was held that the term " liabili- ties " included sums due to the in- vesting members in respect of their shares, and that the borrowing members were liable to contribute ratably to losses incurred thereon by the investing members. In re West Riding Building Society, L. R. 43 Ch. Div. 407 ; 59 L. J. Ch. 823 ; 63 L. T. 483 ; 39 W. R. 74 ; In re Albion Mutual Permanent Benefit Building Society, L. R. 43 Ch. Div. 410, note. Insolvencv puts the association to an end, and nothing remains but to wind up its affairs without throwing on borrowers and non- borrowers more than their respec- tive shares, which result may be reached by requiring the borrower to repay what he received with in- terest. Then, after payment of the debts of the corporation, he would be entitled to a jjro rata dividend with the non-borrower for what he has paid upon his stock. Brown v. Archer, 62 Mo. App. 277 ; s. C 1 App. Mo. Rep . 40.-,. If a borrowing member has as- signed his stock as collateral, he is entitled to have it reassigned to him on paying his portion of the losses, upon the theory that he may share in any of the assets that may be left. State Savings and Loan Association v. Carroll, 15 Pa. C. C. 522. 392 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. there were no outside creditors), the liquidator applied to place advanced members on the list of contributories, no apportionment of loans, however, having been made by the directors. The court decided that the "liabilities" to be provided for under Rule 2 included sums payable to in- vesting members ; that " income " in Rule 3 was not used in contradistinction to capital, but meant what was coming in from all sources, and that "liabilities" in the same rule also included sums payable to investing members ; that under these rules advanced members were liable to contribute to any losses together with the investing members, and that any member seeking to redeem could only do so upon pay- ing what might be due from him in respect of liability. The fact that the directors had not " determined " and " appor- tioned " the loss made no difference now that the society was being wound up by the court. The court also decided that rules similar to Rule 3 constitute a special contract be- tween the members, under which advanced members are liable to contribute rateably with investing members, both towards paying outside creditors and also in bearing the other losses incurred by the society, which but for such con- tract would fall on investing members alone. 1 A mortgage executed by an advanced member of an English building society registered under the Building Societies Act of 1874, provided that the advances should be repaid by certain in- stalments. By the rule an advanced member could redeem on payment of a lump sum, to be calculated in a certain man- ner. The society was ordered wound up, there being outside creditors. It was held that advanced members ought to be placed on the list of contributories, and were liable to pay immediately the sum which would entitle them under the rules to redeem. 2 A building society issued, under its rules, paid-up preference shares al a guaranteed rate of interest, the holders not being liable to contribute to losses, nor to 1 /" re We I Riding, etc., S<>- cietyv. Morgan, 5 Rep. 510; s. c. . L. R. 18 Ch. Div. Ki?: s. c. [1893]2Q. I'.. 266; 62 L. J. Ch. 59 I,. .1. ch. L97 ; 62 L. T. 486; 88 544 ; 69 L. 'I'. 595; 57 .1. I'. 696 ; 46 W. R. 876; 'I 'I'. I- Rep. 160. Amer. & Eng. Corp. Cas. 512. London Providenl Building So- § 350. CONTRIBUTION TO LOSSES. 393 participate in profits. The ordinary members were liable under the rules, whether on withdrawing their shares, or on repaying advances thereon, or on redeeming their securi- ties, for a fair proportion of the losses, expenses, bad debts, and other charges of the societj^. It was held, on a defi- ciency of assets in winding up, that the ordinary members were liable for the full amount due on the preference shares, interest thereon since the date of the winding-up order; and that those members who had received advances on their shares must satisfy this liability by payment, and the other members by submitting to a deduction from their claim against the assets. 1 A building society had lent to its ad- vanced members in respect of their shares in the society. Some of the mortgages by the advanced members secured the principal advanced, and such sums as might become pay- able to the society under the mortgage, or the rules or by- laws, or " in any other way." The other mortgage secured the mortgagor's instalments, subscriptions, fees, and other sums payable according to the rules. The rules provided for the release of a member's security on his paying the amount due for principal, interest, fines, and other pay- ments ; and empowered the trustees, for the purposes of the society, to borrow sums up to a certain limit, at interest, and, in order to secure such loans, to give their personal security, with a right to be indemnified out of the first funds of the society which should be received ; but neither the rules nor the deposit receipts given under them purported to give any security to the depositors upon the funds of the society. The shares of both advanced and unadvanced members were of the same nominal value. The assets of the society, when it was ordered to be wound up, were suffi- cient to pay the ordinary creditors, but not the depositors also, in full. It was held that the actual costs of realizing the properties as they existed at the commencement of the winding-up must first be paid out of the assets as they then existed, and that the rest of such assets must be applied in paying ordinary debts and loans on deposits, ^7*0 rata ; that 1 In re Reliance Permanent Ben- 453; s. c. 66 L. T. (N. S.) 823; 8 efit Building Society, 61 L. J. Ch. T. L. R. 525. 394 BUILDING AND LOAN ASSOCIATIONS. Ch. XVII. to meet the estimated costs (other than the costs of realiza- tion), a call must be made on all the members, both advanced and unadvanced, in proportion to their shares ; that the deficiency due to the ordinary creditors must also be met by calls on all the members. But it was also held that neither advanced nor unadvanced members were liable to contribute, beyond the amounts payable upon their shares under the interest tables, to pay the deficiency due to the depositors ; and that the advanced members were entitled to redeem on paying the calls above mentioned and the amounts due under their mortgage and the rules and tables. 1 Sec. 357— Advanced Shareholder Ceasing to be Member of Society — Paid-up Stock. The effect of advancing a member, under the rules of some associations, is to cancel his membership and turn him into an ordinary debtor of the association, — a debtor, it is true, of a peculiar kind, but still a debtor ; and the question arises whether or not such an individual is liable to contribute to the losses of the society. Another class is often composed of individuals who have withdrawn and received orders for payment of the amount due, but whose orders have not been paid when insolvency intervenes. Of such classes of in- dividuals the Supreme Court of Pennsylvania has said : ""When a building association has failed to fulfil the object of its creation and has become hopelessly insolvent " :: " * :: ' after expenses incident to the administration of its assets are deducted, the general creditors, if any, should be first paid in full, and the residue of the fund should be dis- tributed, pro rata, among those whose claims are based upon stock of i he association, whether they have withdrawn and sold orders for the withdrawal value thereof, or not. Both classes are equally meritorious, and in marshalling the assets neither is entitled to priority over the others. The claims of each are alike based upon their relation to the as- sociation as members thereof." 2 So if a series of stock 1ms i TnreWesi LondonA General L. T. Rep. 796; I.' W. R. 535; LO Permanenl Benefit B.S., [1894J 2 T. I,. K. 280; 8 Rep. 764. Ch. 852; s. o. 68 L. J. Ch. 506; 70 2 Christian's Appeal. 102 Pa. St § 357. CONTRIBUTION TO LOSSES. 395 matured and insolvency then intervenes, its holders must share in the losses with the holders of the scries unmatured. 1 These cases proceed upon the theory that the rules of an as- sociation are framed with a view of fulfilling the purpose for which it was organized, and when that purpose is thwarted all members are cast upon a level and must share benefits and losses alike. "Equality is equity," say the courts. But these views have not always prevailed; and there are a number of English cases to the contrary, as is stated in paragraphs below. By the Building Association Act of 1874, sec. 141, of Eng- land, the liability of any member of any society under the act in respect of any shares upon which no advance had been made is limited to the amount actually paid or in arrear on such share. By sec. 16, the rule of every such society shall set forth " the terms upon which shares may be withdrawn." By the Companies Act, 1862 (25 and 26 Vict., c. 89), sec. 200, " In the event of an unregistered com- pany being wound up, every person shall be deemed to b contributory who is liable at law or in equity to pay or con- tribute to the payment of any debt or liability of the com- pany." Members of a building society incorporated under the Building Society Act of 1871, who had investing shares payable by monthly subscriptions, and upon which no ad- vance had been made, gave due notice of withdrawal and received the estimated amount of their shares under the rules of the society, before the shares were fully paid up or ma- tured. The society was within a year thereafter wound up under the winding-up clauses of the Companies Act. It was held that, on withdrawal of their shares, the holders ceased to be members of the society, and no amount was "in arrear" within sec. 11 of the Building Society Act of 1871, 184; s. C. 13 W. N. Cas. 181; 30 Leg. Int. 132. See also Seibelr. Vic- Pitts. L. Jr. 435 ; 40 Leg. Int. 261 ; toria Building Association, 43 Ohio Hennighausen v. Tisher, 50 Md. St. 371 ; S. C. 1 West. Repr. 340 ; 10 583. Amer. & Eng. Corp. Cas. 460 ; 13 i Criswell's Appeal, 100 Pa. St. Wk. L. Bull. (242) 265 ; 2 N. E. 488 ; s. C 12 W. N. Cas. 483 ; 40 Rep. 371. 396 BUILDING AND LOAN ASSOCIATIONS. Ch. XVII. and that they were not liable to contribute to the debts within the meaning of sec. 200 of the Companies Act. 1 A building society formed under 6 and 7 Will. 4, c. 32, but not registered under the Building Society Act, L874, was ordered to be wound up. Under the rules of the society, the advanced members were not made liable to contribute to losses ; but the directors were at liberty to allow to an advanced member, upon discharging any mort- gage, a fair proportion, to the best of their judgment, of the surplus profits of the society, in respect of his advanced shares. At the date of the winding-up order J. D., an ad- vanced member, was indebted to the society in respect of the advance made to him, which was secured upon a mort- gage of leasehold property. J. D. died subsequently to the date of the winding-up order, and the executors and trustees of his will were settled upon the list of contributories of the society. The mortgage given by J. D. was to secure pay- ment of " all shares or subscription money, expenses, fines, forfeitures, and moneys whatsoever to be paid by the mort- gagee pursuant to the rules of the said society in respect of the shares so received by him in advance as aforesaid, or otherwise in respect of his being a member of the said society." It was held that an advanced shareholder was the debtor of the society in respect of the moneys which he was bound to pay back, and was not a shareholder liable as a contributory ; and, therefore, that the executors and trustees of J. D. were not liable to be put on the list of contributories. 2 In 1867, the plaintiff, who was an advanced member, gave a mortgage to secure such principal or interest moneys and other payments as he ought to pay, according to the rules. The plaintiff made all the required payments, the term of which expired in L884. The rules of the society provided that disputes were to be referred to arbitration, and that i /// re Sheffield & South York- eflt B. S., 65 L. T. 196; s. c. W. N. shire Permanenl B. S..22Q. B. Div. (1891) 123 : following Tn re Middles- 170; 58 L. J. Q. B. 265; 60 L. T. borough, Kedcar & Saltburn B. S., 58 -I. P. 575; 5 L.T. Rep. 192. 58 L. J. Ch. 771. 1 in re Britannia Permanent Ben- § 357. CONTRIBUTION TO LOSSES. 397 when any advanced member had made all his payments during the term, they were to cease, and the trustees were to return his title-deeds and indorse a receipt on them ; and on completion of his term the member was entitled to share in surplus profits. The rules were silent as to losses. After the advance to the plaintiff the society suf- fered losses, and the defendants claimed to retain the mort- gage as a security for the share of those losses, to which, they contended, the plaintiff was liable to contribute. The society was not incorporated. There were no outside credi- tors, and the society was solvent. In an action by the plain- tiff for a discharge of his mortgage and delivery up of his title-deeds and repayment of moneys alleged to have been paid him in excess of the proper amount through mistake of fact: It was held that the subject of the action was not within the arbitration clause, that the plaintiff could not be called on to contribute to losses, and was entitled to the relief claimed. 1 By the rules of a society, advances were made only to members. Mortgagors were required to subscribe their names in a book containing the rules, by which they agreed to become holders of shares to the amount of the loan, and in the mortgages it was recited in the printed forms used by the society that the mortgagors were members for a num- ber of shares equal to the loan. It was not intended that they should make payment on the shares, and they never did so, the object of the managers in inserting the recital in the mortgage evidently being an attempted compliance with the rule that advances were only to be made to members. It was held, when the society went into liquidation, that the mortgagors were not contributories as members of the society, because not members. 2 1 Buckle v. Lordonny, 56 L. J. man v. International, etc., Union, Ch. 437 ; 56 L. T. 273 ; 35 W. R. 67 111. App. 550 ; it is held that, in 360 ; 51 J. P. 422. case of insolvency, all kinds of 2 In re Saint John B. S., 28 N. B. stock must be put upon tbe same 597 ; s. c. 9 Occ. N. 348. basis, and one kind cannot be given As equality among the members preference over another. Latimer of a building association, Wier- v. Equitable, etc., Co., 81 Fed. Rep. 398 BUILDING AND LOAN ASSOCIATIONS. Cll. XVII. Sec. 358 — Preference Shareholders. Where preference shares carried with them a guaranteed rate of interest, and it was one of the conditions of the issue that the holders were to be under no liability, as were the other shareholders, to contribute towards any losses ; and in winding up the society the assets were insufficient to pay the claims of the preference creditors : it was held that such shareholders were exempt from making any payment (or suffering any deduction) in respect of any loss ; and also, that for the purpose of paying their shares in full with interest, each advanced or unadvanced shareholder must contribute — the advanced shareholders by payment, and the unadvanced by way of deduction from any monies which would otherwise be payable to them — a just proportion of the whole of the loss, present and prospective (including so much of such loss as should fail to be met by the advanced shareholders liable to contribute thereto), and including also the expenses of winding up, and interest on the prefer- ence shares. 1 Sec. 359 — Amended Rules Imposing Liability. By the power to amend its rules the society may impose additional liability ; for the contract of membership carries in uil. A.SS'n, 75 Fed. 2 Rosenberg r. NorthuiiiherIan /» re Liverpool, etc., Building Building Society, '•» A.pp. ( !as. 857 , Society, 15 So. Jr. 177 ; In re Pro- s. o. "»l I,. .1. Ch. 876; 52 L. T.225; fessional, Commercial, and Indus- :;:; W. I;. 809; below, Blackburn trial Benefit Building Society, L. R. in tricl Building Society v. Cun- 6 Ch. 856; 8. <'. 25 L. T. (N. S.) liffe, 82 i h. Div. 61 : s. c. 52 L. .1. 897; I!) W. R. 1153. § 369. POWER TO BORROW MONEY. 411 entitled to vote at meetings, nor be called upon to serve any office, and that " investors not in the building branch " might withdraw their deposits on giving a month's notice, if no other time was agreed upon when the deposits were made, and should be entitled to interest on all moneys which have been in the hands of the society more than one month. It was held that the rules of the society, in so far as they authorized borrowing money on deposit, were illegal, be- cause no limit was fixed on the amount which might be borrowed ; and that the depositors were not entitled to have a call made upon the members for the repayment of their deposits. 1 The rules of a society gave the trustees power to issue deposit or paid-up shares, and permitted a depositor to withdraw the whole or part of his deposit " in preference to all other shares." The rules also gave the trustees power to borrow money (such money to be a first charge on the funds and property of the society), and if necessary to execute notes or other security for the money borrowed. The society getting into difficulties, and being ordered wound-up, the question arose concerning the order in which the assets should be divided after the payment of outside creditors. It was held that those embraced in the classes of those who held equitable mortgages under the rule deemed illegal, and those who had made advances under that rule without security, on the faith of the rule, were entitled to share pro rata only in what might be left after all others, including unadvanced members, had been paid. 2 But when this case reached the House of Lords it was reversed in part, and it was declared that a rule, although it did not limit the amount to be borrowed, was valid. 3 The lenders were ordered to give up their securities. 1 7)i re Victoria Permanent Ben- 3 It appeared in the House of efit Building Investment and Free- Lords under the name of Murray hold Land Society, L. R. 9 Eq. 605 ; v. Scott, L. R. 9 App. Cas. 519; S. C. 39 L. J. Ch. 628 ; 18 W. R. s. c. 53 L. J. Ch. 745 ; 51 L. T. (N. 967 ; L. T. (N. S.) 777 ; 34 J. P. S.) 462 ; 33 W. R. 173. It was de- 532 ; 6 Mag. Cas. 474. clared that the language in Laing 2 In re Guardian Building So- v. Reed, supra, on this point was ciety, 48 L. T. Rep. (N. S.) 134; only a dictum. L. R. 23 Ch. Div. 440 ; 52 L. J. Ch. 857 ; 32 W. R. 73. 412 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. Sec. 370 — Subrogation when Loan Illegal. A society, having no rule authorizing the borrowing of money, went into liquidation, and at the date of the wind- ing-up order it owed a considerable sum of money, borrowed from bankers, which was afterwards, chiefly by payments made by borrowing members on account of advances, much reduced. An action was brought against the bankers to compel them to deliver up the deeds that had been given them to secure the payment of the money borrowed. It was held that the borrowing was illegal ; that it was no answer that the money paid the bankers by the borrowers had been applied to the reduction of their claim by the au- thority of the directors' order, a mistake of law touching their power to borrow ; that there was no implied ratifica- tion by the members from their seeing and not questioning the annual balance sheets showing the amount due the bankers, and deposited at the annual meeting ; and that the bankers had no lien on the deeds either under the agree- ment or by the cause of dealing with the society. 1 By a rule of a benefit society it was provided that when the sum of £100 for every share given out, together with all costs and expenses of the society, should have been fully paid, the society should terminate, and the trustees w T ere to indorse a receipt on the mortgage deeds and deliver them to the mortgagors. The advanced members of the society, which was established April 11, 1864, brought an action against the trustees to redeem their mortgages, on the ground that their monthly instalments had all been paid, all the unad- v;ineer liability, and that the society terminated on April 11, 1884. The trustees of the society had no power to borrow, hut the defendants, with the assent of the plain- tiff and other members of the society, borrowed money for the purposes of the society. The defendants claimed to 1 Blackburn Building Society r. and reversing L. R. 29 Ch. Div. Cunliffe, I,. R. '•» \|-|>. Cas. 857; !><)2 ; s. c. 54 L.J. Ch. 1091. See s.c.54 L.J.Ch. ::;<;; 52 l- T. N. S. also Neath, etc., Society v. Luce, i ; 88 W. R. 809 ; affirming L. R. L. R. 43 Ch. Div. L58; s. c. 59 L. !Ch. Div. 61 ; s. C. 31 W. R. 98 ; J. Ch. 3 ; 61 L. T. Ill ; 38 W. !:. 52 L.J. '1.. 92; 48 L. T. N. S. 83; 122. § 371. POWER TO BORROW MONEY. 413 stand in the place of the persons to whom they had made payments, for which the society was liable out of the bor- rowed money. The court declared, that if any of the offi- cers of the society had made any payments for which the society was liable, there not being any moneys of the society out of which such payments could be made, such officers were entitled to stand in the place of the persons to whom such payments were made, and to maintain a claim against the society for the amount thereof. 1 So, where a creditor of a building society had deeds belonging 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 thev had been given him was repaid to him. 2 "Where, however, money was lent by a company to a person, who w r as an ad- vanced member of a building association, to enable the asso- ciation to receive from the member part only of the monies due it, and to carry out an arrangement postponing the asso- ciation's security for the remainder unpaid, which arrange- ment the court considered to come within the mischief of a rule of the association forbidding advancements on second mortgage — it was held that the claims of the asso- ciation on the property mortgaged, for the remainder, would not be postponed to the company ; and that the company could not set up an equity against the association, for the money had been lent, not to the society, but to the member. 3 See. 371 — Society Cannot Exceed its Rules in Borrow- ing. If the rules of the society authorize its directors to bor- row money for a particular purpose, they cannot borrow for another purpose ; and if the money be borrowed for a pur- 1 Owen v. Roberts, 57 L. T. 81. 3 Portsea Island Building Society 2 In re Durham County Perma- v. Barclay, 8 Rep. 389 ; s. c. [1894] nent Benefit Building Society, L. 3 Ch. 86 ; 63 L. J. Ch. 837 ; 71 L. R. 12 Eq. 516 ; s. C. 41 L. J. Ch. T. 82 ; 1 Manson, 339 ; 10 T. L. R. 124; 29 L. T. N. S. 83. See Neath 526; affirmed on appeal, 12 Rep. Building Society v. Luce, L. R. 43 324 ; s. c. [1895] 2 Ch. 298 ; 64 L. Ch. Div. 158 ; S. C. 59 L. J. Ch. 3 ; J. Ch. 579 ; 72 L. T. 744 ; 43 W. R. 61 L. T. 611 ; 38 W. R. 122. 586 ; 11 T. L. R. 424. 41-1 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. pose not authorized by the rules, the lender will lose it. 1 Thus, a rule authorizing the borrowing of money for the special purpose of making advances to members who may have applied for them was held not to give authority to borrow money not actually required to meet applications at the time of the loan. 2 Sec. 372— English Statute of 1874. The Building Societies Act of 1871 settled the question relative to the power of a society to borrow money, by providing that the directors or trustees should have power to borrow money and bind the society for its repayment. In permanent societies it is provided that the "amount * * * so received and not repaid " shall at no time exceed two-thirds of the amount for the time being secured to the society by mortgages from its members. In termi- nating societies the total amount received by the society may be either a sum not exceeding that specified in the case of permanent societies, or a sum not exceeding twelve months' subscriptions on the shares for the time being in force. 3 The rules of the society may still further restrict the amount to be borrowed, and they will be binding. 4 Under this statute a rule of a society limited the amount " borrowed and not repaid " to two-thirds of the amount " secured to the society by mortgages from its members. 1 ' It was held that the total amount borrowed and not repaid, whether from members or others, must be considered in de- termining the power to borrow, but not mortgages from those not members. 5 The " amount for the time being 1 /// re Durham County Building held void, because the rules did Society, L. R. 12 Eq. 51G ; s. c. 25 not authorize the directors to do L. T. Rep. | X. S. ) 83 ; 1 1 L. J. Ch. so. Small v. Smith, L. R. 10 App. 124 : Murray v. Scott. L. R. 9 App. Cas. 119. Ca . 519; 53 L. J. Ch. 745; 51 L. 8 37 & 38 Vict. ch. 42, S. 15. T. N. S. 162 ; 33 W. R. I 73. 4 Looker v. Wingley, L. R. 9 Q. - Moye v. Sparrow, 22 L. T. Rep. B. Div. 397; s. c. 46 J. P. 758. 151 : s. o. L8 W. R. 400 ; 5 W. N. 88. 6 In re Wes1 Riding of Yorkshire Where a society guiiraulcci] (he IVnnancnt Building Society, L. R. payment of certain indebtedness 45 Ch. Div. 463 ; S. C. 59 L. J. Ch. ofa borrower, the transaction was 823; 68 L. T. 483; 39 W. R. 74. § 373. POWER TO BORROW MONEY. 415 secured " covers both the amount of the principal secured and all loans due on the members' securities at the time of the loan to the society, whether for principal, interest, fines, or otherwise ; and all instalments not then accrued due, but secured by the mortgages and outstanding. 1 In Australia it has been held that a statute authorizing a society to receive deposits or loans at interest, not exceeding a certain specified limit, authorizes the society to go into the market and borrow money ; but a rule of the society authorizing the borrowing is necessary. 2 The directors of an incorporated building society, which had no borrowing powers, borrowed money for the benefit of the society, and gave to the lender as security the promissory note of the directors. The society was incorporated under the Building Societies Act of 1874 (37 and 38 Yict. c. 42), and acquired borrowing powers. The appellant, who was the representative of the lender, applied to the society for repayment of the loan, but ulti- mately agreed to refrain from legal proceedings against the society on the directors giving him a deposit note. The directors accordingly gave him a deposit note under the seal of the society, stating that the money was lent by the appel- lant on the date of the deposit note, and he thereupon gave to them the promissory notes above mentioned. It was held that the deposit note was not binding on the society. 3 Sec. 373 — Personal Liability of Directors. If the directors or trustees exceed the power conferred on them by the rule or statutes relative to borrowing money, they will be personally liable, even if there be no fraud on their part. 4 1 Neath Building Society v. Luce, and bind his society unless autho- L. R. 43 Ch. Div.128 ; s. c. 59 L. J. rized so to do by the board of di- Ch. 3 ; 61 L. T. 611 ; 38 W. R. 122. rectors. Browning v. British Am- 2 Colonia Bank of Australia v. erican Friendly Society, 3 Low. Curtain, L. R. 4 Vict. L. (Austr.) Can. Jur. 306. 38 ; Colonia Bank of Australia v. 3 Sheffield, B. S., In re Watson, Draper, L. R. 4 Vict. L. (Austr.) ex parte, 21 Q. B. Div. 301 ; s. C. 527. 57 L. J. Q. B. 609 ; 59 L. T. 401 ; An officer of a building society 36 W. R. 829 ; 52 J. P. 742. cannot accept a bill of exchange 4 Chapleo v. Brunswick Perma- 416 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. Sec. 374 — Power of Directors to Bind Individual Mem- bers of the Society. The directors have no power to bind the members of the society as individuals, or to impose upon them a personal liability, by borrowing mone}^ ; and a rule purporting to so bind the membership is void. 1 Sec. 375 — American Cases. In Pennsylvania it was said, by way of a dictum, that " It would be a gross perversion of the whole spirit and de- sign of such an institution to borrow mone} r from banks or others for the purpose" of loaning out. 2 In Ohio it was directly held that a building association had no authority to borrow money to loan ; although it might to transact its necessary business. If it borrow money to loan, it was a forfeiture of its franchise. 3 In Maryland an as- sociation was incorporated " for the accumulation of a fund by the savings of the members thereof, sufficient to enable them to purchase for themselves respectively, real leasehold property, and generally for the purpose of a building association, and subject in all particulars to the limitations relating to corporations, which are contained in the general laws of the state." A member received a loan, but instead of taking the money received its note, which he discounted. The note was held valid, even if not negotiated as it had been agreed. " The authority vested in this nent Building Society, L. R. 6 Q. S. C. 34 W. R. 148 ; affirming, L. B. Div. 696 ; S. C. 50 L. J. Q. B. R. 29 Ch. Div. 182 ; s. c. 54 L. J. Div. 372 ; 44 L. T. (N. S.) 449 ; Ch. 493 ; 52 L. J. N. S. 406 ; 33 W. 29 W. R. 529, reversing, L. R. 5 C. R. 575. P. Div. 331 ; S. c. 49 L. J. C. P. 2 Stiles's Appeal, 95 Pa. St. 122 ; Div. 796 ; 42 L. T. N. S. 741 ; 29 S. C. 9 W. N. C. 83 ; 37 Leg. Int. W. R. 153 ; Richardson V. William- 366. L. R. 6Q. B. 276; s. c. 40 L. 3 State v. Oberlin Building and .1. Q. B. 145. Loan Association, 35 Ohio St. 258. 1 In re West London and Gen- The money was really borrowed to eral Permanent Benefit Building purchase its own stock, a tiling Society [1894) 2 Ch. 852 ; 8. C. 68 clearly illegal. See Heggie v. I.. .J. Ch. 506; 70 L. T. Rep. 796 ; Building and Loan Association. 42 W. R. 585; 10 T. L R. 280; /// 107 N. C. 581 ; s. C. 12 S. E. Rep. re An on, I,, it. 80 ('I.. Div. 484 ; 275. §375. POWER TO BORROW MONEY. 417 corporation, by the law of its charter, according to the nature of its business, is unquestionably sufficient, to en- able it to borrow money, and to make loans to its mem- bers with a view to accomplish the purpose of its for- mation." 1 An association was, in that state, by statute authorized to issue promissory notes on mortgages only, to be drawn to the order of the mortgagor, who should in all cases indorse the notes thus drawn. The president, secretary and treasurer and three directors were authorized to sign all notes issued. The association issued its notes to a person who gave for it a mortgage to the as- sociation. It was strictly a note in form, payable to the order of the mortgagor, due in sixty days, at a bank named, and signed by the officers of the association. In one corner of the face of the note was an emblem of the seal of the as- sociation, printed at the time the note was printed. The note was indorsed by the association and by it negotiated. It was held that the note was negotiable, that the associa- tion had power to take it and bind itself by endorsement ; that the seal did not destroy its negotiability ; for such was the intent of the parties. " The very nature of the trans- action itself, the objects and purposes to be subserved by the issue of the note, as well as its form, plainly indicate that the parties must have understood that the note was negoti- able, and that it would be so accepted and dealt with by the commercial community. The building association issued the note to the appellees, instead of money, for which the mortgage was given. It was certainly contemplated that the appellees should negotiate the note, in order to obtain the money that the association had contracted to loan, and that was rendered impossible, from the form of the note, except by endorsement. Nc bank or banker would likely discount the note, if not negotiable, upon mere assignment, subject to the equities existing between the original parties. It sufficiently appears that the present note, and others like it, have been dealt with by the banks, and the commercial community generally, as ordinary negotiable paper ; and in 1 Davis v. West Saratoga Building Union, 32 Md. 285. 27 418 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. their understanding of the nature and qualities of these instruments we think they have not been mistaken." 1 An association in Wisconsin was neither forbidden nor expressly empowered to borrow money. It was a serial as- sociation, and when the shares in the first series matured, or should have matured, the association took up money for the purpose of paying off the unadvanced shareholders in that series, gave its note for the loan, and assigned mortgages and bonds held by it against the borrowers in other series, as collateral security. The money thus raised was applied to the purpose intended. Part of the debt was paid, and then an action was brought against the lender of the money to recover possession of the bonds and mortgages thus as- signed. The inquiry was : (1) Whether the association had the power, in view of the facts, and for any purpose, to make the loan ; and (2) if it had not, whether it could be, heard to set up its want of power to borrow the money after having applied the loan to the purposes of the corpora- tion. " To determine the first question," said the court, u it becomes necessary to inquire what are the objects and pur- poses of the corporation, and from such objects and pur- poses to determine whether it is consistent, and reasonably necessary, under certain circumstances, for the corporation to borrow money to accomplish the purpose of the organi- zation ; and if it be found that, under some circumstances, the purpose of the corporation can only be conveniently and reasonably carried out by borrowing money, then, under the adjudicated cases, in the absence of any express provision forbidding the corporation from borrowing, the corporation may do so. * * * It is a universally accepted principle thai corporations organized generally to engage in a par- ticular business have, as incident to such authority, the power to contract debts in the legitimate transaction of such business, unless they are restrained by their charter or by the statute from doing so. It is likewise an equally well acknowledged rule Unit the right to contract debts carries with it the power to give negotiable notes or bills in pay- i Jackson v. Myers, 48 Md. 452 ; v. National Building Association, Muth v. Dolfield,48Md.466; Jones 94 Pa. St. 215* § 375. POWER TO BORROW MONEY. 419 merit of or security for such debts, unless the corporations are in like manner prohibited. * * * If, therefore, it can be shown that the loan association, the plaintiff in this action, in order to properly carry on its business, has the power to contract debts or borrow money as a legitimate way to carry on such business, then it may do so, and give its notes or other proper security for the money loaned." "In conducting the business of a corpora- tion of the said order, when a considerable portion of the stockholders are not borrowing members, it miffht not be not only a just but a beneficial way of conducting the business to loan the money received in the usual course of business to the members of the corporation who are will- ing to borrow the same and pay large premiums therefor, and not to keep the same on hand to the detriment of all the members, and accumulate it, in order to be prepared to pay off the series of stockholders not being borrowing mem- bers whose stock became of its par value, and when the necessity for payment arrived make a temporary loan to pay off said members. It seems to me that this would not be an unreasonable way of conducting the business of the corporation, and that it could, if it saw fit, make a loan for that purpose, there being no statute or by-law of the com- pany expressly prohibiting the company from so doing. We must conclude, therefore, that the corporation had the power to make a loan for the purpose of paying off the stockholders of the first series when their stock became of its par value." Touching the power of the association to assign, as security for the loan, the bonds and mortgages of borrowers in junior series, the court said : ' ; We think the power to borrow implies, in the absence of any law ex- pressly restraining the board the power to secure the pay- ment of the loan, by an assignment of the mortgages and bonds of the other members held and owned by the corpo- ration, and to make the assignment of them for that pur- pose. In this case the bonds and mortgages are made on their face assignable by the company. It is said it is unjust to assign the bonds and mortgages given by members of the subsequent series to secure the payment of the money due 420 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. to the stockholders of the first series. There could be no injustice in so doing if the money was in fact due to the first series. The payment could be enforced by them in equity from the moneys to become due on such bonds and mortgages, in the absence of any other resources of the com- pany, and we know of no other resources which the com- pany would be likel} T to have. The pledge of these mortgages and bonds to the bank can work no injury to the men who gave them. Any payments made on them for the benefit of the bank will inure to their benefit, the same as though it had been paid to the corporation." The court also held that the receipt of the money and its appli- cation to a legitimate purpose estopped the association from disputing its liability for the amount loaned, saying : " The corporation has received the money loaned and applied it to the legitimate purpose of the company in paying off the first series of stockholders. So far as this payment was justly due to such stockholders, all the other stockholders are benefited by it, and they cannot retain the benefit of the application of the money loaned by the bank, and refuse to pay the loan. The plaintiff is estopped by the receipt and application of the money to a legitimate pur- pose of the corporation, from setting up a want of power in the corporation to make the loan. The corporation cannot reap the benefit of the money loaned and then allege a want of power to make it." x i North Hudson Mutual Building by it, see Murray v. Scott, L. R. 9 and Loan Association v. First Na- App. Cas. 519 ; 53 L. J. Ch. 745 ; tioiial Hank, 7!) Wis. 31 ; S. C. 47 51 L. T. (N. S.) 462; 33 W. R. 173 ; N. W. Rep. 300 ; 11 L. R. A. 845 : varying same case in Court of Ap- : \iini-. & Eng. Corp. Cas. 845. peal under the name of In re This case also holds thai the com- Guardian Permanent Building So- pany would be estopped even if the ciety, L. R. 23 Ch. Div. 440 ; s. c. money had been misapplied, if the 52 L. J. Ch. 857; 48 L. T. (N. S.) tender was in ignorance of the de- 134; 32 W. It. 73. See also Quein sign of the directors t<> misapply v. Smith, 108 Pa. S. 325. it, when be made the loan. Upon the question of estoppel, Upon the question of assignment and to like effect, are CriswelPs of bonds and mortgages held by an Appeal, mo Pa. St. 488 ; s.c. 12W. ociation as collateral t<» Becure N. Cas. 483; Jones v. Building As- the payment of money borrowed sociation, 94 Pa. St. 215; Loan § 376. POWER TO BORROW MONEY. 421 Sec. 376 — Overdrafts— Deposits. The overdrawing of its bank account by the association is not such a borrowing as will defeat a recovery by the bank for the amount of the overdraft. 1 But overdrawing of an account at a bank is just as much a borrowing when done with full knowledge that such is the case, and with the consent of the bank, knowing at the time it is an overdraft, as any other transaction of lending or borrowing money ; Company v. Conover, 5 Phila. 18. In Canada a building society has power to borrow money, but it is done under a power conferred by statute. Societe de construction v. Banque, 1 Q. B. (Can.) Rep. 73. Under a statute authorizing such an association to make loans on real and personal security to per- sons not members, it may discount notes ; such a transaction not being banking within the prohibition of its charter to the effect that it shall do no banking. La Societe Per- manente District v. Rossiter, 4 Leg. News. 269. By a statute a society was authorized to adopt a by-law for the borrowing of money under certain circumstances. In a suit on a note it was presumed that by- laws were adopted which author- ized the officers to borrow the money. Snarr v. Toronto Per- manent Building and Saving So- ciety. 29 U. C. Q. B. 317. But unless authorized by the directors so to do, an officer of a society cannot accept a bill of ex- change and bind the society by the acceptance. Browning v. British American Friendly Society, 3 Low. Can. Jur. 306. Where an association by a con- tract ultra vires purchases lands, and gives its notes and bond for the purchase money, a judgment will be restricted to the land. Faulkner's Appeal, 11 W. N. Cas. 48. A member of a building associa- tion is charged with notice that its charter prohibits the directors alone from making contracts in its behalf. Citizens' Saving, Build- ing and Loan Association, v. Ruhl, 55 111. App. 65. The power to incur indebtedness gives implied power to execute negotiable instruments for the amount borrowed. Grommes v. Sullivan, 81 Fed. Rep. 45. In Missouri it would seem that a building association cannot borrow money, although it may issue cer- tificate of deposit. Grohmann v. Brown, 68 Mo. App. 630. Such an association has no right to accept a draft, and is therefore not liable to an innocent holder taking it after acceptance. Towle v. American, etc., Co., 78 Fed. Rep. 688. 1 Laing v. Reed, L. R. 5 Ch. App. 4 ; s. c. 18 W. R. 76 ; 39 L. J. Ch. 1 ; 21 L. T. (N. S.) 773 ; 34 J. P. 134. See also hi re German Min- ing Co., 4 De G. M. & G. 19; In re Cefor Cilcen Mining, L. R. 7 Eq. 88 ; s. c. 19 L. T. 593 ; 38 L. J. Ch. 78 ; and Waterlow v. Sharp, L. R. 8 Eq. 501 ; s. C. 20 L. T. (N. S.) 902. 422 BUILDING AND LOAN ASSOCIATIONS. Ch. XVIII. and especially is this true if it is agreed to pay interest on the amount of the overdraft at the time it is made. Under such circumstances if the act of borrowing is illegal the act in making the overdraft is invalid. 1 If an association be not particularly authorized by statute to receive deposits, then their receipt stands on the same plane as the borrow- ing of money ; and if borrowing be legal and binding on the company, the receiving of deposits is also legal. And where an association was authorized to receive deposits from its stockholders, and received deposits from outsiders, and then became insolvent, it was held that it was so grossly unjust to permit the society to retain the money and not refund it, that the court would order the amount received repaid first and then the stockholders. 2 But where a building association received money on deposit from out- siders it was held that they were bound by the rules of the society the same as if they were members of it ; and that stockholders who had paid up and been discharged could not be called upon for contribution to pay such depositors. 3 Depositors, however, are nothing more than mere creditors of the association, and consequently must be paid before its members ; 4 and in the absence of any special condition 1 Lee as supporting this view, not an act granting "banking Lookeru Wingley, L. R. 9Q.B. Div. powers," within the meaning of 397; s. c. 4G J. P. 758; Blackburn the Ohio constitution. Bates y. Benefit Building Society v. Cun- People's Loan and Saving Associa- liffe, L. it. 22 Ch. Div. 61 ; s. c. 31 tion, 42 Ohio St. 653 ; S.C. 13 Wkly. W. Et. 98; on appeal, 9 App. Cas. L. Bull. 396; Dearborn v. North- 865; S. c. 54 L. J. Ch. 376 ; 56 L. T. west Savin- Bank, 42 Ohio St. 617. 2 15 : 33 W. R. 209 : Brooks v. Black- In the first of these last two cases burn. etc. Society, L. R. 9 App. it was held that an outsider who Cas. 857. made a deposit withan association 2 Criswell's Appeal, 100 Pa. Si. for the purpose of securing a loan s. c. 12 W. N. Cms. 483. See is estopped from denying that lie also Murray V. Scott. L. R. 9 App. was in tact a depositor, when sued 1 519; 53 L. J. Ch. 745; 51 L. by the association for the money S I 162 ; 33 W. R. i;:;. advanced. ■"■ /// re Victoria Permanenl Ben- A note given by a society for a • ■lit Building Society. L. B. '•• Kip deposit is not negotiable. Cooley 605; s. c. is \V. b. 967; 89 L.I. v. Dominion Building Society, 24 ch. 628; 22 L. T. (X. S.) 777. L. Can. Jur. 111. ^ statute authorizing a building 4 In re Mutual Aid Building So- :> ociation to receive deposits is ciety, 30 Ch. Div. 434; B.C. 55 L. § 878. POWER TO BORROW MONEY. 423 depositors giving notice of withdrawal acquire no priority as between themselves in the event of insolvency or winding-up - 1 Sec. 377 — Rights of Borrower on Distribution of As- sets. As we have seen by the preceding section, on distribution of the assets of the association, those who have made loans to it must be paid first, or before the stockholders ; and if stock- holders having made loans to the association, they also, so far as their loans are concerned, stand upon the same foot- ing as if they were outsiders, although they may be liable to contribution, by reason of their membership, to assets of the association in order to pay those not members. 2 See. 378 — Lenders Liable to Refund Society Monies Received in Reduction of Debt. Where an action was brought to compel bankers to re- fund monies from time to time paid them by the society, and applied towards discharging the balance alleged by the bankers to be due them from the society upon their over- drawn account, the court made an order in favor of the official liquidator ; but, on appeal, it was decided that, in taking the account, payments which had been made out of the monies advanced by the bankers to withdrawing mem- bers should be allowed in favor of the bankers ; and also that the lien which had been given by the judgment below to the bankers on any mortgage securities taken by the society in advance out of monies advanced by the bank- ers, should not be subject to the mortgage granted to the society in respect of advances made by the society out of its own proper funds ; and further, the lien of the bankers was not to be subject to the costs of winding up, for the mortgages given to secure sums lent out of J. Ch. Ill ; 53 L. T. 802 ; 34 W. R. 2 Criswell's Appeal, 100 Pa. St. 143 ; Murray v. Scott, 9 App. Cas. 488; s. C. 12 W. X. Cas. 483 ; In re 519; 53 L. J. Ch. 745; 51 L. T. Mutual, etc. , Society. L. R. 30 Ch. 462 ; 33 W. R. 173. Div. 434 ; s. c. 55 L. J. Ch. 511 ; 53 1 In re Progressive Investment L. T. 802 ; 34 W. R. 143. and Building Society, 54 L. T. 45. 424 BUILDING AND LOAN ASSOCIATIONS. Cll. XVIII. monies advanced by the bankers were to be treated as property which they were entitled to claim. 1 Sec. 379— Postponement of Depositor's Right of Action — Available Balance. The rules of a society provided " that if the available balance in hand shall be at any time insufficient to pay all the depositors wishing to withdraw, they shall be paid in rotation according to priority of their notice." After giving notice, a depositor brought an action to recover pay- ment of his monies, and it was held that he had no cause of action, the society having proved that there was no bal- ance available either at the time of giving the notice or bringing the action. " We cannot think," said the court, " that it is only intended, or that the true meaning of the condition 2 is to regulate the course of payment among de- positors, and thus to prevent any undue preference that would give it really no effect. If all the depositors could bring their actions and recover their deposits at the same time, what would be the advantage of the provision for ro- tation and priority ? The construction contended for by the plaintiff would afford no protection to the defendant society, and would leave it in the power of a certain num- ber of panic-stricken depositors to wreck the society, which would not be for the interest of the society or the deposit- ors. The condition means that the defendant society may postpone payment, and the depositors' rights to recover, until there is an available balance in hand sufficient to pay depositors in rotation according to the priority of their notices. The plaintiff brought his action too soon, and at a time when, according to the condition [of the above-quoted rule], though due, was not payable. AVe do not understand 'available balance in hand ' merely to mean money in the coffers of the defendant society, but money which, without undue lessor undue delay, they could realize; as, for ex- ample, money invested in consols or any other security i Blackburn and District Build- 902; s. c. 54 L. J. Ch. 1091 ; 53 L. ing Society v. Cunliffe, 80 Ch. Div. T. 741. 2 Tlic rule above set out. 379. POWER TO BORROW MONEY. 425 capable of being readily realized. ' An available balance ' of this kind the defendant society did not possess at the time of the plaintiff's notice of withdrawal, nor at the time when the action was brought." 1 1 Brett v. Monarch Investment Building Society, 9 Rep. 141 ; s. c. [1894] 1 Q. B. 367 ; 63 L. J. Q. B. 237 ; 70 L. T. 146 ; 42 W. R. 209 ; 58 J. P. 367. In an English case a question was raised concerning the date from which the Statute of Limita- tions was deamed to run. By the rules the production of a loan pass- book by a depositor was made a condition precedent to the liability of the society to repay the loan. The depositor died on the day his notice withdrawing the money ex- pired, without producing the pass- book. It was held that the right of his administrator to sue for the deposit was not bound by the Stat- ute of Limitations, for no right of action had accrued during the de- positor's lifetime, and six years had not elapsed since the date of the grant of the letters of admin- istration, although more than six years had elapsed since the death of the depositor. Atkinson v. Bradford, 3d Equitable Building Society, 25 Q. B. Div. 377 ; s. C. 59 L. J. Q. B. 360 ; 62 L. T. 857 ; 38 W. R. 630. CHAPTEE XIX. TAXATION. Sec. 380. Mortgages. 381. Tax on Stock. 382. Payment into State Treasury — Inter-State Commerce. 383. Exemptions. 384. Covenant to Pay Taxes. Sec. 380— Mortgages. For the purpose of taxcation, mortgages given to a build- ing association to secure the payment of advances made to them must be considered " as synonymous with property." The property of such association is assessable, like the prop- erty of individuals, at its full value. Where a company failed to make a return to the tax-assessing offices, as re- quired by law, but made a report to the state, showing its financial condition, wherein it appeared that its personal estate amounted to over $120,000 ; and the tax-assessing officers assessed it on the amount thus stated, it was held that this was correct ; and that the association could not successfully contend that it was taxable only on the amount yet to be paid in by all the stockholders to make each share worth its par value, upon the theory that all monies advanced become property of the advanced stockholder, subject to his duty to pay interest and instalments, and cease to be assets of the association. 1 A statute requiring building associations "to list their real estate and all per- sonal property " for taxation, covers mortgages held by them if the stock has not been taxed. To tax both the mortffagres an < I the stock' would be double taxation. 2 1 State v. Bornbecker, 41 N. J. 2 State v. Redwood Falls, etc., L. 519 ; affirmed, 42 N. J. I>. 635 ; Association, 45 Minn. 154 ; s. c. 35 State v. Creveling, 89 N. J. L.465; Amer. & Eng. Corp. Cas. 244; 10 affirmed, 40 N. .). L. L92. L. R. A. 752; 47 N. W. Rep. 540 126 § 381. TAXATION. 427 Sec. 381.— Tax on Stock. Where the secretary of an association returned to the taxing officer $101,400 as the amount of bonds, mortgages, and notes then held by it as securities for money loaned its stockholders, as well as others, as provided for in its con- stitution ; and the taxing officer declined to allow any deductions to be made from this amount ; this was held cor- rect, although this sum was the full amount of the capital, stock and accumulated surplus. " This fund," said the court " which has accrued from monthty payments on shares, from premiums and interest on loans, and from fines, is the full amount of the capital stock and accumulated surplus of such associations ; the former being the aggregate of the monthly payments of stock, which, by the fundamental law of the association, are made obligatory on all stockholders alike, w r hile other payments, which are, in effect, optional with those who made them, represent the profits of the scheme, and make up the accumulated surplus." J A statute of Georgia required the officers of a building association " to return to the tax receiver of the county where such associa- tions are located, at its true market value, the stock of such associations owned by the stockholders thereof, upon which, as shown by the books of such associations, no advance has been made, or money borrowed thereon, by the individual stockholders therein, to be taxed as other moneyed capital in the hands of private individuals is taxed." It also pro- vided that " no tax shall be required of real estate and building associations to be paid upon any portion of its capital which has been loaned or advanced to a shareholder upon real estate, upon which real estate tax is payable (made so by statute). A statute termination. Pottsville National imposing a tax on all corporations Saving Fund Association v. Com- doing business applies to a building monwealth, 2 Chest. (Pa.) 189. association that has ceased to make A general law taxing mortgages loans and to collect monthly dues does not apply to building associa- from members who had not bor- tion mortgages. Faust v. Twenty- rowed, but is still collecting debts third, etc., Ass'n, 84 Md. 186 : s. c. due it and discharging existing ob- 35 Atl. Rep. 890. ligations and generally transact- * State v. Creoeling, 39 N. J. L. ing all business necessary to a final 463 ; affirmed, 40 N. J. L. 192. 428 BUILDING AND LOAN ASSOCIATIONS. Ch. XIX. by said shareholder." Under this statute it was held that stock in such an association, represented by shares upon which no advance or loan had been made to the owner, was liable to taxation at its true market value, and the associa- tion must return this class of stock and pay the tax on it." 1 In a Pennsylvania case it was said : " The legal standard of valuation is the actual cash value of the capital stock, which is, of course, made up of the actual cash value of all the shares, without regard to what has been paid in on them." 2 Sec. 382 — Payment into State Treasury — Interstate Commerce. A statute requiring foreign building associations to pay a certain per cent, into the state treasury is valid, and is not an interference with interstate commerce nor a denial to such associations of equal protection of the laws, even if the tax is not imposed as a condition precedent to the entrance of the corporation into the state to do business. 3 Sec. 383 — Exemptions. In several of the states building associations are exempt from taxation ; thus receiving a special favor, on the theory that they are institutions to aid the workingmen in securing hemes. 4 But under a statute exempting " banks and saving- institutions " a building association cannot claim exemption from taxation. 6 Under a clause of a state constitution authorizing the legislature to exempt benevolent institu- tions from taxation, such legislature cannot exempt a build- iMcGowanu. Savannah, etc., As- 3 Southern Building & Loan As- iation,sO(; ; i. 515; s. c.5So.Rep. sooiation v. Norman, 98 Ky. 29 I : 775. See also Charlotte Building, s. c. 32 S. W. Rep. 952 ; 31 L. R. A. etc., Association v. < Jommissioners, -II. 115 N. I '. I in ; 8. C. BOS. E. Rep. 526. 4 In Michigan see Pub. acts 1889 a Commonwealth v. Pottsville No. 124, p. 144. Saving Fund Association, 2 Chest. 6 Bourignon Building Associa- 189. See also Building Association tion v. Commonwealth, 98 Pa. St. Banking Fees, 17 Pa. C. C. 62. En 51 ; s. c. 38 Leg. Int. 324; 10 W. West Virginia shares are assessed N.Oas.101; lSPhila. 628. Contra, to the members. Ohio Valley, etc., Abbott v. Muilding Association, 1 ,,. v. Cobell County, 43 W. Va. Del. (Pa.) 397. sis ; s. o. 26 8. E. 208. § 383. taxation. 429 ing association ; for it is a corporation organized to make money for its stockholders, and is not a benevolent institu- tion. 1 A statute requiring a building association to be taxed on all its stock upon which no advances have been made to stockholders, and providing that no tax shall be levied upon any portion of the capital loaned to its stockholders upon taxable real estate, is valid ; and stock upon which no ad- vances have been made is properly assessed. 2 A statute providing that " the monthly instalments deposited in build- ing associations, and subject to withdrawal on demand, or on thirty or sixty days' notice, as provided in the by-laws of such associations, are an indebtedness which mav be deducted" from their taxable propert}^ ; such instalments Avhen loaned out are not so subject to withdrawal, and hence no deduction can be made on account of them. 3 A statute releasing from taxation notes and mortgages given by members of a building association to it for advances on stock, and remitting taxes already levied but not collected, is valid. 4 Under a provision in a tax law authorizing a tax levied upon the amount paid into the association upon out- standing shares of stock, less the amount loaned to share- holders upon mortgage security, and that neither the asso- ciation nor the shareholders shall be liable to other taxation upon such shares of stock, paid up stock is not exempt from taxation. 5 A statute exempting paid-up shares from taxa- tion, and not any other shares, is unconstitutional; 6 and so is a statute, it has been held, which exempts notes in the hands of the association which have been taken for loans. 7 In England it has been held that a statute exempting from i State v. McGrath, 95 Mo. 193 ; L. R. A. 752 ; 35 Araer. & Eng. S. c. 8 S. W. Rep. 425 ; 22 Amer. & Corp. Cas. 244. Eng. Corp. Cas. 620. See also 4 Selma Building and Loan As- Deniston v. Terrey, 141 Ind. 677 ; sociation v. Morgan, 57 Ala. 33. s. C. 41 N. E. Rep. 143. * Denistonv. Terry, 141 Ind. 677 ; 2 McGowan v. Savannah Mutual s. c. 41 N. E. Rep. 142. Under Loan Association, 80 Ga.515 ; s. c. such a statute the true cash value 5 S. E. Rep. 775. is the amount taxable. 3 State v. Redwood Falls Build- 6 Id. ing and Loan Association, 45 Minn. 7 Homestead Association v. 154 ; S. C. 47 N. W. Rep. 540 ; 10 Keith (111.), 39 N. E. Rep. 1072. 430 BUILDING AND LOAN ASSOCIATIONS. Ch. XIX. stamp duties, bonds, securities, and assurances given on ac- count of any friendly society, extends to building societies. 1 Consequently a mortgage taken by a building societ} 7 as security was held exempt from taxation. This rule has also been extended to a mortgage given by a non-member to the association for a loan. 2 Sec. 384 — Covenant to Pay Taxes. A covenant inserted in a mortgage given to a building association for a loan, requiring the mortgagor to pay the taxes on the land given as security, is valid and binding upon him ; and if he do not pay them, the association may claim the amount under the mortgage. 3 Even though the taxes have been irregularly assessed, the association may pay them, if it has no notice of the irregularity. 4 i Walker v. Giles, 6 C. B. 662 ; S. c. 13 L. T. Rep. 209 ; 13 Jur. 588 ; 18 L. J. C. P. 323 ; 60 E. C. L. 662 ; Barnard v. Pils worth, 6 C. B. 692 ; S. c. 14 L. T. Rep. 132 ; 18 L. J. C. P. 330, note. 2 Thorn v. Croft, L. R. 3 Eq. 193 ; S. C. 36 L. J. Ch. 68 ; 31 J. P. 356 ; 15 L. T. Rep. (N. S.) 205; 15 W. R. 54. In Indiana a general tax law- makes all stock, except where some other provision is made by law, tax- able in the corporate name. An- other statute provides that building associations shall he assessed on the surplus of receipts over loans, and declares thai neither they nor the shareholders shall be liable to - ta sal ion on their shares. It was held i bat this was not a limit on the right to further tax the shareholders, or thoseto whom the company were Indebted ; and it was proper to tax a non-borrowing member for his holdings, which are in the rial are of a credit , and ii was immaterial whether or not the stock was fully paid up. Harn v. Wood- ard (Ind.), 50 N. E. Rep. 33. For a decision holding that a city has the right to tax a building association under its charter, when a general state law of ex- emption is in force, see City Coun- cil of Montgomery v. National Building and Loan Association, 108 Ala. 336 ; s. c. 18 So. Rep. 816. A general statute allowing a debtor to deduct the amount of his general indebtedness from credits due him, from whatever source, applies to a borrowing stockholder, who may deduct the amount he has borrowed from his association from the value of his Stock. Deniston r. Terry, 141 Ind. Cdr : s. c. 41 N. E. Rep. 143. 3 Huntington Building .Associa- tion v. Melsheimer, 14 W. N. Cas. 344. 4 Bates v. People's Saving and Loan Association, 42 Ohio St. 655 ; 14 Wkly. L. Bull. 396. CHAPTER XX. DISSOLUTION — RECEIVER. Sec. 385. Insolvency as a Ground for the Appointment of a Receiver. 386. "Who may Demand a Receiver for an Insolvent Building Association. 387. Right of Member to Ask for Receiver when Shares Reach Par Value. 388. Mortgages not Assets for the Purpose of Determining the Solvency of the Association. 389. Effect of Society Reaching Limit of its Corporate Existence. 390. Dissolution by Agreement. 391. When Abandonment of Corporate Existence may be In- ferred. 392. Forfeiture of Franchise. 393. Suit to Wind Up. 394. Liability of Member for Payment of Dues and the Like After Association Suspends Operations. 395. Apportioning Profits in Serial Association — Estoppel. 396. Distribution of Assets. 397. Effect upon Mortgages or Loans. Sec. 385 — Insolvency as a Ground for the Appoint- ment of a Receiver. Inasmuch as insolvency does not dissolve an ordinary corporation, 1 much less does it dissolve an ordinary build- ing association. 2 Owing to their peculiar organization, such institutions seldom have few creditors outside of their membership, and they very frequently have none. " The insolvency of such an institution is sui generis. There can be, strictly speaking, no insolvency, for the only creditors are the stockholders by virtue of their stock. The so-called insolvency is such a condition of the affairs of the associa- 1 Michles v. Richmond Bank, 11 Building and Loan Association, 3 Paige, 118. W. N. Cas. 11. 2 Gormerly v. Port Richmond 431 432 BUILDING AND LOAN ASSOCIATIONS. Cll. XX. tion as reduces the available and collectible funds below the level of the amount of stock already paid in. The associa- tion is said to be insolvent when it cannot pay back to the stockholders the amount of their actual contribution, dollar for dollar." J "While a building association has the power to make a general assignment, 2 yet it would seem that a better method of procedure is to apply for a receiver in case of insolvency, and the court may even order a reassignment to the associa- tion for that purpose. 3 1 Towle v. American Building, Loan and Investment Society, 61 Fed. Eep. 446 ; People v. National Home Building and Loan Associa- tion, 7 Chicago Law Jr. 193. See In re National Savings, Loan and Building Association, 9 W. N. Cas. 79 ; S. c. 37 Leg. Int. 299 ; Chap- man v. Young, 65 111. App. 131. Commonwealth v. Pennsylvania B. & L. Ass'n, 20 Pa. C. C. 589. 2 Christian's Appeal, 102 Pa. St. 184 ; s. 0. 40 Leg. Int. 261 ; 30 Pitts. L. Jr. 435; 13 W. N. Cas. 181; Connolly v. Association, 6 W. N. Cas. 176. :) Tn the case of In re National Saving and Loan and Building As- sociation, supra, the court made the following order: "Let the general creditors, if any, be paid, and let the Auditor so report if he can. Upon petition in the usual form, ami under t he act of Assem- bly, tin- general creditors being paid, we w ill order a reconveyance ami assig ament of t he enl ire prop- erty in t he hands of the assignee to i hi a i nor. A l>ill <>(' equity may i hen lie prepared at the suit of those intere ted in a final sel I le- nient, in w hich if it shall appear t h.ii i be corporal ion is insoh enl , t hat its a • t may be Lost , and t hat by t he appoint cnenl of a re- ceiver the rights of all may be protected. If the case is a proper one upon the bill and answers, and proofs, we will at once act and direct the receiver, by a cautious and prudent policy, to wind up the affairs of the concern, and then, upon hearing and proof, so marshal and distribute the assets by final decree as to do justice to all." Where a statute provided that when the assets of an association were insufficient to justify the continuance of its business, it should be allowed sixty days within which to make its assets sufficient, and, in default thereof, be dissolved ; it was held that wip- ing out the deficiency between its assets and liabilities by charging it off pro rata against theamounts paid in by its members on their stock was a sufficient compliance with the statute. Continental, etc., So. v. People, 107 111. 195 ; S. C. 47 N. E. Rep. 381. But see People v. Empire, etc., Co., 13 N. Y. Misc. Rep. 221 ; s. c. 34 N. Y. Supp. 235. The fact that at the date of a not ice of withdrawal by a member, the liabilities of the association to its shareholders were in excess of the value of its assets, constitutes an insolvency. Chapman v. Young, 386. DISSOLUTION — RECEIVER. 433 Sec. 380 — Who may Demand a Receiver for an In- solvent Building Association. It is pretty well settled that only a shareholder in a building association may ask to have a receiver appointed for it when insolvent, and he must ask for the appointment in his character as a shareholder, and not in the character of a general creditor of the association. 1 Where, however, a person deposited money with an association with a view of becoming a member, but before becoming such member gave the proper notice of withdrawal, it was held that he might file a petition to wind up the association, the associa- tion's rules giving it no authority to borrow money. 2 65 111. App. 131. See also Contin- ental, etc., So. v. People, 167 111. 195 ; S. C. 47 N. E. Eep. 381. In a New York case it was held that the directors cannot charge off a deposit against the stock of members so as to render the asso- ciation solvent, where the deposit was created by expenditures made in violation of the articles of the as- sociation. People v. Empire, etc., Co., 44 N. Y. Supp. 308; S. c. 15 App. Div. 69. On an application for a receiver on the ground of insolvency, it ap- peared that the alleged indebted- ness consisted of $5000 " bills pay- able," none of which were held by the plaintiffs, and subscriptions of " free shareholders," to the amount of $74,000, of which plaintiffs repre- sented $545 ; that plaintiff had not given notice in writing of their withdrawals, and hence were not creditors ; that a large majority of the free shareholders desired the business continued ; and that the available assets were $50,950. It was held that a receiver ought not be appointed. Steinberger v. In- dependent L. & S. Ass'n, 84 Md. 625 : s. C. 36 Atl. Rep. 439. 28 1 Gormerly v. Port Richmond Building and Loan Association, 3 W. N. Cas. 11. 2 In re Queen's Benefit Building Society, L. R. 6 Ch. Div. 815 ; 19 W. R. 597, 762 ; 40 L. J. Ch. 381 ; 24 L. T. (N. S.) 346. See In re Planet Benefit Building and Investment Society, L. R. 14 Eq. 441 ; s. C. 27 L. T. (N. S.) 638; 20 W. R. 935; 41 L. J. Ch. 738. But see the con- trary in In re National Permanent Benefit Building Society. 5 Ch. 309 ; s. c. 18 W. R. 388 ; 22 L. T. 284 ; 34 J. P. 341. The Illinois statute of 1893 (p. 83) giving the auditor of public ac- counts supervisory power over loan associations, providing that when- ever it shall appear that the assets of such an association are insuffi- cient to warrant the continuance of business, and the association, after notice, fails to make the assets sufficient, he shall report the facts to the attorney-general, who shall apply, on the state's relation, for a dissolution of the association, does not authorize that officer to insti- tute the suit after suit brought by a stockholder to wind up the con- cern as insolvent, but before that is 434 BUILDING AND LOAN ASSOCIATIONS. Ch. XX. Sec. 387 — Right of Member to ask for Receiver when the Shares Reach Par Yalue. When the shares of a building association reach their par value the association, in case it is a terminating one, reaches the limit of time for which it was organized. If it is a serial association, then the stock of the series to which such shares belong has terminated, and all belonging to it are entitled to receive their money, except such as have anticipated that payment by borrowing or securing an advancement. It is sometimes difficult to determine whether that point of time has arrived, for it rests in proof, and usually the officers of the association have the best opportunities of knowing that fact. If they choose to conceal it, and for some purpose of their own carry the association along, it may be difficult to establish the fact. Bat whenever the fact is established such a shareholder may insist upon the appointment of a receiver to wind up the association. 1 If the effect of a member becoming a borrower, according to the contract and by-laws, is to sever his relationship with the association and turn him into a debtor, owing the association a fixed accomplished an assessment is made Tins right has been recognized, which renders the association sol- although not decided, in the fol- vent to the approval of such audi- lowing cases : North Hudson Mu- tor. Broadwell v. Inter-Ocean tual Building and Loan Associa- Homestead & Loan Association, tion v. First National Bank. 79 161 111. 327 ; S. C. 43 N. E. Rep. 1067. Wis. 31 ; S. c. 47 N. W. Rep. 300 ; The Missouri statute of 1895 pro- 10 L. R. S. 845 ; Lister v. Log Cabin viding that proceedings by the su- Building Association, 38 Md. L15; pervisor of building associations for Bowkerv. Mill River Loan Fund the winding up shall he conducted Association, 7 Allen, 100; Charles by tin- attorney-general for the su- Tyrell Loan and Building Associa- pervisor is not mandatory ; so thai tion v. Haley, 13!) Pa. St. 477 ; s. c. when, for any reason, the attorney- 20 Atl. Rep. 1063; O'Rourke v. eral refuses or fails to conduct Wesl Pennsylvania Loan and the suit at the relation of the su- Building Association, 98 Pa. St. pervisor, it may be conducted by 308; Casonv. Seldner, 77 Va. 293 ; other counsel. Slate v. Flitcraft s. C. (', Amer. & Fug. Corp. Cas. (Mo.), 36 S. \V. Rep. 675. Sec 630; Edelyn v. Pascoe, 22 Gratt. Illinois B. & L. Ajbs'd v. People, I 73 826. In a suit to wind up an asso- III. 638; s. o. 50 N. E. Rep. 1007. ciation, all shareholders, including 1 Amer. v. Union Building and those illegally released, should be Loan Association, 50 N. J. Eq. made parties. Cason v. Seldner, 170 ; s. o. 24 Atl. Rep. 052. mpra. § 388. DISSOLUTION — RECEIVER. 435 sum of money, even though payable in weekly or other instalments, he is not entitled to maintain a bill to wind up the association ; for after he has made his payments he no longer has an interest in the association, and has not even the footing of an ordinary creditor. 1 Sec. 388— Mortgages not Assets for the Purpose of Determining' the Solvency of the Association. For the purpose of determining whether or not an asso- ciation is solvent or insolvent, and whether or not it has reached that period of time when it should be wound up, the mortgages given by members for loans cannot be con- sidered, for they are not assets. 2 Where it was claimed that the mortgages should be considered as assets the court denied the claim, saying: "The fallacy consists in treating these mortgage debts as appropriate assets, to be calculated and applied, with the sum from the net revenues, to the sat- isfaction of the claims of the unpaid shareholders. They cannot be used for that purpose. The association has no authority to collect and apply the indebtedness under the mortgage 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 association. The profits, which enable the company to pay the shareholders, also operate to discharge the mortgages. When the former are paid the latter are released ; but the payment of the one, and the release of the other, depend upon the sufficiency of the general revenues and assets." 3 The items of assets to consider, therefore, in determining whether or not an as- sociation is solvent are (a) the gains by premiums ; (b) interest received ; (c) all payments made by borrowers on account of the principal of their advancements, and not reloaned ; (d) 1 Bovvker v. Mill River Loan Building Association, 114 Ind. 226 ; Fund Association, 7 Allen, 100. s. C. 16 N. E. Rep. 486; l:j West See Overby v. Fayette Building Rep. 816 ; 22 Amer. & Eng. Corp. and Loan Association, 81 N. C. 56 ; Cas. 612 ; Lister v. Log Cabin Whiter'. Mechanics' Building Fund Building Association. 38 Md. 115. Association, 22 Gratt. 233. 3 Lister v. Log Cabin Building 2 Barton v. Enterprise Loan and Association, 38 Md. 115. 436 BUILDING AND LOAN ASSOCIATIONS. Cll. XX and all stock payments made by non-borrowers which have not been devoted to the advancement of other members. 1 Sec. 389 — Effect of Society Reaching Limit of its Cor- porate Existence. When a building society has reached the limit of its existence as fixed by the charter or articles of association, or by the maturity of its shares as in the case of a terminating association, it ceases to exist any longer, except for the pur- pose of winding-up its affairs. 2 It can no longer maintain a suit. 3 A judgment rendered against it after, but in a suit brought before, that period of time, is void, unless some statute expressly authorizes it. 4 Sec. 390— Dissolution by Agreement. The stockholders of a building association may abandon the original scheme of the association by agreement and adopt a new one, 5 or wind it up. 6 The dissolution may be effected by acquiescence of all the stockholders in the action of some of their number voting to dissolve the association. 7 But all must consent to the dissolution or winding-up ; and a dissenting minority, however small, may maintain a suit 1 Real estate on land may be es- 4 Id. See Building Association timated at the value paid for it at v. Beyer, 17 Phila. 314; s. c. 41 the sheriff's sale, or the true value Leg. Int. 280, holding that the may be shown. Burns v. Metro- officers, after the expiration of the politan Building Association, 2 charter, may execute a warrant Mackey, 7. of attorney to cany on suits, un- - Eagerman v. Ohio Building der a general statute authorizing and Savings Association, 25 Ohio such associations to maintain ac- si . L86 : Laurel Run Building As- tions after their dissolution. Bociation v. Sperring, 100 Pa. St. 5 City Loan, etc., Association v. 334. Goodrich, 48 Ga. 445. 3 Cooper v. Oriental Savings and G White Haven Loan Building Loan Association, 100 Pa. St. 402 ; Association v. Kelley, 1 Kulp. 9 ; Vim ivit r. Borne Building and s. c. Luz. Leg. Reg. 9. Under Loan Associal ion, *7 < la. :'.7<) ; s. o. a statute Mechanics', etc., Ass'n v. IB B. B. Rep. ■"■; 1 : s. o. 79 Ga. 189; People, 72111. App. 160. I S. E. Rep. 501 ; 19 Ann r. & Eng. 7 People v. Lowe, 117 N. Y. 175 ; Corp. Cas. 66; Borne Building and s. c. 22 N. S. Rep. 1016 ; 31 Amer. I. .,.iu Association r. Van Pelt, 94 & Eng. Corp. Cas. 239; 47 Hun, Ga, 615 ; s. o. SI S. E. Rep. 606. 577. § 390. DISSOLUTION — RECEIVER. 437 for an injunction to prevent the dissolution. 1 Thus, where it was provided in the articles of association that it should continue in operation eight years, unless it should sooner have sufficient funds to pay its debts and redeem its stock, a resolution dissolving the association before the time lim- ited, without the consent of all the shareholders, and with unredeemed stock outstanding, was held void and without effect. 2 If a member claims the benefit to be derived by a dissolution of the association without his consent, he cannot object to the dissolution thereafter. 3 Whatever arrange- ment, however, the members of the association may enter into for a winding-up of the association will be upheld. Thus, an agreement made by all the parties interested that the affairs of the company should be wound up, and that the owners of the unredeemed shares should receive the sums they had advanced, with interest, and that the owners of the unredeemed shares who had given mortgages for the price of redemption should be discharged upon paying the amount of their mortgages, with interest, was held valid and enforced. 4 1 Pfaff v. Building Association, Canadienne-Francaise, 6 Montreal, 6 W. N. Cas. 349. Q. B. 464. 2 Barton v. Enterprise Loan and If the members agree to wind Building Association, 114 Ind. 226 ; up the association before it reaches s. c. 16 N. E. Rep. 486; 13 West its period of limitation, repudiating Rep. 816 ; 22 Amer. & Eng. Corp. the original scheme, and charging Cas. 612. each other with the amount re- 3 Central Building Association ceived with interest, and allowing v. Witzell, 13 Phila. 54 ; S. C. 36 him interest on the amount paid Leg. Int. 174. in, the rate of interest must be the 4 Hoboken Building Association legal rate and cannot exceed that v. Martin, 2 Beas. (N. J.) Eq. 427. rate, although if the original See Himman v. Ryan, 3 Ohio C. C. scheme had been followed, a 529. greater rate of interest or profit After the adoption of a resolu- would have been realized than the tion to dissolve the association, general interest law allows. City under a statute providing for such Loan, etc., Association v. Good- a dissolution, and the proper offi- rich, 48 Ga. 445. cers have entered upon their duties, See People v. Lowe, 117 N. Y. the association is dead and cannot 175 ; S. C. 22 N. E. Rep. 1016. be revived. Larivee v. La Societe 438 BUILDING AND LOAN ASSOCIATIONS. Cll. XX. Sec 391 — When Abandonment of Corporate Existence May be Inferred. It cannot be said that mere non-user is a surrender of corporate rights or powers ; but a failure to exercise its powers for a long period may be evidence sufficient from which to infer that at some time there was an abandonment, either expressly or tacitly. This is peculiarly true of build- ing associations. A case in point is where one member united in himself all the bonds, mortgages, and assets of the association, and all unredeemed shares. The effect was that not enough members were left to make a quorum ; and con- sequently no officers could be elected. The court came to the conclusion that the assignment to this member, who was the security, of all these bonds, mortgages, and shares " amounted to a complete suspension, at least, if not to a final dissolution of the corporation by the unanimous con- sent of all members." J A like holding was held where an association paid off all its stockholders, assigned all its unpaid loans, and ceased to transact any business. 2 Sec. 392 — Forfeiture of Franchise. A corporation may so abuse its corporate powers as to justify the courts, in a proceeding brought for that purpose, to declare that it has forfeited its franchise. Courts are, however, very loathe to enter a decree of forfeiture, except in a clear case. Thus, if a building association should take its funds and use them in a general banking business, no doubt the courts would feel called upon to declare that it had forfeited its franchise, although the occasional discount- ing of a bill of exchange or promissory note would not have that effect. 8 A materia] defect in the proceedings for its incorporation may be sufficient to justify the state in asking 1 <'<><>k v. Cent, 105 Mass. 246. 8 Manufactures and Mechanics' - Y;ni I'll! c. Home liuildiu^and Saving and Loan Co. v. Conover, Loan \ isociation, s? G-a. :i70 ; s. c. 5 Phila. 18 ; State v. Oberlin Build- 13 S. E. Rep. 574; Borne Building ing and Loan Association, 35 Ohio and Loan Association v. Van Pelt, St. 258. 'at Oa. 615; s. c. 21 S. E. Rep. 606. § 393. DISSOLUTION — ItECEIVER. 480 for a decree of forfeiture. 1 The adoption of an invalid by- law, however, is not sufficient to work a forfeiture of its franchise, unless the by-law is so radical as to evince a deter- mination on the part of the association to radically change and pervert the original object of the incorporation. 2 But, in all these instances, no private person, unless some statute authorizes it, can ask for a forfeiture of the association's franchise. Only the state, through its duly constituted offi- cers, can do that. 3 Sec. 393— Suit to Wiiid Up. Whenever a building association is insolvent, and he can- not otherwise realize his claim, a stockholder may petition a court of equity to wind it up. 4 And a court of equity has jurisdiction, at the suit of the shareholder of unredeemed shares, to call the unredeemed shareholders to an account, enforce payment of what they respectively owe, distribute the fund among the unredeemed shareholders, and wind up the institution. 5 In such an instance all the members must be made parties. " In this case, the sum fixed by the arti- cles is $200 on each of the unredeemed shares, after paying the liabilities of the company. No other provision is made for the dissolution of the association. Until it ceases to exist the obligation of the appellant to pay the stipulated monthly dues and interest continues. In like manner a 1 Beeket v. Uniontown Building another or in favor of a shareholder Association, 88 Pa. St. 211 ; Work- as against the association. People ingmen's Building Association v. v. National Home Building and Coleman, 89 Pa. St. 428. See Mar- Loan Association, 7 Chicago Law tin v. Nashville Building Associa- Jur. 193. tion, 2 Coldw. 418 ; Gordon v. Win- i In re Premier Permanent Build- chester Building and Accumulat- ing Association, 11 Australia L. T. ing Association, 12 Bush. 110. 139 ; In re Premier Permanent 2 Beeket v. Uniontown Building Building, etc., Association, L. R. Association, supra ; Rhoads v. 16 Vict. (Australian) 20 ; Com- Hoernerstown Building Associa- monwealth v. Pennsylvania B. & tion, 82 Pa. St. 180 ; State v. Ober- L. Ass'n, 20 Pa. C. C. 89 ; Siborg lin Building and Loan Association, v. Security, etc., Ass'n (Minn.), 75 supra. N. W. Rep. 1116. 3 The state cannot interfere in 5 Edelon v. Pascoe, 22 Gratt- behalf of one shareholder as against 826. 440 BUILDING AND LOAN ASSOCIATIONS. CI). XX. reciprocal obligation rests upon every other stockholder to pay as required by the articles of association. All of the stockholders, therefore, should have been brought before the court, and their respective liabilities to the association enforced, including those illegally released, if any such were found. Provision should also have been made for the collection of their monthly payments as they become due, and for the enforcement of all liabilities and the collection of all debts and assets of the association, and the fund preserved until sufficient to pay all of the debts, if any, and $200 on each of the redeemed shares, unless the company is sooner dissolved by a vote of the stockholders." 1 No one, how- ever, except a stockholder or creditor can ask that the asso- ciation be wound up. Thus, where the plaintiff owned only four shares, which stood in the name of another, which he purchased after the society had gone into liquidation and after it was in fact wound up, it was held that he had no interest to bring the action. 2 Sec. 394 — Liability of Member for Payment of Dues and the Like after Association Suspends Operations. Aside from the question of contributions when an associa- tion suspends operations by reason of its insolvency, a bor- rowing member of such association is released from any further liability to carry out the covenants of his mortgage, and is entitled to have his mortgage released on paying the sura justly due 3 IFe is no longer liable for the payment of dues. 4 So where the by-laws of an association required dues i Cason v. Seldner, 77 Va. 093. Ind. 544 ; s. C. 23 N. E. Rep. 689; 2 Belanger v. Gauthier, 5 Leg. Miller v. Second Jefferson Building News. 171; In re National Per- Association, 50 Pa. St. 32 ; Hinman maneni Benefit Building Society, v. Ryan, 3 Ohio ( '. C. 529. A pro- 5 Ch. 309; 8. C. 18 W. R. 388 ; 22 posal on the part of the association L. T. 284; 34 J. P. 341. to go into liquidation according to 8 Hampstead Building Aasocia- a certain plan will not justify a tion v. King. 58 Mil. 079. member in ceasing to pay dues, al- 1 Blakeley v. El Paso Building though it be stated that the asso- and Loan Association (Tex. Civ. ciation will come to bankruptcy if Ap|).i 26 S. \V. Rep. 292. See it go on the old plan. PioneerSav- Lime City Building Saving and ing and Loan Co. v. Oxford (Tex. Loan Vasociation v. Black, 186 Civ. App.), 85 S. W. Rep. 1078. § 394. DISSOLUTION — RECEIVER. 441 and instalments to be paid weekly, and provided further that " all loans shall become due in six years from the date of this corporation, or on the stock of the association becom- ing of par value, in either of which cases the note given by the borrower, and the stock upon which the loan was made, shall be set off against each other," it was held that a bor- rower who paid the required dues and instalments for a period of six years, thereby extinguished his obligations to the association, and was not liable to make any further pay- ments. 1 Likewise, where, by agreement of all the sharehold- ers, the money advanced to members is to be theirs absolutely, if they pay all dues and interest and agree to take the amounts so advanced in full for their stock, the conditions being fulfilled, mortgages executed by them are not enforce- able, and do not constitute assets of the association ; and if there be no assets for distribution, a receiver will not be appointed. 2 The appointment of a receiver for a building association terminates the liability of the stockholders for monthly dues, 3 but interest upon their mortgages continues. 4 1 Lime City Building, Saving they ought to be allowed not only and Loan Association v. Wagner, for the sums paid by them as 122 Ind. 78; s. c. 23 N. E. Rep. weekly dues, but also for what 689. But see Buist v. Fitzsimons, they paid as interest ; while they 44 S. C. 130 ; S. C. 21 S. E. Rep. 610. are to be charged interest at the 2 Barton v. Enterprise Loan and rate of six per cent, per annum on Building Association, 114 Ind. 226 : the sums advanced by the associa- s. c. 16 N. E. Rep. 486 ; 13 West tion, and so from time to time on Rep. 816 ; 22 Amer. and Eng. Corp. the balance of such sums, after de- Cas. 612. ducting therefrom the moneys 3 Buist v. Bryan, 44 S. C. 121 ; paid by them for weekly dues and S. C. 21 S. E. Rep. 537 ; Brown v. interest. On payment of the bal- Archer, 62 Mo. App. 277 ; s. c. 1 ance due upon their mortgages, App. Mo. Rep. 465 ; Pattison v. Al- thus ascertained, they will be en- bany, etc., Association, 63 Ga. 373. titled to have the same released." 4 Hinman v. Ryan, 3 Ohio C. C. Windsor v. Bandel, 40 Md. 172. 52!) ; State Saving and Loan Asso- It has been held that the appoint- ciation v. Carroll, 15 Pa. C. C. 522 ; ment of a receiver causes debts due s. c. 4 Pa. Dist. Rep. 6. it to mature, yet the receiver can- " The orignal contract having not enforce a mortgage given to been broken up, the liability of secure them under the power of the appellants on their mortgage sale contained in such mortgage, should be ascertained in the ordi- the association alone having the nary way. In stating the account power to do that. Straus v. Caro- 442 BUILDING AND LOAN ASSOCIATIONS. Ch. XX. Sec. 395. — Apportioning Profits in Serial Association — Estoppel. The proper method of apportioning the profits of a build- ing association having more than one series of stock is to divide them equally among the shares in proportion to the amount paid on each share ; and to ascertain the value of any particular share at a given time there must be added to the amount paid on the share a proportion of the profits thus ascertained. The fact that a shareholder has acqui- esced for a number of years in a different method adopted by the association, by which the profits were divided equally among all the shares without regard to the amount paid in, will not estop him from requiring that the method of ascer- taining the value of his share be changed to that indicated above as the proper method. 1 But upon the question of estoppel the rule laid down in this case has not always been followed. Thus, where an amended section of the by-laws of an association gave to borrowing members the right to dividends on the total amount of dues paid by them prior to the declaration of such dividends, as well as to the rebate of interest therein provided for; yet where under the con- stitution, by-laws and regulations adopted prior to such amendatory section, it was the plan, in addition to such rebate of interest, to allow dividends to borrowing members only on dues paid by them during the fiscal year, for which the dividends to non-borrowing members on all dues paid by them prior to declaring such dividend; and if at the time the person became a borrowing member he was ful 1 v advised of the manner in which dividends were de- clared, and with full knowledge thereof continuously for eight years continued to receive dividends so declared, and without complaint allowed such association to deal with all its members on the same. plan, and to pay or credit to non- borrowing members, many of whom ceased to bo mem- bers, such dividends, such person was held estopped from Una Interstate Building and Loan l Charles Tyrell Loan and P.uild- \ jociation, 117 N. C.808; s. c. '-':( ing Assoeiation v. Haley, 1G.'3 Pa. S. I-;. Rep. 450 ; affirmed, lis N. < '. Si. 301 : s. c. 35 W. N. Cas. 269; j. <-. 84 s. I,. Rep. I!''.. 80 Atl. Rep. L54. § 396. DISSOLUTION — RECEIVES. 443 claiming that such method was contrary to the statute in force, and that he was entitled to dividends on all dues paid by him, which would require a recasting of all the accounts of all the members during such time, and which would result in great loss to the association. 1 Where mistakes of fact are made in the compilation and apportionment of the profits among the several series of stock of a building association, and a settlement into which such errors have entered is made between the association and stockholders of one of the series, whereby their stock is extinguished, the fact that the members of such series had ceased to be stockholders at the time of the filing of their bill is no reason why they may not invoke a court of equity to correct the errors. The ordinary stockholder is not held to the strict and rigorous rule as to knowledge of the affairs of a corporation that applies to the officers, and therefore is not precluded from asking for equitable relief from such errors, because the quarterly and annual reports of the offi- cers were read, audited and approved at the stockholders' meeting. But the directors and officers being directly re- sponsible for the management of the affairs of such associa- tion, and such mistakes having arisen from their own negli- gence, they are estopped, and cannot have the aid of a court of equity to correct a settlement based upon them. 2 Where officers of an association proceeded to wind up an associa- tion, pursuant to a resolution of the majority, and after having paid a part it was found that the remaining stock- holders, who had not consented to the arrangement, would not receive as much as those already paid, it was held that the officers, who had acted in good faith, were not liable to the unpaid stockholders. In such a case the unpaid stock- holders can sue those paid off for an equalization of the payments. 3 Sec. 396 — Distribution of Assets. Elsewhere 4 has been discussed the effects of insolvency 1 Buehlman v. Atlantic, etc., As- 3 Goodrich v. City Loan, etc., sociation, 6 Ohio C. C. 285. Association, 54 Ga. 98. 2 Mutual B. & L. A.'s Appeal, 33 * Sees. 348-365. Pitts. L. Jr. 324(1886). 444 BUILDING AND LOAN ASSOCIATIONS. Ch. XX. upon the membership of an association, and the liability of the members to contribute to the losses of the association in order to equalize in value its shares, whether held by bor- rowing or non-borrowing members, or even by those who had withdrawn from the association. It is not necessary in this connection to again discuss that condition of an association ; but turn to a discussion of the rights of members to a dis- tribution of the assets of the association when it lias reached the termination of its corporate existence, in whatever v that may be brought about. To begin with, it is plain that all outside creditors must first be paid, 1 as well as the expenses of maintaining the association. So, too, must all depositors with the association, when that relationship does not require them to become members of the association. 2 A member may also be a general creditor of and likewise a depositor with the association, and be entitled to have his claims in these capacities satisfied, just as if he bore no other relationship to the association. 3 So a member hold- ing prepaid stock under a by-law securing the repayment of the amount in excess of dues actually accrued is entitled to he paid that excess before any of the general members paid. 4 A like rule prevails where a member holds pre- ferred stock. 5 In some cases it is held that a member whose stock lias been redeemed is not entitled to share in the profits of the business accruing thereafter, for hece:: be a member, and has no further interest in the associa- tion. 6 But these casesare not in harmony with the greater 1 Kisterbock's Appeal, 50 Pa. St. ton, 140 N. Y. 54!) ; s. C. 35 N. E. /// re Mutual, etc., Society, Rep. 979. See In re Reliance Per- il. R. 30 Ch. Div. 434. manent Benefit Building Society, 2 Christian's Appeal, 102 Pa. St. 01 L. J. Ch. 453; 66 L. T. (N. S. ) 184; s. c. 13 W. N. Cas. 181; 30 823; 81 L. R. 525. Pitl 3. I.. -Jr. 135 ; 40 Leg. Int. 2G1. 8 Overby v. Fayette Buildingand 8 Christian's Appeal, supra. Loan Association, M N. C. 56; Bennighausen v. Tisher, 50 Mil. Whiter. Mechanic's Building Fund 5 ;. Association, 22 Gratt. 233 ; Edelyn 1 Munhall v. Boedecker, 44 111. v. Pascoe, 22 Gratt. 826. Ajip. 131. The assets must lie converted 6 Murray v. Scott, '■> A.pp. Cas. into cash and then distributed, un- 519; B.C. 5:» L. .J. 715; 83 W. h'. less the members universally agree :,l L. T. 162. People V. Pres- otherwise. Mercer v. AmMer 396. DISSOLUTION — RECEIVER. 445 number of authorities ; for it is pretty generally held that both advanced and unadvanced members, no question of in- solvency intervening, share alike in the profits or assets of the association remaining when it is wound up. 1 If a member has, however, given notice and withdrawn from the association according to its by-laws, he has sev- ered his membership with the association, and is not entitled to a share of its assets on its dissolution. 2 Earnings on stock made subsequent to the death of the holder are to be treated as income and paid to the life-tenant. 3 An association cannot divide or distribute its funds among its members in advance of the distribution at the winding up of the corporation ; and if it do it may work a forfeiture of its charter. 4 If, however, a right of priority in payment has been ac- quired by a withdrawing member, it cannot be taken away by a dissolution of the society, even under the statutory dis- Building and Loan Association, 10 Pa. C. C. 51 ; s. C. 48 Leg. Int. 277 ; Plymouth Building Association v. Mangan, 2 Kulp. 210. 1 Seibel v. Victoria Building As- sociation, 43 Ohio St. 371 ; S. C. 10 Amer. & Eng. Corp. Cas. 460 ; re- versing, 13 Wkly. L. Bull. 265; Mercer v. Ambler Building and Loan Association, 10 Pa. C. C. 51 ; Lister v. Log Cabin Building As- sociation, 38 Md. 115 ; State Saving and Loan Association v. Carroll, 15 Pa. C. C. 522. The dividing of profits among the shareholders is said to give the workings of the corporation a re- semblance to that of a savings bank. Atwood v. Dumas, 149 Mass. 167 ; s. C. 21 N. E. Rep. 236. On maturity of a series of stock of a building association, bor- rowers and non-borrowers stand on an equal footing ; non-bor- rowers cannot be required to take less in cash for their stock than the borrowers received credit on their mortgages. Mercer v. Am- bler Building and Loan Associ- ation, supra. 2 Security Loan Association v. Lake, 69 Ala. 456 ; s. c. 1 Amer. & Eng. Corp. Cas. 418. 3 Elton's Estate, 1 Pa. Dist. Rep. 458 ; s. c. 30 W. N. Cas. 275 ; 49 Leg. Int. 268. 4 State v. Oberlin Building and Loan Association, 35 Ohio St. 258. Borrowing stockholders, in or- der to wind up an association be- fore its time, cannot compel non- borrowing members to accept a sum per share less than the amount fixed by the charter. Pfaff v. Kensington Building Association, 6 W. N. Cas. 349. If an association has made an assignment, a borrowing member on paying off his loan is entitled to have his stock, assigned as col- lateral security, reassigned, in or- 44.6 BUILDING AND LOAN ASSOCIATIONS. Cll. XX. solution provided for by the English Building Society's Act. Thus, where an instrument of dissolution was executed by the members of a society operating under that act, contain- der that iie may share in the dis- tribution of any assets that may be left. State Saving and Loan Association v. Carroll, 15 Pa. C. C. .v.-:. In an incorporated building and loan society the shares of stock were for §1,000 each, and the only actual capital consisted of a stated weekly subscription on each share. As fast as a sufficient amount was contributed, any member could borrow §1,000 on each share held by him, on which he was to pay no interest, and payment of which was to be secured by mortgage on realty, a certain percentage to be paid annually in monthly instal- ments, and no provision was made for canceling the mortgages with- out payment. Held, that on dis- solution of the society, by acquies- cence of all the members, before the contributions reached $1,000 per share of stock, its assets should be distributed equally among its members, according to their re- aped ive uumber of shares, and bor- rowing members were not entitled to have their mortgages canceled until payment of the balances due thereon after deducting their re- spective shares of the assets, nor were creditor members entitled to si .000 on each of their shares of Btock. People v. Lowe, i it X. Y. 175; 22 X. E. L016. To facilitate t he liquidal ion of a unit 1 1 : 1 1 building society a resolu- tion was passed at a meeting of the borrowing members to dis- charge those who iii three months Id pay eighty percent, of I heir indebtedness, the surplus, after paying non-borrowing members in full, to be divided among the bor- rowing members. It was held that those non-borrowing members who did not discharge the society were not bound by this arrange- ment, and were entitled to claim the surplus, to the exclusion of the borrowing members who had all discharged the society. Harvey v. O'Shaughnessey, 6 Leg. News. 369 ; 5 Leg. News. 429. A shareholder who has approved of an arraignment with a creditor of the society whereby the credi- tor is granted delay, on condition that the society should not sell its real estate, waives thereby his right to bring the real estate of the society to sale in satisfaction of his claim as a shareholder. Cham- poux v. Lapierie, 31 Leg. News. 302. The insolvency of an association dissolves the original contract be- tween the shareholders and there- after it is wound up on an equitable basis. On the principle of rescis- sion, each member should receive what he has paid, and pay back what he had received. Knutson v. Northwestern, etc., Ass'n, 07 Minn. 201 ; s. c. 69 N. W. Rep. 889; Chapman v. Young, 65 111. A pp. i:'.l ; Twin ( 'it Les, etc.. Ass'n r. Lepore, 17 Pa. C. C. 426; Chois- ser v. Young, 69 111. App. 352; Rochester Savings Hank v. Whit- mo,,.. 49 N. Y. Supp. 862; Moran v. Gray (N. J. Eq.), 38 Atl. Rep. 608 ; Meares v. Davis (N. C), 28 S. E. Rep. 188; Weir v. Granite State, etc., Ass'n (N. J. Eq.). 88 Atl. Rep. 643; 396. DISSOLUTION — RECEIVER. 447 ing a clause that " members who shall have given notice of withdrawal shall have no priority over members who have not given such notices; " the court adjudged that the right Richter v. Main St., etc., Co., 6 Ohio Dec. 95 ; s. c. 4 Ohio N. P. 97 ; Thompson v. North Carolina B. & L. Ass'n, 120 N. C. 420 ; S. C. 27 S. E. Rep. 118 ; Rogers v. Raines (Ky.) 38 S. W. Rep. 48:3 ; Pioneer Savings & L. Ass'n v. Pancoast (Tex. Civ. A pp.); s. C. 43 S. W. Rep. 280 ; Curtiss v. Granite State, etc., Ass'n, 69 Conn. 6 ; S. C. 36 Atl. Rep. 1023 ; Hohenshell v. Home Savings & L. Ass'n, 140 Mo. 560; S. c. 41 S. W. Rep. 948. Reming- ton v. King, 11 Abb. Pr. 278 ; Peo- ple v. Empire, etc., Co., 17 N. Y. Misc. Rep. 221 ; s. c. N. Y. Supp. 235 ; Sullivan v. Stucky, 86 Fed. Rep. 491 ; Carpenter v. Richardson (Tenn.), 46 S. W. Rep. 452. All the cases cited above hold that he must be charged with sim- ple interest, in an instance of in- solvency, on what he actually re- ceived ; but there is some differ- ence among them when the ques- tion arises with what he is to be credited. Thus some of the cases hold that he is to be credited with premiums, dues, payments made and interest thereon. Rochester Savings Bank v. Whitmore, 49 N. Y. Supp. 862. In some of the cases, however, it is held that he cannot be credited with dues paid on his stock in de- termining the amount he owes on his loan or mortgage ; for they be- long to his stock, and all stock is to be put on a dead level. Post v. Building & L. Ass'n, 97 Tenn. 408 ; S. c. 37 S. W. Rep. 216 ; 34 L. R. A. 201. This is especially true where the dues were unauthor- izedly paid in advance. Id. See also Twin Cities, etc., Ass'n r. Lepore, 17 Pa. C. C. 426; Rogers v. 1 (Ky.), 38 S. W. Rep. 483 ; Curtis v. Granite State, etc. Ass'n. 69 Conn. 6 ; s. c. 36 Atl. Rep. 1023. See Weir v. Granite State, etc., Ass'n (N. J. Eq.), 38 Atl. Rep. 643. The general rule is not changed by the fact that the mortgages given for the loan provide that the premium shall belong to the asso- ciation. Curtis v. Granite State, etc., Ass'n, 69 Conn. 6 ; s. c. 36 Atl. Rep. 1023. In one case it was said that if the value of the stock equal the amount of the loan, the parties are remitted to the position of or- dinary lenders and borrowers. He is charged with all he received with interest, and credited with all he paid, with interest. Moran v. Gray (N. J. Eq.), 38 Atl. Rep. 668. See contra Choisser v. Young, 69 111. App. 252. Fines are included in the amount the borrower is entitled to credit. Thompson v. North Carolina Ass'n, 120 N. C. 420 ; s. C. 27 S. E. Rep. 118. The following cases are at cross purposes with each other. Meares v. Davis (N. C), 28 S. E. Rep. 188 ; Pioneer Savings & I.. Ass'n v. Pan- coast (Tex. Civ. App.), 43 S. W. Rep. 280 ; Knutson r. North West- ern L. & B. Ass'n. 67 Minn. 201: s. C. 69 N. W. Rep. 889. Premiums falling due after the appointment of a receiver or as- signee cannot be collected. Curtis v. Granite State, etc., Ass'n, 96 Conn. 6 ; S. c. 36 Atl. Rep. 1023. 448 BUILDING AND LOAN ASSOCIATIONS. Ch. XX. of a member who had previously given notice of with- drawal could not be affected thereby. 1 Sec. 397 — Effect Upon Mortgages or Loans. The order or agreement for winding up or dissolving a building association cannot accelerate the date when the mortgages or loans mature ; and the contract of the mort- gagor or borrower cannot thereby be changed without his consent. 3 If a series has been improperly declared due, those holding in the series hold their positions un- changed, the same as if no such declaration had been made. Post v. Building & L. Ass'n, 97 Tenn. 408 ; s. C 37 S. W. Rep. 216 ; 34 L. E. A. 201. 1 Botten v. City and Suburban Building Society, 13 Rep. 591 ; s. c. [1895], 22 Ch. 441; 64 L.J. Ch. 609 ; 72 L. T. 722 : 44 W. R. 12 ; following Kemp v. Wright (on ap- peal) 7 Rep. 631 ; s. C. [1895] 1 Ch. 121 ; 64 L. J. Ch. 59 ; 71 L. T. 650 ; 43 W. R. 21 3 : 59 J. P. 133 ; and de- clining to follow Kemp v. Wright, [1894] 2 Ch. 472; s. c. 71 L. T. 650 ; 17 W. R. 213 ; 58 J. P. 588 ; 1 Manson, 308. "■ 1 Kemp v. Wright, 7 Pop. 631 : S. C. [1895] 1 Ch. 121 ; 64 L. J. Ch. 59 ; 71 L. T. 650 ; 43 W. R. 213 ; 95 J. P. 133. See London Provident Building Society v. Morgan, 5 Rep. 510 ; s. C. [1893] 2 Q. B. 266 ; 62 L. J. Q. B. 544; 69 L. L. 595 ; 42 W. R. 157 ; 57 J. P. 696 ; Scottish Property Investment Building So- ciety v. Boyd, 4 Rettie, 127 ; and Tosh v. North British Building So- ciety, 11 App. Cas. 489 ; 35 W. R. 413; 14 Rettie (H. L.) 6. In North Carolina it is held that on the appointment of a receiver because of the insolvency of the association, the mortgage of a bor- rowing member matures at once. Strauss v. Carolina Interstate Building &Loan Association, UN. C. 308 ; S. C. 23 S. E. Rep. 450 ; in Connecticut, Curtis v. Grant, etc., Ass'n. 69 Conn. 6 ; S. C. 1023; and in New Jersey Wier v. Granite State, etc., Ass'n (N. J. Eq.), 38 Atl. Rep. 643. CHAPTER XXL MISCELLANEOUS. Sec. 398. Introduction. 399. General Powers. 400. Power to Hold Real Estate — Leasing. 401. Power to Build Houses. 402. Mechanics' Lien. 403. Seal. 404. Suits. 405. Expense Fund — Withdrawals. 406. Unincorporated Associations. 407. Miscellaneous. 408. Assignment for Benefit of Creditors. 409. Bankruptcy Loan of 1898. 410. War Revenue Law — Stamps. 411. To what Companies Revenue Law Applies. 412. What Investments Exempt from War Tax. Sec. 398 — Introduction. It has been found difficult to classify or to arrange in any other connection, certain decisions relating to building associations ; so much so that it has been deemed best by the authors to bring them together in this connection with- out any attempt to group them in a systematic order, re- lying upon the index to point out the subjects herein dis- cussed. All who have attempted to systematically classify and arrange all the decisions on the subject of building associations have evidently met with a similar embarrass- ment. Sec. 399 — General Powers. Speaking of the powers of a building society, an Austra- lian court has used the following language : " These societies are corporations incorporated by virtue of the statute, and beyond the statute they cannot venture. That which is not 449 450 BUILDING AND LOAN ASSOCIATIONS. Ch. XXL permitted is prohibited." 1 Speaking upon the same subject an American court has said: "Corporations possess all those powers which are expressly conferred upon them by the acts of incorporation, and all those incidental powers which are reasonably necessary for the purpose of carrying into effect the powers expressly granted and reasonably necessary for the purpose of attaining the objects of their creation." 2 A careful examination of the language used in these two quotations will show that the two courts had one and the same view of the powers of a building association or society. The Kansas court applied to it the law apply- ing to corporations generally, while the Australian court drew from the decisions applying to general corporations a rule applicable to building societies. All building associa- tions or societies have ample powers to carry out the object of their incorporation ; but they have no power to carry out any other scheme than that necessary to the attainment of that object. Bearing this in mind, but little confusion can arise when it is desired to ascertain the powers of these associations. Sec. 400— Power to Hold Real Estate— Leasing. Unless authorized by a statute, a building society has no power to deal in real estate, either for itself or for the benefit of its members. 3 If it attempt to purchase land it acquires no title, and its contract for the purchase price is void, even when evidenced by notes and assigned to third parties. 4 And under a power to borrow money, the society cannot bind itself for money borrowed to purchase real 1 In re Metropolitan Permanent J. P. 421 ; Inre Kent Benefit Build- Building and Improvement So- ing Society, 1 Dr. & Sm. 417 ; S. C. ciety, L. R. 7 Vict. Eq. (Australia) 4 L. T. Rep. (N. S.) 010 ; 30 L. J. HO; citing Asl.ury R. W. Co. v. Ch. 785; 7 Jur. (N. S.) 1045; 25 J. Richie, 7 E. & I. App. 653; and P. 805 ; 9 W. R. 686. See Regina Atloi iky (Hiicral v. (J real, Kastern v. D'EyncOurt, 4 B. & S. 820; 9 L. I.'.v. Co. 5 A|.|>. (as. 481. T. 712; 33 L. J. M. C. 89; 10 Jur. *Massey v. Citizens Building, N. S. 513 ; 116 E. C: L. 820. etc . Association, 22 Kan. 624. ' Id. ; Miller's Estate, 2 Pears. 9 Grimes v. Harrison, 26 Beav. (Pa.) 21S; Rhoads •?>. Hoerners- 485; s. c. 5. Jur. (N. 8.) 528 ; 88 L. town Building Association, 82 Pa. T. Rep. II.; 28 L. J. < !h. 828 ; 28 St. 180 ; Faulkner's Appeal, 11 W« § 400. MISCELLANEOUS. 451 estate, and the person loaning it cannot follow the money into the land. 1 If the officers of the association in any way have personally bound themselves for the purchase, they cannot recover of the association any amount they may have been compelled to pay by reason of having entered into such covenant. 2 Where an association, without power to do so, purchased real estate, the vendor retaining a Lien thereon for the purchase money, and the association then sold the land, receiving from the vendee the fall purchase price, it was held that the land in such vendee's hands was liable to the first vendor for the amount due him. 3 In Australia, under a statute empowering a building society " to buy and sell and mortgage freehold or leasehold estate," it may lease its own freehold estate. " These words do not expressly give the power to lease. But they give the power to buy property. And I do not see anything to prevent their buying property which at the time of the pur- chase was leased to some one and so becoming that person's landlord. Further, the society may absolutely dispose of the property so purchased. And it would seem strange if a society whose business is of the character of the societies under this act could sell their property out and out, but could not dispose of their interest for a periodical return. In my opinion the legislature intended to allow these socie- ties to be owners, with the ordinary powers incident to ownership, and the power of leasing among them. * * * I am therefore of opinion that when the legislature said that these societies could buy, sell and mortgage, they also meant that the societies should have the smaller right of an owner, that of leasing." 4 N. Cas. 48. In this last case the ciety, supra. judgment was confined to the land. 3 Peto v. Hammond, 30 Beav. 1 7/i re Durham County Perman- 495 ; s. c. 8 Jur. (N. S.) 550 ; 31 L. ent Investment Land and Building J. Ch. 354. Society, L. R. 12 Eq. 516 ; s.c. 25 L. * In re Premier Permanent Build- T. Rep. (N.S.) 83;41L. J. Ch. 124. ing Society, 2 Austr. L. T. 113. But as to investment of surplus See Fitzpatrick v. Woring, 11 Ch. funds, See Mullock v. Jenkins, D. Ir. 35. 14 Beav. 628 ; s. c. 21 L. J. Ch. In re Premier Permanent Build- 65. ing Society, L. R. 16 Vict. (Aus- * In re Kent Benefit Building So- tralia) 643. 452 BUILDING AND LOAN ASSOCIATIONS. Ch. XXI. Sec. 401 — Power to Build Houses. A charter of a building association authorizing it to aid its members in acquiring and improving land, empowers it to make contracts for the erection of homesteads. 1 Where the object of the society was " to offer to its members a sure and advantageous means of investing their savings, to aid them in acquiring cottages on certain lots of land of one hundred feet frontage, situate " in a certain named district ; a purchase of land in that district, the construction of twenty-four cottages on the land at a cost of $1,250 apiece, and a division of them by lot among the membership was held a valid transaction, and the purchase of the real estate valid. 2 But a statute authorizing* a society to buy and sell and mortgage freehold and leasehold estate, does not authorize it to adopt a rule to " acquire " freehold or lease- hold estate, and, when deemed expedient, erect buildings upon it. 3 Sec. 402— Mechanic's Lien. A building society organized for the purpose of loaning money to its stockholders and on real estate security is not entitled to a mechanic's lien on the homestead of a stock- holder for money loaned him, which he has used in the construction of a building on his land. 4 In Canada a general statute pro- sell real estate, see Tyler v. Anglo- hibiting all corporations purchas- American, etc., Ass'n, 52 N. Y. ing land without permission of the Supp. 77. Power under statute Crown was held to apply to build- to buy. McComb. v. Belknap, 30 ing societies. Cooper v. Mclndoe, 30 Abb. N. C. 119; S. c. 24 N. Y. 2 Montreal Supr. 388 ; s. c. 10 Leg. Supp. 935. News. 35 ; affirmed, 32 Lower. Can. ] Heady r. Bexar Building and Jur. 210. Loan Association (Tex. Civ. App.), An association may advance 20 S. W. Hep. 4 OS. money to pay off a prior mort- 2 La Compagnie de Villas v. gage. Sheffield, etc., Society v. Hughes, 11 Can. Sup. Ct. 537 ; S. C. Aizlewood, 14 Ch. Div. 412. 1 Low. Can. Jur. 264 ; affirming, 3 Thai a building association can- Dorion, 175; s. c. 4 Leg. News. 361. nol purchase land on credit, to be 8 In re Metropolitan Permanent divided among its membership, see Building and Investment Society, Vo v. Cedar Grove Land and L. E. Vict. Eq. (Austr.)86. Building Association, '■) VVkly. L. 4 International Building and Bull. 194. Afl to employing agent to Loan Association v. Fortassain § 404. MISCELLANEOUS. 453 Sec. 403— Seal. It is not necessary that the seal of a building association should be affixed to an instrument authorizing- its agent to sell under a power of sale contained in a mortgage. The entry in the books of the association is sufficient for that purpose. 1 A mortgage was made, pursuant to a statute, to the president and treasurer of a society, their successors and assigns, in trust for the society. The society having exer- cised the power of sale, the succeeding president and treas- urer conveyed the land to a purchaser by deed under a seal not the society's seal ; and this was held to give the pur- chaser a good title in fee simple, the officers for the time being having full powder to convey in fee without using the society's seal. 2 Notwithstanding these decisions of the Canadian Court of Chancery, it has been held by the Queen's Bench of that country that the appointment of a secretary is not valid unless under seal, so far as it was executory. 3 Sec. 404— Suits. In discussing the powers of the president and attorney or solicitor of a building association, references were made to the authority of these officers to represent their associa- tion in the courts, and what was there said need not be repeated here. It may be stated as a general rule of almost universal recognition that the right of a building association to sue as a corporation is admitted, unless such right is challenged by a special plea. 4 Averring that the plaintiff is duly incorporated according to a certain recited statute is a sufficient allegation of incorporation. 5 If the associa- tion be not properly named in the complaint it may be amended by inserting the proper name. 6 A president and (Tex. Civ. App.), 23 S. W. Rep. Loan and Savings Society, 39 U. C. 496. Q. B. 221. 1 Osborne v. Farmers and Me- 4 West Winsted, etc., Association chanics' Building Society, 5 Grant, v. Ford, 27 Conn. 282. Ch. 326. 5 Chillicotte Savings Association 2 In re Inglehart, 29 Grant. Ch. v. Ruegger, 60 Mo. 218. 418. 6 Hoboken Building Association 3 Hughes v. Canada Permanent v. Martin, 2 Beas. (N. J.) Eq. 427. 454 BUILDING AND LOAN ASSOCIATIONS. Ch. XXI. treasurer may sue in their own proper names under a statute vesting in them. " for the time being, for the use of the society, without any assignment or conveyance whatever being necessary on account of any change of president or treasurer by death or removal, and for all purposes of actions in law or equity, concerning the same, be deemed to be, and shall in all such proceedings, when necessary, be stated to be the property of the president and treasurer for the time being, in the proper names of such president and treasurer, with- out further description." 1 But in such an instance the suit may be in the name of the corporation. 2 When the presi- dent and treasurer are authorized to sue for the society in their own names, the suit must be brought in the names of the president and treasurer, who at the time of bringing the suit are holding such offices. 3 The officers of an association, after the expiration of its charter, may execute a power of attorney to carry on a suit already begun. 4 Where a com- mittee of a corporation are authorized, by a resolution of the board of directors, to make collections due the associa- tion, they may institute proceedings to collect them, in the name of the corporation, against an individual, without an order specifying the mode of collecting that particular indebtedness, or without any more particular authority with reference thereto. 5 Sec. 405 — Expense Fund — Withdrawals. A building association may maintain an expense fund ; but on withdrawal a member is not entitled to credit for 1 Barwick v. Clement, 7 U. C. Q. 5 St. Louis Domicile, etc., Asso- B. 51'.). ciation v. Augustine, 2 Mo. App. - Partners and Mechanics' Build- 123. ing Society v. Langstaff, 9 TJ. C. Q. Where payment of assessments B. 183 : Canada Permanent Build- in a building association are made ing Society v. Bank, 10 Grant. Ch. conditions in a promissory note, in 203; Essex Building Society v. a suit thereon it is not required I ;. Jur. N. Y. 528 ; 28 L. J. chase real estate does not dissolve ( 'li. 823 ; 33 L. T. 115. it. Hughes v. Layton, 33 L. J. M. - Mullock v. Jenkins, 14 Beav. C. 89 ; s. C. 10 Jur. N. Y. 513 ; S.C. 628; s. c. '-'I I>. •'• Ch. . sub nom. Regina v. D'Eyncourt, 9 18 L. J. Ch. at p. 827. Asimi- L. T. 712; 28 J. P. 116; 4 Best & lar view was taken in Tn re Kent S. 820; 12 W. R. 408; sub nom. Benefll Building Society, I Dr. & Hughes v. D'Eyncourt, 3 N. R. Sm. 117 : 1 I.. T. 610; 80 L. J. Ch. 420. . Jur. X. Y. 1045; 9 W. R. § 413. MISCELLANEOUS. 4G1 have authority to buy and sell real estate much in the same manner as building societies make loans ; and this fact evidently had its influence with the courts. But in America practically the same results have been reached by the courts where no statute authorized the purchase of real estate. It has been so decided in Pennsylvania; 1 in Canada; 2 and in Ohio. 3 But the rule against societies purchasing and holding real estate does not prevent their buying in lands sold on a decree of foreclosure or on an execution issued on a judgment they have obtained in order to enforce the collection of a loan they have made. Nor does it prevent their taking possession of real estate mortgaged to them after default made ; nor in operating mills and machinery thereon in order to realize their claim or prevent loss. 4 In Texas the statute authorized these associations to aid and assist members in acquiring, holding, or improving real estate, and it was held that this authorized them to make contracts for erecting homesteads for members. 5 'Miller's Estate, 2 Pears. (Pa.) in building or repairing houses, or 348; Faulkner's Appeal, 11 W. N. other purposes." Cas. 48; Rhoades v. Hoenerstown i Sheffield, etc., Society v. Aizlc- Building Ass'n, 82 Pa. St. 180. wood, 44 Ch. Div. 412 ; s. c. 59 L. 2 Cooper v. Mclndoe, 2 Montreal J. Ch. 34 ; 62 L. T. 678 ; 6 T. L. R. Supr. Ct. 38 ; S. C. 10 Leg. News. 25 ; Wynne v. Moore, 1 Australian 35. Jur. Rep. 156. 3 Vos v. Cedar Grove, etc., Ass'n, 5 Heading v. Bexar, etc., Ass'n, 9 Wkly. L. Bull, 194. In this case (Tex. Civ. App.). 26 S. W. Rep. the association was organized " For 468. See also Cahall v. Citizens the purpose of raising moneys to Mutual Building Ass'n, 61 Ala. 232. be loaned among the members and As to the former New York rule, depositors of such corporation, for see McComb v. Belknap, 30 Abb. using in buying lots or houses, or N. C. 119 ; s. C. 24 N. Y. Supp. 935. APPENDICES. APPENDIX I. The following pages, comprising Appendix I, are taken from " A Practical Treatise on Building Societies and Average Investment Trusts'''' (7 ed., 1891), by Arthur Scratchley, M. A., the author of a number of practical works on English moneyed companies. We believe that, coming from so high an authority, and one with such broad experience in Building Societies' or Associations' affairs and' their work- ings, the following pages will be found of practical value to all engaged in the conduct of Building Associations. PART I. ON BENEFIT BUILDING SOCIETIES. The subject of this work has presented difficulties of a complicated character, from the various phases under which the peculiar defects of individual societies appeal 1 . The task has, however, been lightened by the reflection that, al- though it cannot be expected that this effort to place them upon a more rational and secure footing will meet with the success of wholly obviating errors for the future, yet a most important end will at once be obtained if the attention of the patrons, trustees, directors, and other officers of many of these institutions be awakened to the sense of the grave moral responsibility incurred by them in allowing their names to be connected with schemes, which, while profess- ing to benefit, do but cause injury to those for whose good they were designed — to individuals not of equal information and position with themselves, but a class remarkable for the simple faith with which they believe in any statement that is sanctioned by the countenance of their superiors. [Extract from preface to first edition.] CHAPTER I. Article 1. — Among the remarkable features of the pre- sent age, benefit building societies occupy a leading position. Their increase during the last thirty years, not only in the metropolis, but in every part of the kingdom, has been steadily progressive, so that it has become a matter of im- portance to many, and of interest to all, correctly to under- stand their object and the true principles on which they ought to be founded. This information is the more desira- ble, as the amount subscribed to these associations is already so large that they may be said to have engaged in their operations a considerable portion of the investing capital of the industrious classes. But, although they have received this extensive support, it is painful to find that many socie- ties are guided by principles which cannot, either in theory or practice, justify the hope of realizing the advantageous results held out as an inducement to parties to become members. That the principles of building societies should be erroneous, and yet their popularity should be widely ex- tended, may be ascribed to two causes. As yet but few persons of sound mathematical knowledge or experience in calculations have turned their attention to the subject, and the societies hitherto formed have been deprived of that basis of science and just reasoning which alone can insure the prosperity of this or any similar kind of speculation. On the other hand, the members of these associations have, in general, been led to expect from them an unreasonable degree of benefit — a false impression, which has been shared even by persons of the more educated orders. Art. 2. — A benefit building society, when properly con- stituted, is a species of joint stock association, the members of which subscribe periodically, and in proportion to the number of shares they hold, different sums into one common fund, which thus becomes large enough to be advantageously employed by being lent out at interest to such of the mem- bers as desire advances ; and the interest, as soon as it is received, making fresh capital, is lent out again and again, so as to be continually reproductive. Large sums may be raised in this manner ; for example, if 1000 shares were subscribed for at 10s. per month per share, the amount in 4G9 470 APPENDIX I. Ch. I. one year would be £6,000, which, month by month, as received, might be advanced to any members who wish to become borrowers. The payments of borrowers are so calculated as to enable them to repay, by equal monthly or less frequent instalments, within a specified period, the principal of the sum borrowed and whatever interest may be due upon it throughout the duration of the loan. The other members, who have not borrowed, and who are generally called investors, receive, at the end of a given num- ber of years, a large sum, which is equivalent to the amount of their subscriptions with compound interest accumulated upon them. The idea of a society upon this principle, correctly formed and afterwards properly managed, is of the most admirable kind. For, on the one hand, it holds out inducements to industrious individuals to put by periodically portions of their income, which are invested for them by the society, and, at the end of a certain time, are repaid to them in the shape of a large accumulation, without their having themselves the trouble of seeking a suitable investment ; while, on the other hand, the money subscribed, being advanced to some of the members, enables them to purchase houses, or similar prop- erty, and to repay the loan by small periodical instalments, extended over a number of years. The gentle compulsion to investing members of the fines, which enforce punctuality of contribution, is not without its value as tending to form habits of economy and regularity. A, :T . 3. — As regards the purchasing of house property, building societies are peculiarly beneficial. A large portion of a man's income is usually absorbed by the payment of rent, especially among the lower classes, who pay for their tenancy much more heavily than the rich, considering the relative value of the houses which they occupy. It has been justly said, that every one knows something of the ultimate cost of hiring furniture for his house or lodgings; he knows that it is much more advantageous to the hirer of furniture to buy the articles outright than to pay continu- ally for their use; and, therefore, most prudent people in 1 Ik'- middle and humble walks of life make it a rule to pur- chase their own furniture and other articles of domestic comfort and convenience, because the price paid for long hiring is at Least equal to the original value of the article hired. 5Te1 there are many thousands of persons in the metropolis alone, who, while they deem it an unwise bravagance Dot to purchase their articles of household furniture, arc quite content to hire their homes. Akt. J.— It is, however, only by means of these societies Art. 5. ON BENEFIT BUILDING SOCIETIES. 471 that a person, not possessed of capital, who merely receives his income periodically, can become possessor of a house. This he is enabled to do from the practical fact that the annual repayments, required by a society upon a loan, do not much exceed the rent of a house, which could be pur- chased with the sum borrowed " after a short period of saving as an investing member ;" so that a man living ten or fourteen years in a house, instead of paying his rent to his landlord, and thus losing so much money for ever, pays it with a small addition to a building society for a limited number of years, and in consideration of this arrangement, the society advances him at once the money requisite for the purchase of the property, which thus in the stipulated time, whan the loan has been repaid with interest, becomes entirely his own, the money advanced being in the mean- time secured by a suitable mortgage. Art. 5. — Such is the simple outline of the plan pursued in the practice of benefit building societies, and if efficient in 'ins be provided for securing correctness in their prin- ciples of calculation and a fair and honorable way of carry- ing out their object, these institutions must undoubtedly be considered as an excellent application of the system of mutual association. A private individual usually finds it impracticable to obtain an advantageous accumulating interest for the smaller sums which he can spare for his necessities. He has no means of procuring satisfactory information respecting the adequacy of any security con- templated for his investment, nor is he in the way of hear- ing of remunerative opportunities, which present them- selves from time to time. An association, however, of provident persons can com- mand all that is wanting to the single member ; and, although the trifling contribution of each by itself would be too small to be capable of reproductive investment, yet when united with others in a large sum, it becomes a pro- portionate participator and has its representative in the aggregate profits of the general body. Moreover, when there exists a variety of amount of talent and capital, their union for the purposes of carrying out the same design facilitates and renders possible its accomplishment. The efforts of a body of men in pursuit of a good object are generally successful, whether they endeavor to attain for themselves definite and tangible results by the operation of great commercial enterprises, or whether they combine with the provident desire to avert, as far as possible, the pecuniary loss to which the death of any individual among their number would expose the members of the family. As 472 APPENDIX I. Ch. I. an application of the former species of association, though in a limited degree and among humble classes, benefit build- ing societies have proved a remarkable illustration of the great advantages conferred by the working of this prin- ciple, but they are yet so obscured by defects and errors as to require the application of many improvements, both in their system and practice, to prevent them from sinking into disrepute. Art. 6. — The first benefit building society which can be traced was founded in 1815 under the auspices of the Earl of Selkirk. It was a village club at Kirkcudbright in Scot- land. Other institutions of a similar kind were afterwards established in the same kingdom under the title of " Menages," and the system was soon adopted in England, by societies formed in the neighborhood of Manchester and Liverpool and other parts of the JNTorth. After the year 1830 they increased so rapidly, that on the 11th of July, 1836, a "special act (6 and 7 William IV., cap. 32) was passed for their encouragement and protection, in the pro- visions of which were embodied " certain clauses applicable to their conduct, which were included in the statutes relat- ing to Friendly Societies passed in the reigns of George IV. and William IV. As a proof of their numbers it may be stated that up to the present time, there have been regis- tered in the United Kingdom considerably over 7,000 societies, and that they are increasing every year. Of these societies there is evidence to show that above 3,000 are yet in existence, the total income of which is calculated at not less than £9,500,000 a year. In fact, there are several whose annual income exceeds £100,000.* Art. 7. — The act of Parliament just mentioned bears the designation of " An Act for the regulation of Benefit Build- ing Societies," and was passed for the express purpose of encouraging the formation of such institutions, by granting them various privileges, among which is the power of * [The annual receipts from con- has 103,000 inhabitants, possesses tributions of the Leeds Building 60 Building Societies, of 13,401 Society amount to £151,292. The members, with a realized capital number of the members is 7047. of £1,768,025, having trebled their Theamount advanced to borrow- capital since 1859. The Birkbeck ing members £826,112 (Seven- Building Society (London), re- teenth pear, L865). Tl>c Temper- ceived in deposits, during 1865. ance Building Society, London, has £492,789, and in subscriptions I !,! more than £500,000. Thecon- 'j:;i),, and lent out upon ntort- tribution received by the Queen's gage 676,750. The income of the Building Society, Birmingham, Standard Building Society, Edin- during the fourth yearof its exist- burg, for its eighthyear, amounted ence (1865), amounted to £68.890. to £127,889]. The DOrOUgfa Of Sunderland w IikIi Alt. 9. ON BENEFIT BUILDING SOCIETIES. . 473 charging a higher rate of interest than was formerly allowed ; while, to protect their subsequent operations, it enacted that each society should be governed by certain rules, to be approved of, and so certified, by a barrister ap- pointed by Government. It seems to have been overlooked by the legislature that societies of this kind would be exposed to more serious danger than ever, when thus en- couraged by a special act, if the rates of subscription were left unguided by any advice or check furnished by com- petent authority. By far the greater number of the earlier building societies were founded on incorrect principles of payment, and evinced on the part of their originators much ignorance, even of the simplest operation of compound interest. In some instances the statements put forth were very extravagant, and it would not be easy to account for the confidence with which they were received except on the ground that a species of fascination for this kind of invest- ment seemed to possess the minds of the industrious classes ; and even persons of superior position, who would be ex- pected to have more information, united in giving their sanction to the error, for it has been found that no benefit building society has ever been started, however ridiculous its pretensions, which has not speedily succeeded in drawing together a number of shareholders. Art. 8. — The tone of moderation assumed in many of the prospectuses (proceeding, in some cases, from an honest con- viction on the part of their authors) was but too well fitted to gain the confidence of single-minded persons. It was not unusual to find some impossible project represented as " no speculation — no scheme, by which uncertain results are to be obtained, but a sober, well-tried and successful mode of associating together a number of persons for the bene- fit of the whole," and then, although it was deemed unnecessary to give the ground upon which their promises were founded, they sheltered themselves beneath the mantle of legislative sanction, and adduced the Act of Parliament as being " of itself sufficient evidence of the favorable opinion entertained by government of their society. " It cannot be wondered at that statements, advanced in such language as this, and supported by so high an authority, too frequently gained the confidence of the public. Art. 9. — Nor is it thus only that the legitimate object of building societies has been perverted. In order to render the scheme popular and attractive, its projectors in many cases did not content themselves with promising to the poor but industrious man the privilege of becoming the possessor of a house by easy means ; but unhappily infused 474 APPENDIX I. Ch. I. into him an eager desire to obtain a disproportionate amount of gain in his purchase. Hence it comes to pass, that, instead of his feeling a lively satisfaction at being able to get possession of his house by the payment to a society of very little more than the amount of his rent during a r tasonable number of years, he has been taught to believe that this important advantage can be obtained by means and within a period of time which common sense ought to have suggested as impossible. Whilst this attraction was held out to the borrowers a similar sacrifice of principle was made to the investors, or non-borrowers, who were promised large accumulations at the end of a limited number of years, in return for dispro- portionately small monthly subscriptions. The same pros- pectus frequently contained these incompatible statements, and vet the subscribers believed with implicit and blind faith in the virtues of a scheme, into the practicability of which day bv day they did not trouble themselves to inquire. They lost sight of the fact that, in saving a little money they were but providing against misfortunes and the exigencies of life, that facilities for the investment of their savings are only valuable in so far as they increase their means for that purpose, and that not for one moment should they labor under the delusion that, by joining this or that association, their fortunes can be made without trouble. Such hopes cannot receive too strong a check, as they give rise to ideas which I'll the working classes beyond their sphere, and incapacitate them for the exertion necessary to maintain them in it, and thus cannot fail to induce misery and disappointment in the end. Aim-. 10. — la addition to the discouraging effect produced bv tlic errors introduced into so many societies there ;ire other obstacles to their complete success that arise from the imp srfection of the act of Parliament r< Lating to them. In the presence, however, of these objections or difficulties, it may confidently be i I that the introduction into this intry of the system of buildiug societies bias been accom- panied byv -cy happy results in promoting habits of economy and prudence among the poorer classes. Much good has been obtained by their enabling so Large a >er of persons to become possessors of houses and land, which, on the conclusion of their payments, they occupy I'rcc of rent, and can transmit as a little property to their families. This pecuniary interest serves at once to bind ii to the soil, and to promote a feeling of love and ven- er it ion lor the national institutions of their country. The fact that building; societies have suffered little, if at Art. 12. ON BENEFIT BUILDING SOCIETIES. 475 all, from the several severe financial and commercial panics which have been experienced since their introduction, speaks highly for the general soundness of the principle on which they are based, and for the character of the members they attract. Art. 11. — Yet it is remarkable that this excellent principle has been completely overlooked by a class of persons in more easy circumstances, to whose case it would admit of more ready and certain application. There are a vast num- ber of professional men and others engaged in commercial pursuits, with ample means, who continue for years to pay away large sums in rent, without reflecting, that by uniting together in the formation of a superior kind of benefit building society they would be able to realize additional property for their families with but little extra outlaw Such a society would also offer another channel for tempor- ary investment to many non-commercial persons of the higher classes, who would be willing, as investors, to lay out from time to time comparatively small sums of money at advantageous interest. Art. 12. — Hitherto the money accumulated by these asso- ciations has been devoted mainly to the purpose of enabling members to become purchasers of houses and land, or simi- lar property, yet, as far as the principal is concerned, there is no reason why it should not be applied to other objects provided the investment obtained be equally safe. Illustra- tions of this kind will be found in Part II., and in our larger treatise, where Ave suggest a plan for a building society, the shares of which, by the adoption of a combination of Life and even Fidelity Assurance, could be made payable at the end of a definite number of years, or sooner in case of death ; while, at the same time, they might serve as security for the fidelity of the possessor, when holding a situation of trust. Other useful applications of benefit building societies may be enumerated as follows: — First. — Provisions for old age may be secured, payable at tiie end of any number of years, by a person joining the society as an investor. Second. — Houses can be purchased, instead of being hired, by an inconsiderable increase of annual outlay. Third. — -Heads of large commercial establishments and ministers of parishes may, by affording encouragement, advice and protection in the formation of such societies secure more benefit for their dependents and the humble members of their charge than can be obtained by any effort, however extensive, of private charity. 476 APPENDIX I. Cll. I. Fourth. — Leaseholders, such as farmers and others, desir- ous of providing for the fine on renewal on their leases (if for terms certain) can do so by joining a society as investors and subscribers for such number of shares (to be received in full at the required time) as will meet the amount desired. This obviously would be to many an easy mode of provid- ing for what is now often felt to be a difficult and onerous charge. Fifth. — The premiums or fees for placing boys as appren- tices or articled clerks to solicitors, engineers, etc., can be obtained in a similar way. Sixth. — -Marriage and family endowments of all kinds can be secured. Seventh. — Benevolent institutions and religious societies can borrow funds for the erection of churches, alms houses, schools, chapels, etc., or for the immediate paying-off of debts, and the amount borrowed can subsequently be repaid by charitable contributions periodically collected. CHAPTER II. ON THE NATURE OF THE OPERATIONS OF COMPOUND INTEREST. Article 13. — Previously to describing the theoretical con- struction of a building benefit society, or any other similar association, a few remarks will be necessary respecting the principles of compound interest, on which the rates of subscription are supposed to be based, so that the general reader may be enabled to judge of the manner in which the advantages to be derived from these institutions are attain- able, and to appreciate the influence which the practical contingencies examined in the successful sections may be expected to have in the result produced by a mere theoreti- cal investigation of the subject. It would be irrelevant to the object of this work to enter into the doctrines of interest further than is neces- sary to elucidate and explain the nature of benefit building and other investment societies; we shall therefore confine ourselves to a few general outlines and illustrations. The reader who is desirous of more extended information is referred to treatises specially devoted to the science and to the mathematical appendix at the end of this volume, where he will find the subject treated analytically. Art. 11. — It is the custom in all civilized countries that one person borrowing a sum of money from another should pay him periodically for its use a certain consideration, under the name of Interest. This consideration varies in amount according to the nature of the security given for the loan, the state of public monetary affairs, and occasion- ally other circumstances. In order to simplify commercial transactions and establish a standard of measurement for them, annual rates of interest have been formed varying from £1 upward for every £100 borrowed. This interest, although specified nominally as an annual rate, is payable at such regular periods as are agreed upon, either by annual or half-yearly, or more frequent instalments, each periodical payment being, however, always proportional to the annual rate. The rate of interest that a lender may legally demand or receive for the use of his money was formerly limited in England to five per cent, per' annum, although special 477 478 APPENDIX I. Cll. Ii exceptions were made for the investments of building societies and similar institutions. It does not seem clear for what reason the rate of five per cent, was selected as the limit allowed ; and the growing opinion that the exist- ence of such a limit was the occasion of more injury to commercial affairs amidst the fluctuations of public confi- dence than it had produced good by the restraint imposed upon usurious practices gave rise in 1853 to the repeal of all laws against usury. SIMPLE AND COMPOUND INTEREST. Art. 15. — In treating of the advantage derived by invest- ing money, it is important to distinguish between simple and compound interest. If the sums received by the lender from time to time on account of interest are placed by him in similar investments as so much new capital, it is obvious that he not only realizes interest on the sum originally lent, but also on its interest, thus increasing materially the advantages produced by his money, for which he is consequently said to be receiving compound interest. The same would be the result, if the borrower, instead of actually paying the interest when it became due, were allowed to increase his debt thereby, with the understand- ing that the whole should be paid off in one sum at the end of the time for which the loan was made, the borrower undertaking to place his creditor in the same pecuniary position as he would have been in had the instalments of interest been actually paid periodically and themselves re- invested. If, however, instead of supposing the interest, which should have been paid from time to time to be reproductive, the borrower were only bound to pay the sum of the peri- odic instalments on the original amount lent, without any- thing additional for their non-payment at the epoch when they became due, then he is said to be paying only simple in- terest; for example : Suppose £100 were borrowed for four years at the annual rate of 5 per cent, simple interest, which is to be paid at the end oi the fourth year with the loan, then the amount payable at that time would be £100 and four times £5, or all together 6120. Aim. 1<>. — The way compound interest accumulates will be seen by tin- following example: Supposed lends B £1,000 lor fourteen years at 5 per cent, interest, payable annually at the end of each year. At the end of the first year A. Alt. 19. ON BENEFIT BUILDING SOCIETIES. 479 receives from B £'50 for interest, which he reinvests by a further loan to B or to some other party. The amount al- together thus lent is then £1,050. At the end of the second year A receives £52 LOs. as interest at 5 per cent., which he again lends out immediately, making his total investment £1,102 10s. At the end of the third year the interest re- ceived upon this loan of £1,102 10s. is £55 2s. 6d., which, being also lent out, causes the total sum reinvested to be £1,157 12s. 6d. 3 on which, at the end of the fourth year, A again receives interest, and so on, until the end of the period, the advantage derived from these repetitions of in- vestment increasing every year. In this example we have seen that the lender in three years clears £157 12s. 6d. in the shape of interest of the £1,000 originally lent, which is £7 12s. 6d. more than he would have obtained by simple interest. In the same way i f we refer to table No. 4, which is formed on the above eonsiderations, it is found that at the end of fourteen vears the £1,000 would amount to £1,979 18s., of which £979 18. arises from compound interest, being £279 18s. more than a simple interest. Art. 1 7. — As in the practice of the societies which forms the subject of this work, interest is always supposed to be com- pound and not simple, we will confine ourselves to remarks on the various results appertaining to the realization of the former, promising that whenever the rate of interest is men- tioned, it always signifies the yearly rate, whether it be actually paid once a year or in portions at more frequent intervals. Art. 18. — Respecting tables of interest and thepreceding example, it should be observed that the calculations are only true, supposing the money, which is received yearly or other- wise, as interest, to be immediately transferred to some in- vestment producing the same rate of interest, and in as frequent instalments as the original investment did. The loss of a day falsifies the calculations, and neglect of this most important consideration is the cause of the frequent discrepancies which are seen between valuations made on theory and those consistent with the circumstances of actual practice. Art. 19. — In commercial transactions, interest is more frequently due half yearly than yearly, and sometimes quarterly or monthly, which materially increases the amount to which a sum of money will accumulate in a given time, since the instalments of interest are then susceptible of more frequent investment themselves, as so much new capital bearing interest. One instance will prove this : Suppose 480 APPENDIX I. Ch. II. £1,000 were lent out for one year at 5 per cent, rate of in- terest, payable half-yearly. At the end of six months the lender receives half a } r ear's interest, or £25. This, if in- vested immediately, will itself produce in six months 12s. 6d. interest, or the lender will, at the end of the year, by his investment of £1,000, have made £50 12s. 6d., instead of the £50, which he would have received had the interest been payable yearly. The greater advantage derived by the receipt of interest in equal instalments, more frequently than once a year, is shown in Table 5, where is given the actual interest realized at the end of the year, corresponding to various nominal rates, according as it is paid half-yearly, quarterly or monthly, or even by shorter intervals of time. When in- terest is supposed due at the end of every moment of time, it is said to be momentaneous, and this hypothesis, to which other rates can be reduced, gives rise to several curious in- vestigations which are discussed at length in the Appendix. See, also, the Tables 6 and 7. Art. 20. In case where the amount of a sum is to be de- termined for a period of years beyond the limit of the tables which are used, results given in them may yet serve the purpose. Example: Suppose the amount of £100 in thirty years at 5 per cent, compound yearly interest is desired. Ascertain the amount in twenty-five years by Table 7, and then by rule of three determine what the sum produced at the end of twenty-five years will accumulate to in five years more ; or, what is the same thing, the amount of £1 in thirty years is equal to the product of the respective amounts in twenty-five and five years. The multiplication is very easy when decimals are used. Thus in twenty-five years, at 5 per cent., £100 would amount to £338 12s. 8d. Again, in five years, £100 would amount to £127 12s. 6d., therefore in five years £338 12s. 8d. will amount to £132 3s. 10d., or the amount of £100 in thirty years is £432 3s. 10d., which is shown to be correct by Table 4. The general theorem is: The amount of £1 in any given number of years is equal to the product of the respective amounts of 1:1 in any two or more periods of years, into which the given number can be separated. Aim. 21. [fa person be entitled to a certain amount at a given time, and wish in its stead to take its equivalent value at present, the sum which he ought to receive is termed the present value of the amount in question, and the difference between the two is called discount. The dis- Art. 22. ON BENEFIT BUILDING SOCIETIES. 481 count will be less or greater according as the sum due is discounted at simple or compound interest. In ordinary mercantile transactions to avoid the necessity for tables, it is unusual to charge a discount equal to the simple in- terest on the whole debt for the time that exists between the present and the day on which it is due. Thus if the amount be £100, and there remain two years before it is due, the discount at 5 percent, rate of interest will be .£10 — for eighteen months it will be £7 10s., and similarly for other periods. This is sufficiently accurate for the practical purposes of commercial affairs, and in fact is the only way in which the necessity for separate calculations on every occasion can be obviated ; but for debts extending over a large number of years, such a method of computing the discount would give a result which would be much too large. When money is correctly discounted at a certain rate of compound interest, the present value is such a sum as will, if invested at once at the same rate, accumulate at the end of the given time to the amount due. Discount, therefore, being the inverse of interest, we have this fact, corresponding to the one mentioned in Article 19, that : The present value of a sum due at the end of a given time is less in proportion to the greater fre- quency of the period at which the interest is supposed to be due. Example : The present value of £1,000, due in five years and discounted at the rate of 4 per cent, compound yearly interest, is £821 18s. 6d. But if the interest be calculated as due half-yearly, it is £820 7s., and similarly it is less if calculated as due quarterly or monthly. Tables which give the amounts to which a present sum will accumulate will serve inversely to give, by rule of three, the present value of a sum due at the end of a specified number of years. For if £100 amount at three per cent, yearly interest to £115 18s. 5d. in five years (see Table 4), then £100 is the present value of £115 18s. 5d., due five years hence. There- fore, by rule of three, £86 5s. 4d. is the present value of £100 due five years hence. Art. 22. — The important theorem in Article 20 holds also for present values. Art. 23. — A table of present values is worth attention. (See Sec. 2, Appendix). If two rates of interest be followed down the table, and the difference of the present values of £100 at those rates of interest be measured, it will be seen that there is a period at which the difference attains a maxi- mum. In other words, if one person, A, obtain a present loan or advance from another person, B, in return for 482 APPENDIX I. Ch. II. which he is to pay him a sum, S, in a certain number of years ; and A, out of the money he has received, lends a smaller sum (though deducting a higher rate of interest) to a third party, C, from whom in repayment he is also to re- ceive a sum, S, which will enable A to pay his debt to B ; then the immediate profit derived by A will be greatest, if he select the proper term of years for his transaction. ON ANNUITIES OB PERIODIC PAYMENTS. Article 24. — Having explained the operations by which a single sum changes its value, under the influence of interest in the course of time, we will proceed to show what is the result when several sums are taken together into considera- tion. Annuity is a term applied to the periodic payment of money at fixed intervals. It is said to be yearly, half- yearly, quarterly, or monthly annuity, according as the periodic payments are made once a year or in two half- yearly, four quarterly, or twelve monthly equal portions. Annuities are also termed certain, if payable for a definite number of years ; but contingent, if their duration depend upon adventitious circumstances, such as the existence of one or more lives, in which case they are called life annui- ties. We will confine our attentions to the first kind, in which there are only two fundamental questions requiring special examination, from which every problem relating to annuities can be deduced, premising that, unless the con- trary is stated, the annuities are supposed payable at the end of each vein- : First. — What sum an annuity would amount to at the end of its duration, if each periodic payment were to be invested and to produce compound interest. Second. — What present sum paid down is equivalent to an annuity payable for a given number of years. These values will vary with the rate of interest supposed in the calculations, and also with the frequency of the inter- vals, at which the periodic, payments of the annuity, or instalments of interest thereon, are supposed due. It is obvious, however, that, first: The amount of an annuity, at the end of the time during which it is to continue, is the sum of the accumulations of each periodic payment, im- proved at compound interest, from the date at which each was paid, or due, up to the time of the expiration of the annuity. And secondly: The present value of an annuity is equal to the sum of the present values of each of the periodic, payments discounted at compound interest, each Art. 26. ON BENEFIT BUILDING SOCIETIES. 483 payment being separately discounted for the respective dis- tance of time being between the present and the date of which it is due. Art. 25. — Since an annuity is strictly equivalent to its present value, the party purchasing and the other selling being, as far as the mathematical considerations go, in equal positions, it follows that the amount of an annuity is exactly equal to the amount to which the present value of the annuity would accumulate, if itself were invested and improved at the same interest, until the end of the given number of years. Hence, when accurately calculated at the rate of interest agreed upon, the amount and the present value of the annuity are each exactly equivalent to the annuity itself, and are thus equally applicable to the affairs of life, the one being frequently exchanged for the other. Thus, a debtor may clear off a given sum now due by paying to his credi- tor either an equivalent annuity for a certain number of years, or its amount at the end of that time ; and a land- holder, whose estate is charged with an annuity, can com- pound for it by giving a present sum in cash. As an example: Referring to tables 10 and 11, we see that at 7 per cent, rate of yearly interest, the present value of £8 8s. Od. paid at the end of each year for ten years, is nearly £59, and also that the amount of £8 8s. Od. a year at the end of ten years is £116 Is. 2d. ; moreover, Table 4 shows that the single sum £59, improved at 7 per cent, compound interest for ten years, gives the same amount, providing that the three are equivalent to each other ; or in other words, supposing two men each to undertake to pay £8 8s. Od. at the end of each year to a society for ten years, and that one desired to receive in return the present value of his ten years' pay- ments, while the other determined to wait for his share until the end of the time, they would both be fairly treated, in respect of their subscriptions to the society, if the one re- ceived £59 at once, and the other £116 Is. 2d. at the termina- tion of the annual payments. The same reasoning applies to annuities of larger or smaller amounts for different periods of duration, and a society receiving, as in the above example, annuities from its members and pa} T ing to some their present value and to others their ultimate amount, is on the general principle of a benefit building society. Art. 26. — The whole theory of annuities cannot be ex- plained without some analytical investigations, such as will be found in the Appendix. For practice, Tables 10, 11 and 12 may be used, in which are given, for various rates of 484 APPENDIX I. Ch. II. interest, the amount and present value of an annuity of £100, payable at the end of each year, and the annuity which £100 will purchase. These tables, however, will serve for annuities of other amounts, and they may be adopted when the annuity is paid at the beginning instead of the end of each year. Art. 27. — If the annuity be supposed payable half-yearly or quarterly, or monthly, as in building societies, some modification is necessary in the tables, the nature of which is explained in the Appendix. But it is clear that : A smaller annuity ought to be paid during a specified number of years, in consideration of a given present sum, debt or purchase-money, in proportion to the greater frequency of the periods, at which the equal portions of the annuity are to be paid. Similarly : The accumulated amount of an annuity at the end of a given time, increases with the frequency of the Intervals at which the instalments are paid. Art. 28. — It will be observed that : For a given annuity, the amount at the end of a given number of years will in- crease with the rate of interest at which the money is sup- posed invested. And inversely : The larger the accumula- tion is promised in return for the subscription of an annuity for a stated time, the higher will the rate of interest be at which it must be invested. Hence, the first point to be t bought of, when an accumulation is promised for an annuity paid, is: Can the necessary rate of interest be obtained? Can every instalment of the annuity be immediately and continually invested throughout the whole time, at the rate required '. Thus, for example, £6 a year will amount to £82 18s. nearly, in ten years, at 7 per cent, rate of interest. But, in order that £0 a year may amount to £120, the rate of inter- est required is 11' percent. (See Appendix.) Again, that £6 a year will amount to £140, or £3 a year to £70 in the Mime time, the rate of interest required is nearly 18 per cent. Akt. 29. — The number of years during which a given an- nuity is to be paid in return for a given present sum, debt, or purchase-money, increases with the rate of interest sup- posed to be paid. Inversely: The advantage obtained by a borrower, who pays a certain annuity in return for a loan, diminishes as trie number of years increases. Example: If a borrower pay 68s 8. Od. a year during ten years for a loan of 659, he is paying at the rate of 7 per cent, compound yearly interest, but if the time be increased to thirteen years, the rate of interest will be about 10£ per cent. Alt. 32. ON BENEFIT BUILDING SOCIETIES. 485 Art. 30. — On comparing Table 4 with Table 10, it will be seen that the difference of two successive values of the annvify- table (^amounts is equal to the sum given in the table of sin- gle amounts for the lesser number of years. Example : The amount of an annuity of £100, in eleven years, at 5 per cent =£1,420.67 The amount of an annuity of £100, in ten years, at 5 per cent = £1 ,257.78 Difference £162.89 which is the amount of a single £100 at 5 per cent, by Table 4. So that Table 4 might in fact be calculated from Table 10, if that were given. The converse holds for present values. (See Tables 9 and 11.) Art. 31. — If annuity payments be deferred for a few years, the present value and the amount of such an annuity can be easily deduced from the tables for immediate annuities. For instance, the present value of a deferred annuity of i'l for ten years, at 5 per cent, (the first payment to begin at the end of five years), is equal to the present value of the immediate annuhYy, viz : £7.7217 for ten years divided by the amount of £1 for four years, or by £1.2155. The answer is £6.3527. <>\' THE DOUBLING OF MONEY. Art. 32. — "When a sum of money increases to double its value by the accumulation of compound interest, the an- alytical investigations assume a peculiar form, from Avhich we have deduced the following theorems as bearing on the system of many Benefit Building Societies : (See Appendix.) 1. — For all rates of interest not exceeding 10 per cent. the number of years in which a single sum will become double in amount by the accumulation of com/pound 'ml' r< st may be foundby dividing 70 by the rate of interest per cent., and taking that whole number which is nearest to the quotient obtained. The accuracy of this theorem may be judged of by Table 8, but the property is valuable as furnishing a simple rule and one easily remembered. Thus : If the rate of interest be 2 per cent., then the number of years will be ^°- nearly = 35 years If the rate of interest be 21 per cent., then the number of years will be tt 9- ? nearly = 28 years If the rate of interest be 3 per cent. , then the number of years will be -^ nearly = 23£ years 486 APPENDIX I. Ch. II. If the rate of interest be 3£ per cent., then the number of years will be -g^? nearly = 20 years If the rate of interest be 4 per cent., then the number of years will be ^ nearly = 17$ years If the rate of interest be 4| per cent., then the number of years will be ^tt^s nearly = 15| years If the rate of interest be 5 per cent., then the number of years will be ^°- nearly = 14 years If the rate of interest be 6 per cent., then the number of years will be 7 6 °- nearly = 11 J years If the rate of interest be 7 per cent., then the number of years will be ^ nearly = 10 years If the rate of interest be 8 per cent., then the number of years will be ™ nearly = 8|- years (or 9 nearly.) If the rate of interest be 9 per cent., then the number of years will be -™ nearly = 7 f years (or 8 nearly.) If the rate of interest be 10 per cent., then the number of years will be f {} nearly = 7 years which agree with the whole numbers given by the table. When the rate of interest is higher than 10 per cent., a larger dividend than 70 must be taken. 2.— The amount of an annuity of £1, in the exact time in which a single sum would double, is equal to £100 divided by the rate of interest per cent. Thus, at 5 percent., money will double in fourteen years and a fraction, and £1 a year for the same time will amount to £100 divided by 5, or £20, which agrees with Table 10. Art. 33. — From Theorems 1 and 2 we have: 3. — Tf a sum of money be borrowed for such a time that, if unpaid, it wouldbecome doubled by the accumulation of com- pound interest, then the debtor can liquidate his debt with interest in that time, by an inutility equal to twice one years interest on the sum Inn-rowed. If the time be a certain num- ber of years and days, the last payment of the debtor will be a fractional portion of the year's annuity proportionate to the fractional number of days. Thus, if £60 be borrowed for fourteen years, seventy-six days (which is the exact time in which money will double at yearly 5 percent.), then the debt can be repaid, including principal and interest, by an annuity for that time after the rate of £6 a year, since £3 is the interest on £60 at 5 per cent. in, if £60 be borrowed for ten years, ninety days (the exacl lime of doubling al 7 per cent.), then a yearly annuity of 68 8s. for thai time will repaj principal and interest, II Is. being one year's interest on 660 at 7 percent. If the above annuities were paid in monthly instalments of LOs. and J Is. the debts would be repaid in very nearly fourteen years and ten years respectively. Alt. 35. ON BENEFIT BUILDING SOCIETIES. 487 4. — The interest, at which money will double in a given number of years, is nearly equal to 70 divided by the number of years. 5. — If two equal sums be invested for the same time, the one at simple, the other at compound, interest, the former will increase 70 per cent, in the time in which the latter will double; or whatever be the rate, the advantage in the time of doubling will be 30 per <>ent. in favor of com- pound interest. Art. 34. — The result obtained by means of the above theorems become more accurate when the instalments of annuity are due more often than once a year, and in the case of monthly payments, they are found to differ but very- little from the real values. The exact degree of approxi- mation afforded by these theorems we have examined in the Appendix, together with the general extension, of which they admit, to the case of money increasing to several times its original value. One is most important : — If a sum of money be borrowed for such a time, that (if unpaid it would amount to y-fold its original value) then the annuity which would pay it off, principal and interest in that time, is equal toy divided hyf less one, times one year's interest on the debt. Or : — The amount of an annuity of £1 {accumulated at com- pound interest, 1 per cent., during the whole time in which the single sum £1 would accumulate to £f) is equal to £100 (/-I). ' , Art. 35. — -The Appendix also contains other theorems, which have been deduced, relating to various interesting points in the working of Compound Interest. The results in some instances, however, are obtained only bv the aid of analysis of a somewhat high order. At the end of the practical Section 4, will be found the Formula for calcu- lating tables for the allowance of interest, in case a society undertake to receive occasional deposits, with power to the depositor of withdrawing the whole or part of the sum, under certain conditions. CHAPTEK III. on benefit building societies as originally constituted. Section 1. The Theoretical Principles of a Terminating Society. [" A minute inquiry into the various systems of these associ- ations has confirmed an opinion, suggested by previous experi- ences, that, among other defects, one stands prominent as the fatal obstacle in the way of their success, arising from almost universal conditions, by which the existence of a Benefit Building Society is limited to a specified, number of years." — See Preface to First Edition of Treatise on Building- Societies.] Article. 36. — Benefit building societies are generally founded with the same object, but carried out with various modifications. They are now divided into two distinct classes : the one terminating, the other permanent. A ter- minating society is one which it is intended to close at the end of a certain period, when all the shares of the members have realized their full amount. In a permanent society it is merely the membership of a shareholder that terminates at the end of a fixed number of years (when he receives the full value of his shares) — the society itself continuing. Whichever system be adopted the object of a building society is still the same, namely, as we have stated in Chapter I., to enable individuals to associate together and unite their subscripl ions from time to time in one common fund, some for the simple purpose of placing a portion of their incomes in an advantageous investment, others with the view of borrowing money, by which they may purchase houses or other similar property. But, in order that one man may borrow, there must be others who lead. To induce a person of limited means to lay by periodically a portion of his income merely as an investing member, some strong incentive must be held out, and the only one that has been found successful is to offer him a high r;ite of interest for the use of his money. The legislature, being aware of the force of this consideration, and of the importance of removing any obstacle at that time existing, passed the Benefit Building Society Act of 488 Art. 38. ON BENEFIT BUILDING SOCIETIES. 489 1830, in which the following clause was specially introduced : " And be it enacted, That it shall and may be lawful to and for any such society to have and receive from any member or members thereof any sum or sums of money, by way of bonus on any share or shares, for the privilege of receiving the same in advance prior to the same being realized, and also any interest for the share or shares so re- ceived, or any part thereof, without being subject or liable on account thereof, to any of the forfeitures or penalties enforced by any act or acts of Parliament relating to usury." So that, in other words, the society might charge its borrowing members, under the name of bonus, any rate of interest upon a loan which it might deem advisable ; and though this clause is rendered unnecessary by the repeal of the Acts relating to usury, it strives to show the intention of the legislature. Art. 37 — In this chapter we shall examine the character and deficiencies of terminating societies, and in the next enter upon the question of the merits of their successors on our principle of permanence. The majority of the terminating building societies an- nounce, at the time of their formation, that their shares are a fixed sum, usually £120, to be realized at the expiration of a given number of years, by which time, it is expected, the association will terminate with that result. The number of years is generally 10 or 11, although some societies exist whose expected duration is 11 or 13 years, and some in which the amount of the shares is £50 or £100. The sub- scriptions of the members are a few shillings a month per share, varying with the number of years calculated as the probable duration of the society, but not allowed by the statute to exceed 20 shillings per share, and the investing or non-borrowing members are promised the amount of their shares at its close. The subscriptions are received at monthly meetings and, with as little delay as practicable, are lent to those members w T ho wish to become borrowers, and to obtain a loan in the shape of a present advance on each share they hold or take up, in lieu of the amount which they w r ould otherwise receive at the end. The sum advanced per share of course depends upon the number of years that remain between the time of borrowing and the date at which the society is expected to terminate. Art. 38. — To explain this, we will take an example ; but it must be first remarked that in the most of the associa- tions at present existing in the United Kingdom, which have any principle of reasoning for their guide, one of two rates of interest has generally been adopted as the basis of 490 APPENDIX I. Ch. III. their calculations ; their expected duration being conse- quently different. These rates are 5 or 7 per cent, per annum ; but the interest, though taken at a nominal annual rate, is supposed to be realized at the end of each month, instead of at the end of each year. In practice many diffi- culties, to which attention is drawn further on, oppose the ictual realization of interest monthly ; yet, for the purpose ;>f an example, the question may be treated theoretically, as if no such impediments were in existence. Let the case be that of a 14 years' terminating society, formed on a basis of 5 per cent, rate of interest, and con- sisting of shares of £120 each, on which every member pays 10s. at the beginning of each month, during 11 years. This sum is assumed, because such a monthly annuity would, at 5 per cent, rate of interest supposed, realized monthly and continuously invested and reinvested, accumulate to £120 at the end of nearly 14 years; hence £120 is the amount that a non-borrowing member would be entitled to receive at the close of the society. On the other hand, it is known that £60 cash, invested at 5 per cent, rate of compound monthly interest, will accumulate to £120 in nearly 14 years. If, then, a member should wish to discount one share and take its present value at the beginning of the society, he would be entitled to receive £60, in consideration of his subsequent monthly payment of 10s., or £6 a year for 14 years. Sim- ilarly, should he desire to borrow £300, or 5 times 60, he would have to make payments on 5 shares, amounting to £.")(» a year. As the society progresses in its existence, the number of remaining months over which a borrower's pay- ments can extend, diminishes ; so that the amount of advance per share, which a member would be entitled to receive, if he wished to borrow at a later period of the society than the beginning, would depend upon the date of his Hist becoming a subscriber. If hehad entered only just before receiving a loan, the amount of advance per share would merely be discounted present value of his future pay- ments; but if he had been a subscriber for some months previously, then, in addition to the allowance for Ids future subscriptions, he would also be entitled to a sum arising from his past payments. Thus, for example: In the 14 years' society in question, a member, whose subscriptions are los. a month, or £6 a year, for each £120 share, if he wished to borrow in the first month of the 7th year, and had been a subscriber from the beginning, would receive £42 Is. Id. on account of his past payments during 6 years, and £38 L9s. 8d. in considera- tion of ais future subscripl ions, making altogether £81 0s. 9d. Art. 40. ON BENEFIT BUILDING SOCIETIES. We quote one of the societies on this plan, but this can be easily proved correct by means of a monthly compound interest table. But, if the borrower had only just become a member at the beginning of the seventh year, and did not pay up any arrears or back subscriptions, he would merely be entitled to £38 19s. 8d. as an advance in con- sideration of the payment of £6 a year, to be made by him during the remaining 8 years ; and, under such circum- stances, it is seen by rule of three that to obtain a loan of £81 0s. 9d., he would have to pay £12 9s. 6d. a year during the 8 years. So that, in fact, the nearer a member, at the time of his first joining, or taking up the required number of new shares, and then borrowing, is to the epoch at which the society is expected to close, the larger will be his pay- ments in return for a given loan. As a second instance, it would be found that, although a member, who borrowed £300 at the commencement, would merely pay £30 for 14 years, yet, if he took up the shares at the beginning of the 9th year and obtained the same loan, without paying up any arrear-subscriptions, he would then have to pay £59 18s. for the remaining 6 years. Such a high rate of repayment becomes very inconvenient to members of limited means, who wish to borrow money for the purchase of house prop- erty, not at the beginning, but when they have for some time been members ; and the difficulty increases more and more with the progress of the institution. Art. 39.— The proceeding is an example at 5 per cent- Societies formed upon the 7 per cent, rate of interest are expected to last only 10 years, and on this supposition there exist a great many. The amount of the shares to be real- ized, at the end of such a period, is usually, as before, £120, for which the members pay lis. a month for 10 years. This rate of payment is adopted because such a monthly annuity would amount to £120 at the end of nearly ten years, sup- posing each monthly payment immediately as it is received invested at 7 per cent, compound interest, calculated also as realized monthly. Again, since £60, if similarly invested at 7 per cent., would, with its accumulations from compound interest, amount to £120 at the end of nearly 10 years, it is obvious that a member effecting a loan upon a share at the begin- ning, and receiving £60 as its present value, would be in an equitable position with regard to a non- borrowing member, who waited for the full value of his share or £120, at the termination of the society. Art. 10. — Other associations exist founded on other rates of interest, as 6 or 8 per cent., and of different expected 492 APPENDIX I. Ch. III. periods of duration. The principle of calculation, however, is the same, and the same remarks apply to all, whatever be the rate adopted. The intention of each is to give to the investors the amount of their shares in full, at the close of the number of years representing the probable duration of the society, and throughout its existence to invest the funds, from time to time as collected, in the shape of dis- counted advances to any of the members who wish to bor- row, the amount of advance per share being supposed proportionate: First, to the number of years or months that the borrower has already been a subscriber ; and, sec- ondly, to the unexpired time which remains bettvem the epoch at which he obtains the loan, and the expected date of the termination of the association. Art. 41. — Such is the system of the superior classes of terminating benefit building societies, but it must not be supposed that all or even the greater number were estab- lished on such accurate principles of calculation. This, un- fortunately, was not the case. By far the majority were based on rates of subscription fundamentally unsound, and, in their subsequent dealings, both with the investors and bor- rowers, proceeded on assumptions which cannot be justified by theoretical or practical reasoning. Of this the next sec- tion will contain a few instances, which prevailed in several hundreds of the societies established at an early period, and are selected not as being by any means the most extrava- gant of the number, but simply from the extent to which they were adopted. The defects ' in most cases are so numerous and va- ]} In the state of Massachusetts, membered by some only as a building societies have been in scheme by which sharpers ab- operalion some years under the sorbed the money of the simple, title of Loan Fund Associations, and by others as an unsuccessful but as most of them are founded on if not an unfortunate experiment." the terminating principles, their The commissioners, however, career lias not been prosperous, proceed to remark, That in spite The insurance commissioners of of the inherent defects of these tlic state, who are charged with associations, and the abuses in supervision of these institutions, practice, they have had a lar^e made the following remarks, in degree of usefulness, and have t heir report of 1862 : demonstrated, perhaps even better "There seems at present no than if they had been better con- probability that the number of structed, the value of the principle • organizations will increase, of repaying loans by small monthly Most of these now existing uil1 'iiintiilinciitx. It lias I n inipossi- close bytheirown limitation, ble for us to ascertain with exact- and perhaps Hie rest, will also ness but we have no doubt that by cease from the fact thai their means of them not less than one structure is not stable enough to thousand families in Massachusetts l.iud lie- pressure Of tin- e times. now enjoy homes of their own, in a few years they may bi re v. in. would otherwise have been Art. 42. ON BENEFIT BUILDING SOCIETIES. 493 ried, and in each individual society so interwoven one with another, that it will be necessary, for the better sepa- ration of ideas, and in order to enable the reader to fully understand the details into which we are about to enter, that we should endeavor to introduce some classification among them. The chief heads under which they may be resumed are as follows : First. — Inaccuracy in theory ; such as erroneous rates of subscription, etc. Second. — Practical causes, which nullify the results ob- tained from accurate theory : such as loss of interest, the expenses of management, etc. Third. — The pecuniary loss inseparable from the condition of termination. Fourth. — The great inconvenience caused to individual members by the terminating system ; such as the difficulty of withdrawing at the time when a member may desire it, or of effecting the redemption of a mortgage on equitable terms, etc. Fifth. — Losses through mismanagement : viz., From inat- tention to the sufficiency or soundness of security accepted for investment; or, from the consequences of inaccuracy in balance sheets, etc., etc. Some of these defects will be explained by themselves in the next section ; others, to avoid the necessity for sub- sequent repetition, will be considered by way of contrast in the chapters, which treat of the advantages of the permanent principle and the practical working of building societies. Section 2. Societies on Erroneous Principles. Art. 42. — First instances /—Societies have been established, proposing to last 10 years only, and sometimes for a less period, the shares of which are £120, and the payments of the investors 10s. a month : that is to say, for a subscription of £6 a year during 10 years, or a total payment of £60, a member is promised £120 at the end of that time. Now, in order that the payment of £6 a year may accu- rolling about as tenants from one £670,000, and having lost only landlord or boarding-house to an- £3,000 upon realization. Thelarg- other, or have left the state in dis- est amount lent to one member in gust to find a home in the wilder- any society is £2,350 ; and some ness. Though the machinery lias have never lent more than £200. not worked smoothly, it has turned The aggregate existing capital of out an article of inestimable value, the several societies is £100,000, Twenty-eight of these societies and the annual expenses of man- are still in existence, having lent agement, £3.000. J 494 APPENDIX I. Ch. III. ululate with compound interest to £120, in the course of 10 years a rate equivalent to 14^ per cent, yearly interest must be realized ; and unless the subscriptions are continu- ally invested and reinvested at this rate, the promised re- sults are impossible. Of this the reader may satisfy himself by referring to the mathematical Appendix. The borrower's repayments, however, do not bring into the society a higher rate of interest than 7 or 8 per cent., and in some cases much less ; for the same prospectuses state that if a member desire an advance in the first year, he will re- ceive £60 on each share (sometimes only £55) in return for which he will have to pay 14s. a month, or £8 8s. Od. a year, for the 10 years, the extra 4s. being usually charged under the name of redemption fee. A reference to a com- pound monthly interest table, will show that the actual in- terest produced by these repayments, which include principal and interest, is between 7 and 8 per cent, per annum. The advances, also, made in the second and subsequent years of the existence of the association, are in the same proportion; — consequently, the subscriptions of the members are in- correctly calculated to the large amount of nearly 7 percent, annual rate of interest, even although the borrowers pay so high a rate as 8 per cent. Hence it follows, that the promised results cannot be realized. The above assumes that the monthly receipts are also rein- vested monthly. Such in reality is not the case. Indeed, even if a society of this kind were to experience no pecuniary loss from any of the causes which will be examined further on, yet the result would practically be only as follows: — 1 >y table 0, a yearly annuity of £6 invested continuously at 7 per cent, will accumulate to £82 18s. Od. in ten years leaving a deficit of £37 2s. Od. per unadvanced share, or nearly one-third of the promised amount, at the epoch of the expected termination of the society. Again, 1 even supposing the borrowers should unwitting 1 Unjustifiably high rates of in- shall pay interest at 5 per cent. tcrest were prevalent among many per annum, on the amount bor- of the earlier societies, from a mis- rowed, by equal monthly pay- taken interpretation of the Rules, meats, such interest to commence and much injustice is still occa- from the time the money is ad- sionally committed by (lie same vanced or if the security for the means. For example, in s ;is- same be not completed previously, sociations, the borrowers pay in- then from the third month from terest at I or 5 per cent, on the the time of purchase, and to be most advanced, pursuant to clauses subject to the same fines as for similar to the following : vi/.., subscriptions in arrear." The ob- vious equitable interpretation of " Payment op Enterest. the proceeding is, that the inter- '• l. Thai any member having est-subscription shall be after the received bis or her share or shares, rate of 5 per cent, on the whole Art. 43. ON BENEFIT BUILDING SOCIETIES. 495 consent to pay 10 per cent, interest for their loans, there would yet be a deficiency of £24 7s. 6d. since the amount of £6 a year in 10 years at 10 per cent, is only £95 12s. 6d. This remarkable instance of inaccuracy of rates is the more worthy of notice, as it prevailed with various other less important errors in a great number of benefit build- ing societies, and thus involved the pecuniary welfare of many shareholders. 1 There can be no doubt, however, that it arose entirely from ignorance, for the same prospec- tuses usually declared that the annual rate of interest, charged from the borrowers, did not exceed 4 per cent. This last statement was possibly suggested by some misconception founded on the circumstance of the borrowers paying 4s. a month per share more than the investors. Art. 43. — The second instance is of a more complicated char- acter, and was introduced with considerable pretension by its advocates, as an improved plan of a benefit building society. The scheme professed to guarantee that the society shall positively not last more than 10 years ; that non-borrow- ing members, by paying 5s. a month, or £3 a year, for 10 years would be entitled to and receive £70 at the end of that time, which is £40 more than the total amount of the 10 years' subscriptions ; also, that the borrower shall re- ceive as an advance on each share, if there be no competitors sum borrowed, diminishing, if the Building and Invest- debt diminish, in just proportion. MENT SOCIETY may now (the sec- For example let the debt be £100 ; ond year having terminated) re- the borrower's payments would ceive the whole amount of their comprise the ordinary subserip- subscriptions with 18-J- per cent, tion, and £5 a year or 8s. 4d. a per annum interest thereon. By month for interest. As, however, order of the Board. the principal of his debt is gradu- (Signed) Secretary. ally liquidated in the period of the j tant to Persons desir nrcliasing House Property. fair to require him to keep on pay- J -co ing £5 a year for interest to the £1,000 will be offered for sale at end ; inasmuch as in so doing he the second meeting of the is practically paying sums in in- Building and Investment So- terest which increase tbe rate ciety, on Thursday Evening, the from 5 per cent, up to 50 per cent. 9th of May next, at half-past Yet this has been perpetrated in 7 o'clock, Interest payable many societies. by the borrowers from 1 to 5 per 1 The following advertisement, cent. The whole amount of the extracted from a weekly periodi- purchase-money and law charges cal, will serve as a specimen of advanced by the society. No ar- popular credulity : — rears to pay — Fixed to close in ten , , , r , years certain. Subscription, 5s. Immense success of Mr. s ^er share ner month BuiMing and Investment Societies Fxomt £ i numbero f shares £70 /or -every £30 Subscribed m k th J> flrst mee ti n g, this so- a Fixed Term of 7 en I ears. ciety wiU be cloged after the third Notice. — The members of the meeting. 496 APPENDIX I. Ch. III. with him for the same loan, the total of the 10 years subscrip- tion or £30, in return for which he was to pay 5s. a month, or £3 a year, for 10 years : or, in other words, that a member could borrow £30 and repay the whole, including principal "and interest" by ten payments of £3 extended over 10 years. If, however, there are several applicants for advances, theu the prospectus states — That the funds of the society shall be put up to open competition and the same shall be awarded to those members who shall offer the highest premium of interest for the use thereof. By this plan the great evils, loss and uncertainty, attend- ant upon the rotation and balloting systems, are avoided. That the premiums or interest shall be the only sum pay- able by the borrowers for the use of the money that shall be advanced to them. That the premiums bid shall not be deducted from the sum to be advanced, but may be paid by equal monthly instal- ments, spread over the remainder of the ten years. This will be a very great accommodation to the borrowers, and is, in the opinion of the directors, a great improvement upon the old systems, under which the premiums are deducted from the money to be advanced. In order that the members may be guided as to the pre- miums they may safely bid for advances of money, the fol- lowing Table is given, showing the amount of interest to which the premiums for £3 to £15 per share will be equal for the ten years, namely : — PREMIUMS. IF GIVEN DURING THE FIRST TEAR. Interest per cent, per annum. £ s. d. Premium for an advance of £30, spread over £ s. (1 3 4 10 6 7 11) 9 (1 in 10 12 13 10 15 . 1 .. 1 10 ..2 . . 2 10 ..3 . . 3 10 ..4 .. 4 10 . . 5 u While such great benefits are secured to the borrowers, it will be Been that those m< mhers mho allow their subscriptions to remain as investments, will receive, at the expiration of the A n yt ars a rial a, a y< ry large profit, amounting, it is cal- culated {from //<< facilities and encouragement afforded to borrowers, and the certainty of the society being always able Alt. 43. ON BENEFIT BUILDING SOCIETIES. 497 to lend out its funds at a moderate rate of interest), to nearly £40 per share, or £70 for each £30 subscribed in the course of the 10 years : Thus showing, that persons wishing to in- vest their small savings, < future provision for themselves or their families, will be able to do so in this society with a vast deal more advantage and solid benefit, than they can by investing their money in Life Assurances, or depositing the same in savings banks, which do not in any case allow more than 3 per cent, per annum interest, or not above one-tenth of the estimated interest or profit to be gained by investing money in this society." " This plan clearly proves that, although the investors (that is to say those members, who do not borrow money of the society) will probably more than double the capital they may invest in this society in the 10 years ; the bor- rowers will gain considerably more in the same time." We have quoted so much of this prospectus, because the s}^stem is one that contains a variety of complicated errors common, unfortunately, to a considerable number of soci- eties. It has been said that the inventors were promised £70, in return for the 10 annual payments of £3. This could not be effected unless the subscriptions invested after the rate of 18 per cent, yearly interest, continuously realized during the 10 years, by the constant investment and reinvestments of the society funds, in loans to borrowers. Now the members who borrow pay more or less, accord- ing as there is competition or not for advances. If there be no competition, a borrower gives no premium, and consequently in obtaining a loan of £30 per share, has only to pay £3 a year for 10 years, or, in other words, he has the loan without paying any interest for it. If there be competition, the highest premium he can pay on each £30 share is £15, spread over 10 years : he there- fore obtains an advance of £30, for which he has to pay annually £3 subscription, and £1 10s. Od. instalment of his premium during 10 years, which is equivalent to paying nearly 8 per cent, rate of interest for the loan. [See the Tables at the end.] So that in the most favorable case the society would ex- perience annually a deficiency of 10 per cent, rate of inter- est. If the premium or discount which a borrower allows be less than £15, the repayments made by him are smaller, and consequently the rate of interest obtained on the aver- age is less than 8 per cent. Hence, while on the one hand, this " Improved'''' plan undertook to guarantee to the investors 32 498 APPENDIX I. Cll. III. a profit arising from the accumulations of their subscriptions at IS per cent, compottnd interest / yet, on the other, it lent oui the money at rates which never could exceed 8 'per cent, and in most cases would be considerably less. We pass over the other incorrect estimates advanced by the prospectus, respecting the rates of interest, which are said to correspond to the various amounts of premium men- tioned, as enough has been stated to prove the utter unsound- ness of the plan. Art. 44. — Ballot Appropriation Societies. — In this class of society the subscriptions of investing members are fixed at a trifling sum, such as one shilling a week, and no interest whatever is promised to them ; the attraction being the promise of a loan of large amount — £250 or £300 — to be balloted to the member, on which, it is pretended, he has to pay no interest. The rules provide, however (cl. 25), that in addition to a repayment of one-tenth per annum of the loan for 10 years, the amount of the investing shares shall subsequently be paid up by each borrowing member, and that the objects of the society shall not be treated as realized till each member has had an advance, which entails on all members the legal necessity of continuing their subscrip- tions till all are served with loans. The encouragement to overlook this consideration on joining the society is a promise that " when the whole purpose of the society has been completed," all the subscriptions received shall be re- turned to the members. Any person desiring a loan from such a society, and not successful in getting one soon bal- lotted to him, has to ' purchase the right to an advance from some more fortunate member, who may not wish himself to use it. The price given for the right is measured by the neces- sities of the one party and the cupidity of the other ; but it has the same effect on the member who borrows as if more interest were charged on the loan by the society, and the society as a body loses the profit obtained by the members who, through chance only, may have secured the right to an " Appropriation," as such loans are termed. A system involving such a complication of errors and absurd- ities would have; earlier broken down, but for the profit ob- tained on the shares of those members who withdraw dis- appointed. 'The Following advertisement Money ready to be advanced on shows thai I In- Bate <>!' Loans is car- freehold, leasehold, or for building ried on systematically by these so- purposes. Repayable £7 10s. per oieties : — Appropriation.— €:ioo quarter. Also a .€250. for ten years, without interest, in Secretary, a Building Society, for Sale. 13, Street. Art. 46. ON BENEFIT BUILDING SOCIETIES. 409 Art. 45. — Many other societies have been started, con- ducted upon various schemes which are equally fallacious, and announcements in the public prints such as the follow- ing, were not unusual : — " From the peculiar advantages offered by this society, the investing members will reap above 20 per cent, interest for the use of their subscriptions," etc., etc. And further on the same advertisements assert — " That the borrowers will scarcely pay at the rate of 2 per cent, interest for the loans." Again — " It is calculated that those members who allow their sub- scriptions to accumulate at compound interest till the close of this society, will receive about 25 per cent, annual interest for the same, etc., etc., and from SO to 100 per cent, profit will be obtained by those members who purchase property with the money advanced to them by the society." Such statements require no comment. Art. 46. — It is not necessary to extend, our inquiry into the defects of other societies, as, since our earlier publi- cations, increasing knowledge on this subject has to a con- siderable extent prevented their formation. Our object in this place is rather to point out the general practical objec- tions to the system of terminating societies altogether, than to rectify misconceptions which arise from ignorance. It is, however, worthy of notice that the tendency of new societies was to diminish the rate of contribution paid by the members, without making any corresponding reduc- tion in the amount of each share promised at the termination. Formerly a more secure principle was adopted, and the monthly subscriptions required on each share were much larger. For instance, in most of the old Liverpool and Man- chester societies, the shares were fixed at £150, and the monthly payments at 20s. per share. Hence, many suc- ceeded in terminating successfully. The modern associa- tions, however, diminished the monthly subscriptions one- half, and yet took only £30 of the amount of the share to be realized. In general the statements, they put forth did not depend upon principles deduced from sound knowledge or careful reasoning, but were rather the offspring of crude guesses thrown out at random. The originators of the multitudinous variety of " new and improved plans," promising such large benefits simul- taneously to each of the two classes of members who alone constitute these societies, might, with as much proba- bility of success, devise a game of cards, at which all who 500 APPENDIX I. Ch. III. played should rise up winners. They did not reflect that, although a fair and reasonable benefit may be secured to the investor by lending on equitable terms to the borrower, yet any extra profit beyond this, which is promised to the one, can only be obtained at the expense of the other. Section 3. The leading Practical Objections to Benefit Building Socie- ties as Originally Constituted. Art. 47. — Among the objections which apply to the majority of the earlier societies, there is one which is pecu- liar to those founded on the terminating principle : — In consequence of its being intended to close the society in a given number of years, or as soon after as practicable, the opportunity for investment soon ceases, as the members a/re un- willing to borrow in the later years of its existence, when the period over which a loan can extend has become small, and the corresponding rates of repayment much increased. It is found by experience, and it is indeed a fact which common sense would suggest, that it is almost impossible to find members who will care to borrow, when the first five or six years of any society's expected duration have elapsed. The monthly repayments upon a loan, which is to be only for a short period, becomes too large to suit the means of the industrious classes, who are usually the shareholders of a benefit building society ; and this difficulty increases to an insurmountable degree in the last years of the proposed term of its existence. For although a man who borrowed £300 for 14 years in order to purchase a house might con- trive with comparative ease to pay £30 a year in addition to the taxes and ground rent, yet he would probably be unable to pay £59 18s. Od. a year it' the loan were merely for 6 years, or £85 12s. 6d. a year if it were only for 4 years, and so forth. Art. 48. Some societies attempt to obviate the difficulty by a plan which, in some measure, would be successful in preventing this loss of interest, were it not that it entails another equally important objection relative to the expenses of the association. The plan alluded to consists in dividing "by lot any balance of money existing at a meeting, where there are no borrowers, among those members who have not yet received advances on their shares, so as to compel them at once to withdraw from the society, as far as such shares are concerned ; the amount paid, on this forced withdrawal of each share, being regulated by its value at the time of withdrawal, according to the rules. Art. 49. ON BENEFIT BUILDING SOCIETIES. 501 Such a measure, though necessary, adds to the general difficulties in the principle of termination, since it tends, montli by month, in a rate rapidly increasing, to diminish the number of the members or the association ; for in each successive month of the last years of its expected existence the number of members who desire to borrow becomes less, and, in the absence of applicants for advances, the number of investors, or non-borrowers, who must be paid off, increases. Thus the society, which might otherwise have succeeded, rapidly sinks in importance, and the expenses and any deficiency of funds, which may afterwards be dis- covered, instead of being spread over a large body, have to be borne by the few who are unlucky enough to remain to the end. Art. 49. — The following objections for consideration, al- though common to many societies, whether terminating or permanent, are nevertheless increased and aggravated when the institution is of a transitory character. First. — The interest is usually calcrdated as likely to he realised monthly, whereas such is practically not the case. It is not possible but that, from the very beginning of any society's existence, some portion of its funds will at various periods remain unemployed for a time. Sometimes this takes place because the balance in hand is not large enough to meet the purpose of any borrower, particularly in the first year or two, when the subscribers are too few in number to raise quickly enough an adequate sum. Sometimes, on the contrary, when the amount required by the borrowers, whose names are entered, has been advanced, there remains a sum which is not applied for. Now it has been stated that the interest is generally cal- culated as produced monthly, which would require that there should never be even a day lost in investing the whole of the subscriptions collected at each meeting; and since this is practically impossible, it may be laid down as an axiom, that no society can be secure whose rates of subscription are formed upon such a principle. It is not remembered that although it is desirable to receive the subscriptions monthly, yet it is not safe to act upon the hypothesis of their being immediately reinvested, or of monthly interest being actually obtained, as such a mode of calculation reduces the rate of repayment, which it is necessary to charge to a borrower for a given loan. It is one thing to receive the repayments monthly, and another to assume, in the calculations, that they may be fre- quently reproductive of interest. In other words, the safety of any society depends upon the managers always having 502 APPENDIX I. Cll, III. sufficient time, before the arrival of each of the calculated periods for reinvestment, upon which the tables are based to complete the necessary details for preventing loss of in- terest, by investing all moneys which are not required for the immediate purposes of management. This can only be secured satisfactorily by making the epochs of monetary repayment in each year more frequent than the periods at which allowance for interest is credited to the borrower in the fundamental calculations. Hence it would be safer, at all events, if the interest were supposed paid quarterly ; but, in order to remove any pos- sible contingency from this source, we consider that, in all calculations which form the basis of the subscriptions, the interest should be assumed as only realized annually and at the end of each year. The difference between this assump- tion and the actual result would be in favor of the society, and useful for contingencies. Akt. 50. — Secondly. — The loss from the expenses of man- agement. Whether the amount of monthly subscriptions from the members of a benefit building society be theoreti- cally sufficient or not, yet the promised results cannot be realized, in consequence of the annual loss caused by the ex- penses, which are not adequately provided for. In Section 1 we have seen that, in most societies founded upon principles theoretically accurate, the present value of each share at the time of an advance, or its amount at the end of the specified number of years, are respectively equiv- alent to the accumulation arising from the receipt and im- mediate reinvestment of the monthly subscriptions thereon. It follows that the money so received cannot be appro- priated to other purposes without loss; hence the expenses of starting and giving publicity to a building society, and those also of its subsequent management, to however small a compass they are reduced, must be defrayed out of some other source of revenue than the share subscriptions. If the initial and subsequent annua] expenses could be accurately estimated beforehand, (here would be no difficulty in ascer- taining what payment per share ought to be contributed by each member to meet the necessary outlay. In the majority of cases, however, the probable amount of the expenses is neither known nor provided for, although they are fre- quently asserted t<> be covered by the entrance fees, fines for non-payment of subscriptions when due and a, few other trifling sources of profit, which the society may be expected to receive. T<> a certain extent, this is correct, but in no case are these receipts sufficienl to defray more than a very small proportion of the expenses. In the first place it must Art. 51. ON BENEFIT BUILDING SOCIETIES. 503 be remembered that a fine is not wholly profit. A fine is inflicted at so much a month per share, for neglect of regu- larity in paying the monthly subscription when due, and, therefore, is partly requisite to supply the loss of interest, which the society would otherwise experience. And, even assuming that the preliminary expenses could be covered by the money received from entrance fees, which an inspection of the various balance sheets shows to be very seldom the case, yet the annual charges of management, consisting of office-rent, salaries, etc., must be provided for. To show how such an annual outlay would affect the ultimate status of a terminating association, take for an example a 14-years building society, whose shares are £720, produced by a monthly subscription of 10s. or £6 a year, and the annual expenses of which we will suppose to amount to £72 a year. Now £72 is 12 times £6, or equal to the amount of subscriptions received yearly on 12 shares, and, therefore, by -the fundamental statements of the society, is calculated as equivalent to 12 times £120, or £1,440; consequently the an- nual charges must produce a deficiency of £1,440 in the society's fund at the epoch of its originally expected ter- mination. This instance will apply in principle to all soci- eties, whether of 10, 12, or 14 years' duration, unless, inde- pendently of the monthly share subscriptions, they have adequately provided for the annual expenditure. On exam- ination many of the annual balance sheets show, moreover, that the expenses of the year added together frequently average from £120 to £150, which, on the same principle of calculation as that made use of above, must create, from this source alone, a deficiency in the society's funds, at the end, of from £2,400 to £3,000. Art. 51. — Thirdly. — There is no provision made in the theo- retical calculations for losses, which may be experienced through bad investments, etc. In all mercantile transactions of this kind losses must occasionally happen ; and whether they arise from wilful neglect or carelessness, or other causes, such as deterioration in the value of property, they combine to pro- duce an effect for which no provision is made in determining the subscriptions to be paid by members. Although at the commencement of a benefit building society,it would of course be impossible to foresee the individual events, or even the nature of the events, which are likely to be productive of loss, yet it is a matter of experience that losses will occur, entailing a deficiency in the society's funds at the time of its promised termination, which, with the combination of the other de- fects already mentioned, will, in the case of a terminating society, tend to cause a prolongation of its existence beyond 504 APPENDIX I. Cb. III. the originally intended or stated period. By such means the duration of the subscriptions of both investors and bor- rowers is unavoidably extended, and they suffer, in con- sequence, a decided loss. As these societies are constituted, the duration of a society and the consequent continuance of the borrower's re- payment depend not on any number of years specified in the prospectus, but upon the actual completion of the full amount of the unadvanced shares ; so that a society may not close at the end of the expected term of its existence, unless the fund collected at the last monthly meeting shall be sufficient to give to each of the non-borrowing members a division per share equal to its originally stated amount. If there be a deficienc} r , from whatever cause it may proceed, then must all the members, borrowers as well as non-borrow- ers, continue their subscriptions for such additional number of months as may be necessary, unless they should all unan- imously agree to dissolve the society and put up with the loss sustained. Art. 52.— It appears, therefore, that in these closely- woven societies, there will not be, at the end of the originally spec- ified time, sufficient funds to give to each investor the full amount of his shares, unless : — Throughout the whole previous duration of the association, there has been no loss sustained, either through bad investments or other causes, or from ex- traneous expenses {not covered! >>j sufficient extra contributions from each member over and above the receipts from fines, fees, etc.), and also unless no month has passed in which any part of the subscriptions has remained unproductive, so that, in other words, no loss of interest has at any time occur i' d. Art. 53. — Should there arise a deficiency from any one of these causes, and the duration of the society be prolonged, it will be well to consider the effect which such a result has upon the relative interest of the investors and borrowers respec- tively. An extension of its existence for three or four years, in reality, causes the borrowers to pay much more for the Loans 1 hey have obtained than they imagined would be the case when i hey entered into their engagements toward thesociety. The interest which they actually pay, instead of being perhaps only 5 or 7 per cent., becomes thereby increased to more than 10 per cent. An investor, also, not only does //^/receive the promised amount at the expected time, re- specting which he may likely have made pecuniary arrange- ments, but lie is also compelled to continue his own sub- scriptions; by which means the benefit that he derives from ins shares is \cvy materially diminished. Alt. 55. ON BENEFIT BUILDING SOCIETIES. 505 As, however, the investors have still the option of with- drawing- from the society, if they are willing to accept snch amount of dividend per share as the funds admit of, and thus mutually agree to dissolve the association, it will often be a question worthy of their serious consideration whether it will not be better to endeavor to make an arrangement with the existing borrowing members, that the latter should at once contribute something towards the deficiency, to be determined by calculation, and then that all the members, both investors and borrowers, should agree to dissolve tlie society. Experience has shown that this plan will really be the most advantageous to the two classes of members, inasmuch as the investors will be prepared, in general, to put up with some loss, or, in other words, to release the borrowers upon liberal terms, in order to receive at once some money for their shares, however much the amount may fall short of what they expected. Art. 54. — We have said that the borrowers have not to make good the whole deficiency in the society's funds, but only their proportionate amounts, considered relatively to the otherwise necessary continuation of subscriptions from both parties. Hence, it will be advisable, in order to avoid an unintentional act of injustice to either, that the members should see that the proper quota to be contributed is deter- mined by accurate calculation. Art. 55. — In perusing these remarks respecting the ma- jority of the terminating societies, and in comparing the lib- eral promises contained in their prospectuses with the periodic reports of the position of their affairs, we believe the impartial reader can arrive but at one conclusion. 1 He will become satisfied : — That not one in twenty, or even in a greater number, can possibly realize for its members, whether investors or borrowers, the advantageous results originally promised ; and that, at the various epochs of their expected termination, there will be found such a de- ficiency 'of money as must deprive the possessors of unad- vanced shares of a considerable portion of the accumulation 1 Readers should beware how that in the north of England a so- they rely too hastily upon state- ciety terminated lately with the nients which they may hear, of promised results, through the individual societies having ter- members paying for the last few minated successfully. They will years double the original subscrip- find, upon investigation, like the tions upon their shares. The pub- author, that some questionable lie were then informed of the fact expedient has been adopted, to- that the shares had been realized, wards the last years of its intended The shareholders alone could have existence, by which an apparently stated what they had paid for prosperous end lias been obtained, the same. For example, it may be mentioned 506 APPENDIX I. Ch. III. which they had been led to expect ; that in many cases so far from receiving £120 per share, they will obtain less than £75, and that, if not disposed to accept whatever sum may be offered to them, they will be forced to continue their sub- scriptions for several years beyond the specified time ; that these unfortunate results have arisen in great measure from a lack of proper knowledge and experience in the originators of these institutions, — a circumstance that does not always escape the notice of the industrious classes, and tends largely to diminish their faith in the real advantages of prudent and economical habits ; lastly, that legislative measures are necessary for the due regulation both of the legal establishment of a benefit building society, and also of the system of its financial operations ; and that some supervision should be exercised by truly competent persons, not only at the commencement of the society's existence, but subsequently, from time to time, throughout its prog- ress. CHAPTER IV. ON PERMANENT BENEFIT BUILDING SOCIETIES. Article 56. — Having reviewed some of the leading objec- tions to the plan of terminating societies, which propose to close at the expiration of a fixed number of years, or as soon after as the stated amount of the unadvanced shares is real- ized, we will now proceed to examine in detail the various superior features of oxw permanent system. To enable an institution of this kind to conduct its opera- tions successfully, as regards the profit which is expected by the investing members, at the same time that the bor- rowers are freed from unjust responsibilities, it is proper, not only that the rates of subscription and repayment should depend upon a sound basis of mathematical reasoning, but also that the general system of the society's practical opera- tions should be, as much as possible, clear from those de- fects which either prevent the realization of the expected interest within the calculated time, or produce injury and personal inconvenience to the members. It is essential that due provision should be made for the current expenses and liabilities, and that they should no longer be left de- pendent upon the uncertain receipts from fines or fees. The relative position of the two classes of members should also be more equitably considered, so that the profits of the one may not be increased by taking an unfair advantage of the others ; and the period of the duration of a mortgage should be rendered definite, in order that the claim of the society upon a borrower may at all times be subject to equit- able adjustment, in case of his being subsequently desirous of redeeming his property, since it is evident that any un- certainty, respecting the duration and amount of a debt- tends materially to depreciate the saleable value of the se- curity held for it. As, moreover, it is not easy to form an opinion of the possible fluctuations in the value of money, when it is in- volved in transactions extending over a lengthened number of years, attention must be given to a suitable reserve be- ing annually made upon the society's profits to form a pro- tective fund against future contingencies. Experience daily shows that benefit building societies, from the peculiar 507 508 APPENDIX I. Ch. IV. nature of their transactions, are exposed to losses which cannot always be averted by the most careful or intelligent management. By subjecting, however, the chance of their advent to the laws of " Average," and by providing a re- source whence any deficiency may be at once made good, these institutions can be rendered, on the whole, as secure and as advantageous mediums for investment as any other in the kingdom. Art. 57. — The permanent plan which, we devised in 1846 appears to meet these requirements, as it is entirely free from most of the objections peculiar to terminating societies: — First. — The difficulty of finding borrowers, at any time in the course of the existence of a society, is removed. Second. — New members may enter in any month without paying up any arrears or increase of entrance fee. Hence, the scope of the society's action is extended, and the power, resulting from mutual association, of doing good, is greatly augmented as the number of shareholders increases year b} T year, and even month by month, instead of diminishing. Third. — The initial and annual expenses can be more equitably divided, and spread over a larger number of members. Fourth. — A member may, under reasonable restrictions, withdraw his subscriptions, or effect the redemption of a mortgage, without the delay or expense that he would ex- perience in a terminating society. Fifth. — The duration of members' subscriptions can be fixed with greater certainty. Art. 58. — The system of a permanent building society, which is most simple in its operations, may be explained as follows: — -The members are separated, as before, into two classes, investors and borrowers. The investors pay a certain monthly subscription during 2kjfoced number of years, calculated as sufficient for the re- ali/ai ion of (heir snares, at the end of which time the amount due is paid to them, and they secede from the association, as far as such shares are concerned. The investors represent i he proprietors of a company. New members can enter at any time, and commence their subscriptions without paying up any arrears or any increase on the original entrance fee, whereas, in terminating societies, the fee on entering is in- creased, without sufficient reason, year by year, until, from being originally only 2s. 6d., il is, in some cases, raised to six pounds per share. The duration of a membership is counted from the month of a member's first entrance. This causes every month ;i fresh secies of members to be added to the society, or new shares tobei ssued, so t hat, taking an example, Art. 58. ON BENEFIT BUILDING SOCIETIES. 509 if the term of membership were 10 j^earsor 120 months, and 5" new shares on the average were taken up every month, there would, at the end of the first 10 years, be 6000 shares subscribed, supposing always that, if any were withdrawn, the average would be kept up by an increase in the new- comers. At the end of the first 120 months, or 10 years, 50 would be paid out, but as new members would come in, the number of subscribers would be undiminished ; and month by month afterwards, as successive periods of 120 months were completed, old members would go out and new ones come in. The borrowers receive, at the time of obtaining an ad- vance, the full amount of their shares, without any deduc- tion beyond a trifling commission, which is withheld as a contribution toward the expenses and losses ; the loan is secured by a mortgage on the property purchased, and in return they pay, during an optional fixed number of years previously agreed upon, a suitable monthly subscription, by which the debt is liquidated with interest. The members who become borrowers, at once cease to he investors in re- spect of the shares on which they obtain advances, and do not participate in any of the subsequent liabilities or ex- penses of the society, nor, consequently, in its profits, which in fact they anticipate by obtaining their loans at a moder- ate and definite rate. The general liabilities are provided for by taking, as the basis of the calculations, a higher rate of interest for the repayments than is actually guaranteed to the investors for the realization of their shares ; that is to say, if the amount of each share held by an investor, which is promised to him at the end of a fixed term of years, be equivalent to the accumulation of his subscriptions at 4£ or 5 per cent, compound interest, the borrowers would nevertheless be charged about 6| or 7 per cent. This dif- ference of 2 per cent, in the rate of interest obtained is tem- porarily withheld from the investors, in order to form a management and contingent fund, for the purpose of meet- ing the expenses, and contingencies of loss on the mort- gages. The customary commission, which is deducted from the loan, is proportionate to the number of years of its dura- tion, and varies in amount with the local circumstances of the place in which the society is conducted. It is regulated by a table, where the advances are made by rotation or the ballot ; but in the case of the bidding system, it is replaced by the premium bid per share. A borrower must have been previously an investor, but immediately after he borrows, he passes over from one class to the other, receiving then whatever amount is due to him 510 APPENDIX I. Ch. IY. on his investing shares, as arising from his past subscrip- tions, with interest thereon from the date of his first joining up to the time of his obtaining the advance. The repay- ments of the borrowers are for a fixed term of years what- ever be the subsequent condition of the society, as it is not reasonable that, when they have once given good and suffi- cient security for a loan, they should be expected to share in the responsibilities of future investments. This is one great improvement upon the old system, where the period of the subscriptions depends upon the suc- cess or non-success of the association, or upon the contin- gency of any loss being sustained by it from other property mortgaged to other members ; so that in many cases the re- payments are extended over several years more than was expected by a borrower when he first effected his loan. Art. 59. — As regards those members who remain in- vestors, the system of periodically ' dividing a bonus from the profits is adopted, which has been found so productive of safety and success to mutual life assurance companies. Instead of forestalling the society's profits by reducing the monthly subscriptions of the investor to such a degree as barely to leave them sufficient, even theoretically, to produce by accumulation the amount of the shares, the safer plan already alluded to is adopted of keeping the subscriptions sufficiently high to be theoretically and practically adequate to the purpose. Any surplus profits which arise, beyond the promised amount of the unadvanced shares, are periodi- cally and proportionately divided among the investors in the shape of a profit-bonus to be paid to them, with the other sums due on the completion of the subscriptions upon each share. The bonus system thus possesses very great advan- tages, inasmuch as it preserves to the society the possession of a reserve fund, over which it has power, and whence any unexpected losses may be met. Art. GO. — The borrowers, of course, are not entitled to 1 Valuations for the purpose of years of its existence, declared declaring a bonus should not be profit amounting to £17,885. In made at less intervals than three the tenth year, although £1,922 of Or five years. An annual valua- this profit which was supposed to fcioil is perplexing and unfair, in- have been realized fell in, by for- asmuch as the amount. <>f new feiture of bonus on withdrawal, profits annually made by the build- yet the aggregate balance in favor ing society varies very largely, of the society was only £47, show- being affected by the number of ing a loss in that year of £1,875. new mortgages granted, the pro- If annual valuations are made, a portion of withdrawals and re- very large proportion of the ap- demptions, and many other cir- parent balance ought to be set CUmstances. aside for an equalization fund, \ ca e is before us of a building before any prolit is actually de' .society which, in the first nine clared. Art. 62. ON BENEFIT BUILDING SOCIETIES. 511 participate in this surplus-bonus, as they have secured the equivalent by the manner in which they obtained their advances. This point appears, since the publication of the first edition of our treatise, to have been misunderstood, and several well-disposed persons have exclaimed against an apparent disadvantage offered to borrowers by the new system. They should, however, have reflected that the borrower is, in all cases, practically equally well off, since by the very mode in which he obtains his loan, he secures at once the enjoyment of an immediate profit, which is still only prospective to the investor. The money in hand is of at least as much advantage to the borrower as the deferred realization of his share can be to the subscriber, who has to wait to the end of his membership. So strange a notion, however, appears to prevail in some places, that a plan of so-called " mutuality," by which borrowers should antici- pate with investors in the profits and losses of the society, is preferable, that, on the ground of expediency, we have in some cases recommended the adoption of a "mutual" plan. Art. 61. — In a permanent institution of this kind there is little difficulty in obtaining borrowers, for the great objec- tion disappears which is made against terminating societies, viz., that after a few years of their existence, the duration of a mortgage is too limited, and the loan repayments too heavy to suit the means of the class who are usually mem- bers. If the society be permanent, a member can at any time become a borrower, and yet have his advance for whatever period is most suited to his means, the amount of monthly payments required being less as the duration of the debt is extended. Akt. 62. — Again, since new members may come in at any time without paying up any arrears, the society will, if properly managed, continually receive a fresh accession of strength from new subscribers, and thus generally possess, at each meeting, funds sufficiently large to be capable of being invested without delay ; whereas, it has been stated before as one of the difficulties in the old societies, that their being comparatively confined in their action, the funds collected at a subscription meeting are frequently insuffi- cient to meet the wants of any borrowing member, and are consequently left idle and unproductive of interest for per- haps some months, until by subsequent addition they amount to the sum required. The permanent principle, therefore, possesses several ele- ments which tend materially to confirm the calculations founded on the probability of a continuous realization of interest. 512 APPENDIX I. Ch. IV. Akt. 63. — It is, however, necessary and proper that a liio-her rate of interest be charged, in determining the ad- vance repayments, than the investors would be content to receive in return for their subscriptions, in order that some margin may thus be provided for the various contingencies to which these societies are exposed. These contingencies arise not from the investors, but from the borrowers. It is through the loans that losses are likely to be produced, and the borrowers should therefore pay sufficient interest to protect the investors from such casualties. As we have said before, the security offered to benefit building socie- ties is one of much tendency to be of an unsound nature, and out of a large number of such investments a few bad cases will always arise entailing loss. By charging, how- ever, a sufficiently high rate of interest from the borrowers, the annual receipts from that source may be made large enough not only to meet the engagements in respect of interest on their subscriptions, which the society has con- tracted towards the investors, but also to cover any loss arising from bad security or other causes. 1 In societies formed for the purpose of purchasing or deal- ing with property, which does not consist of land, in or around London, or other large towns, a very fair plan is to take 7 per cent, rate of interest as the basis of the loan repayments, since that rate is sufficiently low to enable a member to purchase a house on comparatively moderate terms, and, in consequence of the greater opportunities for other investments, at apparently as high rates of interest, possessed by London residents, which they might consider more secure than house mortgages, it would be nearly im- possible to find lenders or investors, ii" a lower rate were charged, as (supposing that the expenses and losses which might arise absorb 2 per cent, off the rate of interest ob- tained) they would not clear more than 5 per cent, for their money. 1 We have, since writing the funds, say, at 6 per cent, per an- above, mel witha similar view of mini duly :u or 4 per cent. — the principal involved, in the well- more or less — can ho considered as known Catechisme de I'Economi the payment from the borrower by Politique, by the Late distinguished way of rent lor the hiring (if the .1. B. Say, ai page 181 of the fourth money. The remainder 2h or 2 edition. The substance of his percent. — more or less — istocover view is as follows: Capital is ren- the extra, risk existing in the in- dered available, by industrial en- vestment, or is the premium of terprises, to produce an income assurance at which the lender — under the name of interest. The act ing ;is his own Assurer — can in- interesl or income from such a cur the chance of loss, to which he source Bhould be separated into is exposed through making his two parts. When a sum of money advance upon ;i security, that is i lenl ai ;i much higher rate of not of the first class, interest than thai of the public Alt. 66. ON BENEFIT BUILDING SOCIETIES. 513 Akt. 64. — Again, the expenses, both initial and annual, can be more equitably divided over present and future share- holders. First, as regards the initial expenses, instead of their being defrayed by the first series of members, they can be charged as a debt against them as well as present sub- scribers and be paid off by certain fixed temporary deduc- tions from the surplus profits of the society. The annual expenses will in a similar manner be borne b} 7 a much greater number of members than in the case in associations formed on the terminating principle, with this one peculiar additional advantage, that year by year as the society pro- gresses, until the close of the first period of the duration of the investors' shares, the number of contributors will in- crease instead of diminishing. {See Appendix for further remarks on the rate of contribution, which it is equitable to require from the members.) Art. 65. — In permanent societies, any borrower who de- sires it can, under certain practical restrictions, be permitted to redeem his mortgage on much more equitable terms than under the old system. In a society of limited duration, if a borrower, or his family, in case of death before the mortgage is cleared off, make application to pay off the remainder of the debt, a much larger sum is exacted than would be required on a mere theoretical view of the question, in consequence of the society no longer possessing opportunities of investment for any sum which may be returned on its hands, as the other members are unwilling to borrow, when the loan can only be obtained for a few years. So that a borrower who wishes to clear off his mortgage before the close of the asso- ciation, has to pay not only the net value of the remainder of his debt, but also some compensation for the loss of interest which will be experienced in those years during which the money thus returned will remain idle and unproductive in the hands of the society. Hence, instances constantly occur of amounts being required in redemption of a mortgage, which would be considered unfair and exorbitant were it not for the peculiar circumstances of the case. In a permanent association, on the contrary, as opportu- nities for investment abound, the directors would be ready to offer fair and reasonable terms for redemption, in order to increase their power of encouraging the entry of new members by the prospect of an early advance. Art. 66. — On the other hand, the withdrawal of shares by the investing members is greatly facilitated. In terminating societies, persons who desire to discon- tinue their membership, cannot do so without much diffi- 33 514 APPENDIX I. Ch. IV. culty and delay, because the money they have subscribed is engaged in the society's investments ; and as few. if any, new members join after two or three years, the funds received from time to time can only with considerable restriction be paid out on withdrawing shares. Hence it has been cus- tomary to inflict fines, varying from 5s. to £10 per share on parties withdrawing. 1 This deduction is severely felt by the poor man who, when endeavoring to save a few pounds, does not know at what time he may require them ; and who from unforeseen circumstances may desire to withdraw some portion of his subscriptions, as the only means of freeing himself from, perhaps, temporary difficulties. Yet, if withdrawals were permitted without restrictions, a ter- minating society could never lend out the whole of the sums invested, as it might be called upon at any time to return an inconvenient portion of them. Consequently, in all the old benefit building societies, the rules attempt to provide against this difficulty by making it not easy to withdraw shares. Moreover, the societies themselves are injured by applications for withdrawal, which they cannot satisfy, as a feeling of distrust is excited which materially affects their subsequent operations. This inconvenience does not exist in the permanent plan, because new members continually enter, and there is always a floating balance sufficient to meet any applications for withdrawal within reasonable limits. Art. 67. — The permanent system, described in the fore- going pages, will best be understood by a few examples from the rules of a society, founded upon that principle, which has met with great success :— "The shares of investing members are 2 £100 each, for which the subscription is 13s. 0d. a month for 10 years or 120 months, or [10s. 0d. " 12 150 8s. 0d. " 14 168 "J " They may, however, take half shares of £50, or quarter shares of £25 each, if they prefer it. Investing members can withdraw from the society, without fine, at any time after the first year, when the amount of their subscriptions will be returned, with interest, varying, according to the length of time the mem tier has subscribed, from 1 per cent, up to 6 per cent, according to the following table for whole 1 The rules should provide that 2 In some cases €50, and even ;i member who has given notice £25, would, perhaps, be the prefer* to withdraw shall not participate able amount of eaoh share, as the in any loss occurring subsequent to smaller the sum subscribed, the the date of his notice. less amount of withdrawals. Art. 67. ON BENEFIT BUILDING SOCIETIES. 515 shares, and so in proportion for half and quarter shares, viz., f At the end of the first year £ " 2 years 3 " Hi " 4 " " 5 " At the last or 10th year £100. (With Profits in addition to the £100.") " Investors may, if they desire it, cease their future pay- ments and leave their past subscriptions, as a deposit pro- ducing compound interest, to be received back in one accu- mulated sum at the end of the originally selected term of their membership." 1 " A guarantee fund is also formed, by the issue of stock, in shares of £ each, which may be put up at once, or by four quar- terly instalments of five shillings. On these shares interest is paid half yearly, at a guaranteed rate of per cent." " Persons intending to borrow must, in order to qualify, previously become members ; and, at the time of borrowing, they will be repaid the sum due for the past subscriptions on their shares with interest, and then receive, as a loan, the full amount as any number of shares they may require, without any deduction, beyond a small commission, which will be carried to the credit of a management and contin- gent fund, to defray expenses, etc. Loans, to the extent of £ , will be made to members on security of real or lease- hold estate, house or land, in any part of England, for 5, 7, 10, 12 or 14 years, as they prefer." " Example. 2 A member borrowing £100 on mortgage is only required to make the following repayments, including principle and interest, viz., If for 5 years- -£2 8 monthly or £6 5 quarterly 7 " 1 11 " 4 15 4 cc 10 " 1 3 9 cc 3 13 1 (C 12 tt 1 1 (< 3 4 6 « 14 ii 19 1 fit 2 18 9 it The repayments of the borrowers are calculated at 6 or 7 per cent, rate of interest, whether the loan be taken for 5, 7, 10, 12, or 14 years, and although actually paid monthly 1 The table being calculated by of annuities secured upon prop- the formula in section 4 of the erty. It will be different from the appendix. ordinary deed of the terminating 2 The mortgage deed must be building society. for a term certain, as in the case 516 APPENDIX I. Ch. IV. or quarterly, they are regarded in the calculation as made yearly and at the end of each year. This creates but a slight augmentation in the amount of the periodic repay- ments and yet tends materially to increase the safety of the basis on which a society is founded. " The amount of commission deducted is what a careful examination of the expenses and losses of other similar in- stitutions has shown to be necessary and sufficient. (See the Hides in oar Treatise on Copyhold Enfranchisements and Freehold Land Societies). " The surplus profits of the society (over and above the promised amount of the unadvanced shares) will be ascer- tained periodically by an actuary, and be apportioned, two- thirds to the credit of the investors, to be paid to them as a bonus at the termination of their 10 years membership ; the other third to be carried to the credit of a permanent guarantee fund, formed to meet any loss which may arise. This proportion in the division of surplus profits will, how- ever, be varied as may be considered advisable, after the expiration of the first nine years of the society's existence. " There will be no loss from bidding. Should there be more applicants for advances than can be supplied at one time, priority will be settled by ballot (or rotation). The receipts arising from the entrance fees, fines, etc., will all be carried to the credit of the management and contingent fund, out of which the different expenses will be defrayed. " As an example of the working of this society : — Suppose a person desirous to purchase a house for £300, which would return a net rental of £30 per annum, and that he has been an investing member one year before he applies for the advance. He must hold three shares to borrow £300; and in this example suppose that he has paid one year's subscriptions on each of the three shares. By the table of withdrawals he is entitled to three times £7 16s. 0d., or £23 8s. 0d., in return for his past, subscriptions. This sum he receives at once, if he desire it, with the £300, and, ceasing to be an investor, he borrows the £300 on the terms of the table of repay- ments for loans, for which only he gives security. If he effect this loan for 10 years, his repayments, including principal and interest, will be £3 lis. 3d. a month, or annmllv £47 15 Multiplied by 10 years .... 10 Making the total re-payments . . £427 10 Deducl L0 years' rent paid or received . £300 Leaving the cost, as far as the benefit . Building Society is concerned . . £127 10 Alt. 68. ON BENEFIT BUILDING SOCIETIES. 517 " For which sum the member has thus secured to his family a house, free of rent, for the remainder of its lease. The above example is for 10 years. The purchase, however, may be effected by smaller annual payments, if the loan be taken out for 12 or 14 years. " The deduction for commission, and the law expenses, must be provided for from the £23 8s. or other private source. They of course add to the expenses of the purchase, but it should be remembered that the payments of the borrowers can in no way be increased or extended beyond the specified period for which the loan is taken, as is the case in the old societies. " Taking an example from one of them whose shares are £120, upon which, in the first year, a borrower would re- ceive only about £55 in cash, and occasionally much less, he would be required to pay lid. per month per share, or £8 8s. Od. per annum, until the close of the society, which is more likely to extend to 11, or even 16 years, than to ter- minate in 10 years, but, confining the question to 10 years, in order to obtain a loan of £300, he would have to pay a subscription upon five and a half shares, amounting to £46 4s. Od. a year ; whereas in this society it would cost only £42 15s. Od." Art. 68. — In the permanent plan just described, the periods of the investors' subscriptions may be 10, 12, or 14 years, or even longer or shorter without affecting the prin- ciple. Either would answer equally well, and the result would be the same to an investor whatever term were adopted, if the basis of the subscriptions were upon the same rate of interest. We recommend, however, that to avoid complication, in no society should the investors have more than one or two periods for the realization of theunadvanced shares, and their monthly subscriptions should not be less than what would be required to produce them by accumu- lation in the stated time, at 4 or 5i per cent, compound yearly interest. Although it is not possible, a priori to esti- mate the amount of surplus profit, which will remain at the end of each period, when the expenses and any losses that may occur have been provided for, yet it is reasonable to ex- pect that if the society be carefully managed, each investor will receive a bonus in addition to the originally promised amount of his share. What that bonus will be must depend on the success of the association ; and every member will, therefore, find it to his advantage to add his individual efforts in promoting its prosperity. The management and con- tingent fund will be amply adequate for its purpose, since it will include not only the entrance fees, fines and commission 518 APPENDIX I. Ch. IV. deducted from the loans at the time of an advance, but, moreover, a fluctuating reserve on each £100 share, arising from the circumstance that the annual subscriptions paid by an investing member, viz., 13s. a month or £7 16s. Od. a year, are invested at 7 per cent, compound interest, and in the case of its being realized monthly, the reserve in 10 years would be as high as £11 per share. (See Section IV. Ap- pendix.) Art. 66. — An improvement might be effected in the pecu- niary position of the borrowers, by which greater facilities would be afforded to them to realize benefit from advances. For the first year after his purchase, a borrower is, in most cases, scarcely able to complete the necessary arrangements connected with the furnishing his house, etc., and he experi- ences some difficulty in providing for the increased pay- ments, which begin at the end of the month from the time of his obtaining a loan. The original object of benefit building societies, viz., to enable the industrious poor to be- come possessors of their own homes, would be accomplished, with greater certainty and less inconvenience to the parties concerned, if the monthly repayments upon advances did not begin for a year after the same had been granted. The borrower would thus have time to look about him and to settle comfortably in his purchase ; and the society would merely have the repayments deferred for one year, or for whatever other time might be agreed upon. In the Appendix the formula is given for the rate of contribution suitable for a loan so granted. CHAPTER Y. THE PRACTICAL MANAGEMENT OF A BENEFIT BUILDING- SOCIETY. Article 70. — After recommending the adoption of the per- manent instead of the terminating principle, in the formation of all benefit building societies, and the conversion into per- manent societies of those terminating ones which yet remain, it may not be out of place to add a few remarks relative to their subsequent practical management. At the commencement, great care ought to be exercised in the judicious selection of suitable persons as officers. The most important of these are undoubtedly the solicitor and surveyor, from their influence, for good or evil, on the operations of the society ; for it is upon their testimony respecting the soundness and adequacy of the security offered for an investment, that its safety and prosperity entirely depend. When a member is desirous of purchasing a house, or other similar property, he makes application to the directors, who instruct the surveyor to examine and report on the nature, position, and value of the proposed purchase. If these be satisfactory, they then direct the solicitor to examine into the right of sale or title which the member possesses. Should this also prove unexceptionable, the money is advanced for the purchase, its repayment being secured by a mortgage on the property for an agreed term of years. Let us now examine the position of the benefit building society with respect to this investment. If, at some subsequent time, before the mortgage is cleared off, the borrower were to discontinue his payments, the society would be under the necessity of seizing the property and reselling it, in order to recover the remaining amount yet due to it. Thence would arise various chances of loss. It may happen that the locality in which the property is situated may have diminished in public estimation, as is frequently the case with many parts of London and other large towns ; or the necessary repairs to which any new purchaser would be exposed, if they have been neglected by the late occupier, might be found too heavy. Perhaps by a wilful mis-statement or an error in judgment on the part of the surveyor, the house may have been estimated at 519 520 appendix i. Ch. V. more than its real value ; or, lastly, some defect in the original title may be discovered. In any one of these cases an attempt to resell the property would occasion loss. Art. 71. — Now these contingencies may in a great measure be averted by the selection of an efficient committee, and of careful and respectable officers. An excellent arrangement exists in a society at Carlisle, by which those duties which are usually performed (or neglected) by the committee, are distributed among a series Of separate officials. The com- mittee consists of six, and undertakes the general manage- ment. Four money-stewards are appointed to attend the receipt of the money, and to be responsible for its being duly accounted for. Four inspectors, also to examine the securities prepared for advances. No member is liable to serve two of these offices at once. The usual system, however, is to confide the whole manage- ment and supervision of the society's affairs to one commit- tee, who are assisted by a solicitor, a surveyor, a manager, auditors, arbitrators and trustees. We proceed to make a few remarks on the duties appertaining to these several offices : — First. As regards the solicitor, who examines the title of the property. This branch of law business, which is techni- cally called " conveyancing," is one of great intricacy and difficulty, and requires peculiar skill and experience in the person who undertakes it. The title-deed to property often much involved, or present flaws and deficiencies which can only be detected by searching and patient inquiry. On the other hand the prosperity of a building society, the security of its members during the continuance of a. mortgage, and the subsequent undisturbed enjoyment b}^ the borrowers of the property purchased, depend solely and entirely upon the validity of these titles, and the correct appreciation of the property they represent. For these reasons, the selection of a competent solicitor is one of the most important duties which belong to the directors of the society. The person chosen should possess both experience and taienJ ; be should be ;i man of integrity and firm principle, incapable alike of being influenced by motives of interest or feelings of private friendship; and, besides these indispen- sable qualifications, he should, if possible, in common with the other officers of the society, be possessed of a good con- lierf ion. A i.t. 72. — -To secure the services of ;i person thus qualified, an adequate and Liberal remuneration must be offered, in- stead of the insufficient Ices which are sometimes tendered by Art. 75. ON BENEFIT BUILDING SOCIETIES. 521 building societies to their solicitors. The recompense should be proportionate not only to the actual value of the work- done, but also to the heavy responsibility attached to the office which they hold ; for, should the society sustain any loss through the inaptitude or carelessness of its solicitor, he is legally liable to make good the deficiency. Examples of this will be found in our chapter of law cases, under the title Solicitor. Art. 73. — Besides the necessity of offering an ample re- muneration to the solicitor of a building society, it is also essential that the amount of his fees, whatever it be, should be fixed beforehand, at the time of his election to the office. Art. 74. — 2d. The Surveyor of the society stands next in importance to the solicitor, his duties being attended with great difficulty, and considerable experience and judgment being requisite to enable him to form anything approaching to an accurate estimate of the pecuniary value of property. This value may depend upon several varying conditions. The tenure by which the property is held may be freehold, copyhold or leasehold ; in the latter case the number of years yet unexpired in the lease must be taken into consid- eration. The neighborhood in which the property is situ- ated may be likely to rise or fall in public opinion. Any estimate, calculated on the amount of rent actually paid, is little to be trusted, as attempts are not unfrequently made to mislead the surveyor by letting the property at a nomi- nal rent much larger than is actually paid for it. The surveyor, therefore, must not only be able to esti- mate the materials and cost of erection, but he must be well acquainted with the locality in which he is employed, and he must have sufficient experience to enable him to detect the artifices by which the vendors of property en- deavor to exaggerate its value. The false estimates, which are sometimes productive of so much loss to building societies, are not always the fruits of incapacity or inexperience. Cases have occurred of com- pacts between the surveyor and the vendor or the purchaser of property, or even some officer of the society, to share be- tween themselves the profits of an unfair valuation. . To guard against the possibility of such fraudulent prac- tices as these, a man of high moral integrity should be chosen ; and he should, as well as the solicitor, be liberally remunerated for his services. Art. 75. — Several expedients have been adopted, with the view of obtaining a check on the estimates of the surveyors of benefit building societies. It has been recommended that they should be paid out of the ordinary funds of the society, 522 appendix i. Ch. V. instead of by the borrowing members individually, so as to destroy any reciprocity of action or feeling between them and the mortgagors of property. Some societies appoint a survey committee to act as a check between the surveyor and purchaser, and a regulation has been proposed to pre- vent any subsequent transfer of property from a member to the surveyor, or to any individual of the survey committee. All these may be useful as auxiliary measures, but the necessity for them will be much diminished by a previous examination into the character of the person employed. Art. 76. — 3d. The Manager. — We have placed the solicitor and the surveyor of a society first in importance on the list of its officers, because we believe that, provided they are unex- ceptionable, and the manager be an honest, intelligent, and active man, little more is wanting to carry on with advan- tage an institution formed on a correct basis as regards its rates of subscription. It is, however, essential that any person proposed as a manager should be thoroughly ac- quainted with the fundamental principles of compound interest, and the practice of tables relating thereto. Much mischief and inequitable dealing has occurred in several of the existing societies, from the ignorance of their managers on that subject ; and it would be well if some regulation were enforced requiring that every person who intends to become the manager of an association in which the savings of the poor are engaged, should first obtain from competent persons a certificate of his qualifications for the office. Since not a little depends on the zeal and attention with which the manager performs his duties, it is but reasonable that he should be paid as his exertions demand. Experi- ence has long shown that it is a sorry and false economy not to give an adequate remuneration to men who superin- tend the affairs of important institutions. Art. 77. — One duty of the manager must specially be mentioned. Be should make himself perfectly master of the rides of the society, and the bearing of each clause upon the various matters of business, which he will have to sub- mit, from time to time, to the board of directors at their periodic meetings. It cannot be expected that the trustees or directors should be as cognizant as their deputy of the practical effect of regulations, which they meet- only at intervals to carry out; the responsibility therefore rests, very properly, on the manager, and that he should be awa re of t he dul ies of office, ol herwise his society may fall intol hose posit ions of difficulty and even Litigation, from the evil effects of w Inch many insl it ut ions have greatly suffered. Aim. 7". 1th. The Auditors of the society occupy also Art. 80. ON BENEFIT BUILDING SOCIETIES. 523 very responsible situations. The members entirely rely upon their careful examination, from time to time, of the accounts and balance sheets. Not only is it their duly to see that correct vouchers are produced corresponding to the items of expenses and receipts, but they should examine strictly into the formation of the annual or more frequent balance sheet;, purporting to show the pecuniary position of the society at the time of audit. Upon the faith of the statements contained in these balance sheets, it is customary for the directors of the institution to found their report of its progress. By erroneously placing sums to the credit of profit, which are not such in reality, subsequent loss has been created. [See the following chapter.] For this reason it is of urgent necessity that the auditors should be careful and experienced persons, well versed in the practice of book- keeping and the calculation of interest. In Part 2 of the present work relating to Local Enterprise Encouragement Associations, we discuss at length the whole system of audit in public companies, and recommend a more efficient inspec- tion as necessary for the prevention of fraud, and for apply- ing a speedy remedy to defects of management. The syst< m we there advocate is equally applicable to benefit building societies, and its adoption would be found of great advantage. Art. 79. — 5th. The Arbitrators. As to these officers, see our legal chapter under the heading Arbitration. Art. 80. — The Trustees of the society, though last on our list, in reality are the most prominent, if not the most active of its officers. ^\Ve may judge of this from the fact of their names being so frequently paraded as evidence to the public of the general respectability of the association, and from the popular impression that they are numbered amongst its responsible officials. The high and recognized standing of many trustees leads us to wonder at the read- iness with which they accord their names to uncertain themes, and their being so unmindful of the injury likely to be caused by their imprudence to the public at large. 1 To correct this evil, a knowledge of the usual duties of their position, we are confident, is alone necessary. A slight degree of watchfulness, exercised in a properly constituted association, will protect them from sharing in the reprehen- sion that otherwise would be justly due to them. As trustees of the society they should insist upon a strict ad- herence to the rules established for its government and also 2 upon security being given by those officers, who act as recipients of the members' money. 1 See Art. 42, page 23. are told in this work, which may 2 Benefit building societies, we be considered the grammar of the 524 appendix i. Ch. V. Art. 81. — Turning from the officers of the society to the de- tails of its practical working, we shall next examine several points respecting which there is considerable difference of opinion ; even among persons who are most experienced in building society transactions. With reference to the mode of granting advances to members, when there are applications for loans exceeding the amount of money which can be lent, three plans exist : viz., either by bidding, rotation (that is, seniority on the list of applicants), or by ballot. The two first appear to present more objections than the third, although it is ex- tremely difficult to decide what system can be adojited as likely to be entirely free from inconvenience. Art. 82. — The plan of determining by bidding who is to have the preference for an advance, consists of putting the sum proposed to be lent, up to auction among the members, and in finally allotting it to that person who offers the highest discount for it. This may be explained by an ex- ample : In a 10 years' society, suppose there is a sum ready to be advanced. The chairman puts up, say, one share of £120, and inquires what discount will be allowed for it. The members present hand in written biddings to him, and he declares the highest discount offered ; upon which the bid- ding is commenced a second time, and the result is again declared ; and, finally, a third trial is made, and the advance is allotted to the member who has offered the largest dis- count. By this plan members who had no intention to borrow, have had the power of raising the discount offered, by bid- ding during the first and second trials and abstaining the third time; the profits derived by the non-borrowers in- creasing with the magnitude of the discount obtained. An attempt has Ween made to remove this objection by causing the bidding to be made by word of mouth, as at a public auction, and by only allowing one trial. The system of bidding, however, may still cause borrowing members to obtain advances on most inequitable terms, unless a limit be phucd to the price, which they can offer. Cases contin- ■iii. are mainly intended for carry on their duration beyond the the benefit of persons of very period specified. There must be moderate means; and yet their security for the intermissions of < i h transactions are nol upon the those who are in any way con- footing of the public respectabil- cerned in handling the money of it y, which gives security, as for in- the company, or the wist lom which Stance in a hank. This is the first t he plan may he conceived will be point to be considered; for even no guarantee against ruinous loss. ih" wild miscalculations pointed Chambers's Edinburgh Journal — oul in M.nie terminating societies Extract from Review of our Treat- will merely involve partial Loi 3, or ise on Building Societies. Al't. 86. ON BENEFIT BUILDING SOCIETIES. 525 ually occur, where discounts, for £120 shares, are given as high us £70 and even £80 in the first year. By this means the borrower receives only £50, or even £40, at the begin- ning, in lieu of £120, the full amount of the share at the end of the society. And as be has to pay 14s. a month, for 10 years, or £8 8s. 0d. a year, his advance costs him considerably over L0 per cent, rate of interest. Art. 83. — It is necessary, however, to caution the societies which adopt the bidding system, or indeed any system by which a large discount or commission or premium is de- ducted from an advance at the time it is made, against rep- resenting the amount so deducted as immediately realized profit. The only light in which it can be properly viewed, is as a fund for increasing the interest to be received by the society on the loan, and so providing an extra protective margin on the future repayments against loss on the security. For example, if a loan nominally of £100 be granted at five per cent, for 10 years, and a discount of £4 14s. Od. de- ducted, the rate of interest realized by the society on the actual money advanced is 6 per cent. Again, if the rate of interest nominally charged be 1 per cent, and the dis- count £8 12s, Od. the interest actually realized is 9 per cent. Art. 84. — Between the rotation or seniority systems and balloting it is difficult to make a choice. By the first a member puts his name down on the list of applicants, and waits his turn for an advance. If the societ}^ has been some months in existence when he joins or wishes to borrow, he may have to wait a considerable time before he obtains the loan he desires. Art. 85. — By the balloting plan, the names of all the ap- plicants are placed together in a ballot box, and one is drawn out by lot, to whom preference is given. To this last arrangement the modern societies seem to incline, because, without the enormous losses consequent on the bidding system, and the delay certain to attend that by rotation, each of the borrowing members individually has a chance of being fortunate enough to obtain the first right to an advance. As the names are drawn out of the ballot-box a list is formed in the order of which the loans are to be granted. If there be not money enough to suit all the applicants at once, those members whose names remain on the list have preference at the next advance before any subsequent ballot, provided they have been six months in the society. Art. 86. — It has been imagined that the system of ballot- 526 appendix i. Ch. V. ingis not legal, inasmuch as it might be considered a species of lottery. Such an impression is entirely without founda- tion, since the ballot is merely introduced in a permanent building society for the simple purpose of collecting for an individual preference the names of the members, who desire to become borrowers and receive advances, for which each and all have to pay after the same rate of subscription and interest ; no favor in respect of repayments being obtained by any. The ordinary lotteries were very properly prohib- ited from very different motives, because they encouraged a system of gambling, by which one man was made rich, while his less fortunate rivals became impoverished. Is o analogy exists between the two cases. If the bidding or rotation plan be preferred, there would be found no difficulty in ap- plying either to a permanent building society, but a clause should be introduced to obviate too great improvidence on the part of competing borrowers in the former case, or the disheartening delay of the latter s} T stem. Akt. 87. — With respect to the important question, how the surplus bonus to investing members should be ascer- tained and divided, errors of a grave character are frequently committed by societies. It appears to be thought by many that when a valuation has been made of the future repay- ments remaining to receive from the borrowing members, the whole of the surplus shown may be taken to be realized profit, and alloted to the investing shares accordingly. If any portion is reserved to a guarantee fund, that portion is frequently fixed at a very small amount, such as £100 or £200. The necessity of ample and liberal reserves, is one which practical advisers find the greatest difficulty in en- forcing on the managing bodies of building societies. Every estimate of the present value of the mortgages as- sumes necessarily that the repayments will be punctually kept up, and until that has been proved to be the case by the complete discharge of the securities without loss of the society, the surplus profit on the transaction is not, in point of fact, realized. If the whole of the calculated surplus, therefore, be divided, and the members, who were in the society when the mortgages were granted, complete their shares and receive their bonus, then should loss subse- quent ly arise on those mortgages it would have to be borne by the members entering utter they were granted, attracted probably by this fallacious estimate of profit. The amount of reserve to be deducted, before an actual division of prof- it, must be determined in each case by the circumstances of the society, ;ind the Length of time the several mort- gages have still to run, but to divide profits without mak- Art. 90. ON BENEFIT BUILDING SOCIETIES. 527 ing an ample reserve for contingencies of loss, is a highly dangerous proceeding. Art. 88. — In the general conduct of the society it ought to be borne in mind that, at its commencement, a liberal yet careful outlay is requisite, to give due publicity to its principles in the districts over which its operations are pro- posed to extend. The preliminary expenses may perhaps be large in amount, but where they have been judiciously in- curred, they are sure to be amply repaid by the future ex- tent and importance of the institution. In order to effect legitimately and advantageously the main object of benefit building societies, care should be taken that the personal in- terests of no individual member are sacrificed by the adop- tion of any unjust regulations which may have been intro- duced for the special advantage of another. As the chief aim is to provide a home for those who otherwise might not be in circumstances to obtain it, the amount of avail- able funds during each year should be so apportioned as to supply the greatest possible number with advances. Where a member has pecuniary means of his own, he ought readily to apply it towards part of his purchase, so that his less fortunate neighbor may participate to the fullest extent in the assistance which the society can afford him. Again, there is in general less spirit of speculation on the part of a borrower, who intends to occupy the house himself which he desires to buy, and it is found by experience that more substantial property is offered for security in such cases. Art. 89. — It is desirable that no meeting of the society should ever be held at any tavern or public-house. The members may save much money by the adoption of this rule. They may do more : they may deliver themselves from the temptation to form bad habits of intemperance and useless expenditure which, to view them in no worse light, well nigh counterbalance all the advantages to be derived from these institutions. Art. 90. — The Rules should be framed by persons well versed in the principles and practice of benefit building societies, so that the advantages of both sound and new features may be secured. All such provisions as experi- ence has proved to be productive of loss or inconvenience, must be excluded. The set of rules in our Treatise on Copy- holds are applicable to the proposed permanent plan, which we have prepared, of a building-society, and may be adapted to the circumstances of particular localities. * They have been carefully modified, since the publication of our first draft set in 1847, by the results of uninterrupted experience, 528 APPENDIX I. Ch. V. and by valuable suggestion communicated by the certify- ing barrister for England, Mr. John Tidd Pratt ; and we re- commend them as providing a sound basis for any society, although we are far from believing that they should be adopted, without modification, as lifted to every part of the country. Airr. 91. — The promoters of new societies should carefully abstain from engrafting corrections upon the draft rules in question which their inexperience may prevent them from perceiving might have the effect of utterly destroying the connected link of principles by which the various clauses hinge upon each other. That this caution is not unnecess- ary, we may mention, by way of anecdote, that one of the most flourishing societies at present in Middlesex had to go through the expensive operation of a revision and fresh reg- istration of its clauses, after a great number of copies of its prospectuses and rules had been printed ready for circu- lation. This arose from the promoters having adopted the general characteristics of our first draft set of rules, upon which they had made such fanciful alterations that the sys- tem in their hands became a chapter of inconsistency ; and they were put to expense in retracing their steps, which in great measure might have been obviated by a more legit- imate proceeding at first. Aim. 92. — Particular care should be taken in the rules to ddine accurately the method of distributing bonuses out of surplus profits among the members. In many societies the rules relating to profits are drawn so carelessly as to give rise to much dissension and dispute between the members as to the interpretation to be placed upon their provisions. It is the more important that care should he taken on this point in the first instances ; that there is difficulty in afterwards altering a rule relating to profits where vested interests exist. Aim. 93. — The directors should be cautious not to offer too much discount on shares paid in advance. It may be safe fco hold out a promise of accumulations from interest, by the end of ;i term of years, at even 5 per cent, or more; hut it. does not- follow that it would be equally so to allow 5 or 4& per cent, discount on money tendered in advance. The distinction is obvious : In the one case, the undertaking is simply to give the result of the interest after it has been realized; in the other, the equivalent is parted with at once ;iik1 a grave responsibility unnecessarily incurred of so in- vesting the money received ;is to recover the discounter forestalled interest) paid in advance. CHAPTEE VI. THE BALANCE SHEETS OF BENEFIT BUILDING SOCIETIES. Articlk 94. — We have mentioned before, that it is cus- tomary for all building societies to produce, once a year at least, a balance sheet relative to the state of their pecuniary affairs, which is certified by the auditors as correct, and generally concludes with an estimate of the improvement in the value of the shares, attained by the operation of the preceding year. It is evidently of the greatest importance that such statements should be accurate, for, if a fictitious amount of profits be declared, the directors, not being aware of the error, are induced to make a corresponding augmen- tation in the entrance fee, to be required from any one Avho may subsequently desire to join the society, and to partici- pate in the supposed profits ; the effect of which would be to deter persons from entering, and the scope of the asso- ciation would be curtailed. The existing members also would conceive a false impression respecting the pecuniary value of their shares ; and, if any of them should desire to withdraw from the society before its termination, they would expect, and the directors might be led to pay to them, a premium equivalent to the profit declared, which if it be overrated must be prejudicial to the interests of the general body of shareholders. Considerable sums are in this manner frequently paid away in the early stages of the society under the name of bonus, which create an irrepara- ble deficiency in the accumulated funds at the epoch of their intended termination. In a variety of cases, which have come before our notice, this mischievous circumstance has occurred, and has been found to have produced a most un- favorable effect on their financial position. 1 Moreover, many members who might be disposed to seek for advances imagine that, if so large a profit can be made so soon, they surely would have to pay too high a rate of interest for the loan desired. They become consequently dissatisfied and do not borrow. Nor is the pernicious effect of these erroneous 1 The case is similar in its effect itors, but who by giving 20s. to to that of a bankrupt tradesman, some of them at first, leaves but whose assets would enable him to 10s. in the pound to those who are pay 15s. in the pound to his cred- paid afterwards. 34 529 530 APPENDIX I. Ch. VI. estimates confined to the members of the society in which they occur. The false experience and superficial success thus created are quoted by the promoters of new associations formed on the same scheme, and serve both as an excuse for copying it, with all the errors it contains, without fur- ther inquiry into its safety or practicability, and as a means of attracting members eager to participate in similar advantages. Art. 95. — Such are the evil consequences attending an inaccurate statement of the position of a society at the end of any year ; and yet, in many instances, the balance sheets contain mistakes equally important with those which are found in the rules and rates of subscription. The main source of error consists in the practice of in- serting the whole nominal amount of a share, for instance £120, as having been lent in cash to a borrowing member, when probably he has only received £55 or £60. This is obviously incorrect, since it matters not what is the nominal value of the share, but merely what present sum in money has actually been advanced upon it, in lieu of the full amou nt, which the shareholder would otherwise be entitled to claim at the close of the society, and for which advance he has to pay a monthly annuity for a certain number of years. Art. 96. — In general, the only profit which can be appa- rent in the annual statements, is that resulting from the in- terest already obtained through investing the subscriptions in loans; and, as such, is merely what was assumed as prob- able in the fundamental calculations. By the accumulations of interest year by year the expected amount of the shares can alone be realized, and the yearly profit thus produced is not a matter of congratulation as if it were unexpected, but simply the means by which the suppositions forming the basis of the society are rendered true. Hence, if profit at the end of any year be shown, it cannot be carried to the credit of any but the investing or non-borrowing members, who are making their monthly payments in the hope of receiving, at the end of a certain number of years, the promised accumulation of their subscriptions, and compound interest thereon, which, together, are represented by the share they hold. The borrowers, having cancelled their shares by the loans obtained, are not interested in or enti- tled to any portion of the profit or interest realized. Aim. 97. The question, however, may be said to present some difficulty of convict ion, as it, is frequently objected by borrowers that as, in ;i terminating society, they are exposed to participate in any losses which may affect its Art. 99. ON BENEFIT BUILDING SOCIETIES. 531 duration, it would be but fair that they should also share in the pecuniary prosperity of the association. To this, which is but another proof of the evil of high-flown balance sheets, it can be only answered that, as they have received their shares in advance, and frequently on very favorable terms, they should not afterwards claim a part of the profits, by which alone non-borrowers can expect to receive an advan- tage from the society equivalent to that already secured by the borrowers. Moreover, practically, the borrowers are greatly benefited in the end by a non-participation in the annual profits; inasmuch as the more rapidly the unad- vanced shares improve in value or towards completion, the sooner will the society arrive at its termination, and the sooner they will be entitled to cease their payments, and to have their deeds returned to them indorsed with the usual receipt. Art. 98. — The plan, hitherto adopted, of making a balance sheet serve to give an estimate of the profit annually re- alized on the shares, is productive of the greatest confusion. The terms Dr. and Cr. tend to mislead, if the figures under their head are considered relative to profit or loss expe- rienced. A balance sheet merely supplies information as to the items of money received, and the mode in which such receipts have been disposed of. It can express no opinion as to whether any advantage or disadvantage has been derived from the way in which the money has been laid out, but simply conveys the facts as they have occurred ; and, as such, it is useful and necessary for the protection of the shareholders, because it shows clearly how the pecuniary affairs of the association are managed. In the other point of view, it is not of much value, as something more is re- quired than a mere statement of money received and money spent or invested to attain a satisfactory knowledge of the position of the society, as regards profit and loss incurred. When the auditors see under the head of Cr. a heavy item for expenses of management, it does not occur to them that so much money is sunk and gone from the society for ever ; the money is accounted for, that is all. Art. 99. — To arrive effectually at the actual value of the shares, an annual valuation of quite a different character should be made, on the same plan as that adopted by life assurance companies ; by which not only the sums received and then invested or spent, or paid out on withdrawal, are considered; but the present value also is estimated of the profit to be expected from the advantageous nature of the society's investments in the advances to the borrowers, rela- 532 appendix i. Ch. VI. tively with the present value of its engagements in respect to the shares held by non-borrowers. This is not the busi- ness of a mere balance sheet, but must be effected by a correct mathematical calculation, in which the expected duration of the subscriptions, and the interest actually real- ized, are taken into account. Art. 100. — This distinction has been overlooked by several writers in periodicals treating of this subject, who, in re- viewing balance sheets, appear to believe that, in order to ascertain correctly the yearly profit or loss of a society, it is sufficient to form a profit and loss account, placing on the one side the various items of receipts from entrance fees, redemption fees, fines, etc., and on the other side the expenses, and to consider the balance, whichever it be, profit and loss, as representing the true value of the shares. The same rule being applied indiscriminately to every descrip- tion of benefit building society, without any reference to the essential consideration as to whether the rates of invest- 'ors' subscriptions or borrowers' repayments are adequate to the originally promised results. The members, however, can feel no security respecting the actual progress of the society and their own future liabilities, unless an accurate estimate of the profit and loss experienced by it be made from time to time ; and we would strongly impress upon them the necessity of insisting on the production periodically of a complete valuation of the position of the society, dis- tinct from the ordinary balance sheets. [See Schedule C, Art. 103.] Art. 101. — Having mentioned the correct method which ought to be adopted, we will proceed to give three speci- mens of balance sheets, taken at random from a number of similar reports, for the purpose of showing how they have hitherto been prepared, and to draw attention to the inju- rious effect of exaggerated declarations of profit. Art. 1<»± — It is essential to bear in mind that the mischief produced by an erroneous view of the profits of the society is even more serious in the earlier stage of its existence than afterwards, as the loss created by paying away the money in shape of bonus to persons withdrawing is increased with 1 lie number of years yet remaining of the proposed dura- tion of the association. For example, suppose £500 be de- clared by way of profit at th<' end of the third year of a thirteen years' society, which is realizing an average rate of interest, of 7 percent., since money doubles at 7 per cent, in ten years, the 6500 profit, if paid away when declared, would cause a deficiency of £1,000 at I he end. As no evil is gen- erally without a remedy, so immediate steps may serve to Art. 102. ON BENEFIT BUILDING SOCIETIES. 533 restore the association to its sound position. We, there- fore, urge upon the directors of all such societies to have their last balance sheet carefully readjusted, and the basis of their subsequent statements settled upon correct and intelligible principles. The matter presents comparatively little difficulty, and a downward course of injudicious pay- ment of supposed profit out of capital may be stayed. They would thus be enabled not only to ascertain satisfac- torily, from time to time, the precise value of the unad- vanced shares, but also to determine the probable duration of the borrowers' mortgage repayments ; a point in itself of vital importance to that responsible class of members. BALANCE SHEETS. No. 1. Extract from the first report of the Society Shares, £120 ; monthly subscriptions, 10s. per share : " The directors have to congratulate the members on the success which has attended the operations of the society during the past year — a success which verifies the correct- ness of the prospectus issued at its formation. " The balance sheet shows the superior advantage of building societies over other modes of investment ; for if the amount received had been placed, say in a savings bank, the profit would have been about £43, or Is. 104d. per share ; while, by the legitimate operations of the society, the profit secured has amounted to £2,738 18s. 8d., or £6 0s. 9-kl. on the £6 per share paid ; making the present value £12 0s. 9|d." Copy of the balance sheet annexed to the report, given verbatim : Dr. Entrance money £70 2 6 Subscriptions in advance 1 Subscriptions for twelve months 2,530 10 Forfeited shares 2 Fines 12 1 Transfer 9 5 Postage 2 11 Interest 21 12 10 2,649 2 4 1,016 5 Premiums (or discount) on 33 (£120) shares, taken up Premiums on 12+ shares, not taken up, but for which the society has funds 764 10 2,680 15 53-± APPENDIX I. Cll. VI. ARREARS. Subscriptions 190 10 Fines 17 16 Interest 2 Postage 1 1 6 211 7 6 £5,541 4 10 Cr. By formation expenses, including enrollment of rules and deed boxes £25 14 2 Manager's salary 50 Postage 5 12 81 6 2 By mortgage property 480 240 " " 240 " " " 2,040 " " " 960 3,960 By arrears of subscription £211 7 6 Premiums 764 10 Casb at bankers 524 10 Cash in manager's hands 4 1,499 18 8 5.459 18 8 £5,541 4 10 To balance in favor of the society brougbt down £5,459 18 8 Deduct subscriptions on 453^ shares, at £6 per share 2,721 Net profit realized £2,738 18 8 to £6 9i p. share Cash paid 6 The present value of each share £12 9£ The directors in the above congratulate the members on the success of the society, which they affirm is manifested by the profit, I'o its. Did. per share, realized in one year beyond the I'O year's subscription paid, a result equivalent to more than loo per cent, interest for the money. This statement is, however, not correct; and the error arises from the whole nominal a/mount of the 33 advanced shares, or £3,960, being entered to the Cr. as having been lenl in mortgage, whereas in reality the difference, £2,043 L5s. Od. (between 63,960 and the discov/nt or premiums, 61,916 5s. 0d., given by the borrowers for the loan), is all that has been advanced. Moreover, the item £764 10s. 0d., respecting the shares not taken up, but for which premiums have nominally been given, has obviously nothing to do Art. 102. ON BENEFIT BUILDING SOCIETIES. 535 with the business of the past year, and ought not have ap- peared in the balance sheet. These conditions change the result. The following is a copy of the preceding balance sheet, arranged as it should be, viz., by placing only the money actually received or due for arrears on the one side, and money actually paid on the other : Dr. Entrance money £70 2 6 Subscriptions in advance 1 Subscriptions for twelve months 2,530 10 Forfeited shares 2 Fines 12 1 Transfers 9 5 Postage (received from members) 211 Interest 21 12 10 2,649 2 4 ARREARS. Subscription 190 10 Fines 17 16 Interest 2 Postage 1 1 6 211 7 6 £2,860 9 10 Cr. By formation expenses, including enrollment of rules and deed boxes £25 14 2 Manager's salary 50 Postage (year's expense to the society) 5 12 By 33 shares taken up, value at £120 each 3,960 Less the discount (or premiums) 1,916 5 81 6 2 By arrears of subscription £21 1 7 Cash at bankers 524 10 Cash in manager's hands 4 2,043 15 735 8 8 2,779 3 8 £2,860 9 10 To balance in favor of the society brought down £2,779 3 8 Deduct one year's subscrijitions on 453^ shares, at £6 per share, and the £1 in advance 2,722 Difference £57 3 8 "Which, divided among the number of investors, shares, or those which have not been advanced, will give the dividend apparently realized per share for the past year. But the number of unadvanced shares is 453 14- less 33, or 420 1, and £57 3s. 8d. divided by 420 | equals 2s. 5d. nearly, Avhich is the result of the past year's operations of this building society, as far as the above debtor and creditor 536 appendix i. Ch. VI. account is concerned, and entitles the investors to receive 2s. 5d. per share at its termination, in addition to the £6 paid by each. The true value of each share can only be ascertained by the method described in the preceding pages, in which would enter the various considerations deduced from the particular nature of the society. No. 2. The Mutual Association. Original entrance fee, 2s. 6d. Monthly subscriptions, 10s. Redemption, 4s. per share of £120 each. In the third annual report of this society, the directors state that 85-j shares have been advanced during the last year, which, added to those in the two previous years, make a total of 261i shares, on account of which securities have been lodged with the society. " Since the auditing of the accounts, 5-J shares, not in- cluded in that number, have been further advanced, which will make 267 out of 635 shares subscribed for ; and the directors are under engagements to advance 20 shares out of the fourth year's capital." " The present entrance fee upon new and additional shares is £6 ; but upon shares being taken to complete a purchase it is only £2 2s. 0d., at which sum it was agreed they should con- tinue until after the shareholders' meeting in January last." " The minimum premium or discount upon purchased shares has been fixed by the directors at £55 per share for the fourth year. Summary of the Financial Statements as Appended to the Report ; General Account for the Third Year. Dr. To cash as per last account £ 8329 17 1 Subscriptions, third year 3650 16 6 1 Interest, entrance fees, fines, rules, transfers, etc 590 7 Forfeit on purchased shares 60 1 Arrears of subscriptions, fines, interest, etc 100 16 Cash advanced as a loan 4085 Premiums as per last report 10626 19 5 Premium, third year 4938 17 6 £82,882 7 1 l The practice of throwing B6V- is unfair, and may justly become eral items together to accounl for the subject of animadversion o large a Bum as £500, as the third among the shareholders, line of t he above debtor accounl , Art. 102. ON BENEFIT BUILDING SOCIETIES. 537 Cr. Expenses, first and second year 204 113 Interest on loans (2 years) 65 4 176 shares advanced, first and second year 21120 851 ditto, third year 10260 Management Expenses third year 77 18 2 Interest on loans 183 4 4 Ground rent and insurance 11 12 Arrears, as above 100 16 Cash with bankers 358 12 2 £32,382 7 1 Profit Account. • Dr. Expenses for three years 282 9 5 Subscriptions, ditto 11361 9 Interest, ground rent and insurance 259 9 6 Arrears 100 16 Loans 4085 Cash with bankers 359 12 2 Profit and bonus 15933 11 £32,382 7 1 Cr. By account as above £32,382 7 1 £32,382 7 1 Showing : Profit and bonus brought down, divided between 635 shares of £120 each 25 2 Subscriptions paid 18 Estimated portion of each share cancelled in three years £43 2 The above account contains various errors, and the items are injudiciously mingled together. The profit £15,933 lis. does not in reality exist, as it is in great measure an imag- inary advantage, supposed to have arisen from the discount given by borrowers on their shares, and, as such, ought not to have appeared in the balance sheet. We will not examine what would be found to be the ac- tual value of shares, supposing a proper calculation made, but simply remark, that the above furnishes ample evidence of the deficiency arising from the expenses, which must exist towards the epoch of a society's termination, if they so considerably diminish, even in three years, the interest realized on the investor's subscription ; for the receipts from interest and fees, including the forfeited shares, altogether only amount to £650 0s. Yd., of which £541 18s. lid. has been absorbed by the expenses, leaving £108 Is. 8d. to be divided between 368 unadvanced shares, which is about 5s. 538 appendix i. Ch. Vi. lOd. per share, and is all the interest obtained for three years' subscriptions on each. Such a result speaks for itself. No. 3. The Society. Original entrance fee, 2s. 6d. Present one, £1 per share. Shares, £120. Monthly subscriptions, 10s. Redemption fee, 4s. per share. In the first annual report the directors allude to the suc- cess which has attended the progress of the society : — " There are 113 members holding 2 Hi shares, and the total profits, after deducting expenses, amount to £1069 17s. 9d., being £5 Is. 2d. per share ; which, added to the subscription of £6 paid on each share, shows a profit of £11 Is. 2d. to be the progress made towards the realization of each share." The following are abstracts of the financial statements : — Dr. Cash Amount Subscriptions on shares £ 1258 10 Entrance and redemption fees, fines, rules, etc... • 60 13 9 £1319 3 9 Cr. Expenses ..." £66 14 9 Advances on 19i shares £2,340 Less premiums thereon 1,160 5 1,233 15 Balance with bankers 18 14 £1,319 3 9 Profit Account. Dr. To expenses £60 14 9 Balance or profit of the first year 1,069 17 9 £1,136 12 6 Cr. Premiums on V.)\ shares £1,106 5 Subscriptions and fines in arrears 11 13 6 1.117 18 6 Balance in banker's hands. . .- 18 14 £1,136 12 6 Profits brought down : 61,069 17s. 9d M divided by 211* shares, gives £5 1 2 Subscripj ions paid 6 Actual value of each share £11 1 2 The above result is fictitious in consequence of the dis- Alt. 103. ON BENEFIT BUILDING SOCIETIES. 539 count or premiums, £1,100 5s. 0d., given by the borrower on the nominal value of their shares, being entered as actual profit or cash realized. Instead of any interest having been produced by the last year's business, we find that the ex- penses have been entrenched on the receipts from subsc/'ij>- tions : For the expenses paid amount to £GG 14 9 Less fees, fines, etc., to be received in arrear GO 13 9 Leaving a deficiency of £6 1 which, divided among the 192 unadvanced shares, gives a deficiency of about T| per share. 1 Art. 103.— Schedule C. Form of Liabilities and Assets Account. Dr. 1. Outstanding accounts unpaid, viz £ £ 2. Loans and interest thereon due by the society, viz. . £ £ 3. To net subscriptions actually received upon shares (now actually in existence) of depositing or (non-borrowing) members, from the of 18 , to the 18 £ 4. To interest due thereon up to this date, and calcu- lated at per cent, rate of interest (being the rate obtained from the borrowers, or that prom- ised to the depositors by the rules) £ 5. To reserve for future expenses dur- ing years £ Total £ Cr. 1. By cash in hand, viz. : £...., £ £ 2. Value of property in possession, through default, if sold to produce assets £ 3. Arrears due upon existing mortgages, viz.: Repayment subscriptions £ Fines and fees £ £ 4. 2 By arrears of fines and fees due from the non- borrowers £ 1 Schedules A and B relate to the general business of the society. 2 The arrears of subscriptions due from non-borrowers must not be taken into account, as the society is only made debtor to them for the net subscriptions received. 540 APPENDIX I. Ch. VI. 5. Present value of future repayments on existing mort- gages calculated at per cent, rate of interest. . £. Total £. Balance £. The above has been prepared by me, , Chairman ) or Secretary, this of 18 , at J Schedule F. Return to be made for the purpose of a valuation of the amount due in respect to the unadvanced shares in force 18 . . z 2 u s E 'o a n u 3 o 'E 3 C rt . » C •£ O c 4) P 4 rt 1/3 O e 3 5 SUBSCRIPTION. 6 s o .&■§ ■Si 3 £ C rt O > c rt o.S >-*d •° s 3 p< 3 7 >- 3 o rt 2 s & P. B 3 O s s U the particular rule to be altered or added to may be proposed ; but no rule not men- RULES FOR BENEFIT BUILDING SOCIETIES. 545 tioned in such requisition, shall be in any respect altered or repealed, except so far as the same may relate to the sub- ject-matter of any rule so mentioned in the requisition. All alterations in or additions to these rules, shall be duly enrolled and certified. Art. 2. — In the construction of these rules, the word " share " shall apply as well to a fraction of a share as to a whole share; the word "month" shall be held to be a calendar month ; the word " year " shall mean the society's year, and every such year shall be taken to expire with the day of ; the word " board," or directors, shall mean the board of directors for the time being. The term " repayment subscription " shall be held to mean the sums or subscriptions periodically paid by members in dis- charge of their advanced shares ; and whenever any word importing the singular number or the masculine gender only, is used, it shall be held to include and apply to the plural number or feminine gender, as the case may be, and vice versa, unless there be something in the subject or con- text repugnant to such constructions. Art. 3. — If any question or dispute arise on the construc- tion or meaning of any of the rules of the society, such ques- tion or dispute shall be referred to the solicitors of the soci- ety, whose decision shall be final, except reference is made to arbitration ; and such decision shall be put into writing, and deposited with the secretary if required by the directors. XII. EXPENSE AND CONTINGENT FUND. Art. 1. — Every member, whose shares are not fully real- ized, shall pay quarterly, in addition to his subscription on unadvanced or advanced shares, the sums of per share, as a contribution towards a separate fund to be called " the expense and contingent fund." In case of non-pay- ment, the same may be charged upon the first subsequent payments of the member becoming due for his subscriptions on his shares, and deducted from the same, or treated, if not paid, as subscriptions in arrear. Where a member pays up the whole, or any portion of his shares in advance, and re- ceives discount thereon, the expense of quarterage for the whole of the time which it would ordinarily take up his share in full shall still be payable, and, if not paid, treated as a subscription in arrear, and as such be liable to the fines set forth in Kule XLIII. Art. 2. — All fines, contributions and fees whatsoever mentioned in these rules, except remuneration fees payable to the officers, shall be passed to the expense and contingent 35 546 APPENDIX I. fund ; and so also shall a deduction at £ per cent, per annum, from the amount of income derived from the repayment subscriptions of advanced shares. Akt. 3. — The general expenses of management and of periodical valuations and estimates, and any losses that may be incurred by the societ}^, shall be defrayed out of the ex- pense and contingent fund ; but if such expenses and losses be greater than the amount of such expense and contingent fund, the excess shall be borne rateably per cent, by the holders of unadvanced shares not realized, in proportion to the number of years the same shall have been in force ; but not by those who leave their realized shares as a deposit in the society's hands, and receive interest for the use thereof, pursuant to Rule XXVIII. The rate of contribution per share shall be settled by the consulting actuary, so that each share may be debited with the same, but the payment there- of may be deferred until the withdrawal or realization of the share. Art. -t. — At the end of the first three years, and every subsequent three years, a valuation of the liabilities and as- sets of the society, and of the expense and contingent fund shall be made by the consulting actuary ; and if, after all losses and expenses shall have been satisfied, and bonus under clause 32 set aside for the borrowing members, any surplus profit remain, arising from excess of assets over liabilities, the same shall be appropriated thus : — to a permanent guarantee fund, to meet future con- tingencies ; and the remaining among the holders of all unadvanced shares which are not yet realized nor in arrear for subscriptions and fines, in proportion to the number and amount of the shares they hold, and to the number of years such shares respectively have been in force, such bonus shall be paid when the shares are fully realized. No portion of the bonus shall be paid to unadvanced shareholders with- drawing previously to the realization of their shares, unless the withdrawal be compulsory, pursuant to Rule XXIX. 1 Art. 5. — After the society has been nine years in exist- ence, the members at a special general meeting summoned for the purpose, with the advice of the consulting actuary, may alter the above proportion in the division of surplus profits; and increase or diminish the amount of the per- manent guarantee fund. 1 In making a valuation, care mortgages, as the result would be should be taken not to use a with- doubly erroneous: the liabilities drawal table t<> measure the liabil- would be underestimated, and as- itv on unadvanced shares, nor a, sets would be overvalued, redemption table to value the EULES FOE BENEFIT BUILDING SOCIETIES. 547 MEMBERS. XIII. — ADMISSION OF MEMBERS. Article 1. — Members may be admitted into this society at any time, on making application to the directors in the form (A) annexed to these rules. Art. 2. — Every member, at the time of entering into the society, shall be furnished with a pass-book, containing a copy of these rules (for which he shall pay ), in which book his account with the society shall, at the termination of every year, be made up by the secretary. XIV. LOST PASS-BOOK. Art. 1. — Any person losing his pass-book will be supplied with another containing a copy of his account, on payment of a fine of over and above the cost of the book. Art. 2. — If any person other than the member to whom it belongs shall produce any pass-book, and represent him- self to be the member therein named, and shall thereupon withdraw or receive any money in respect of the account contained in the pass-book, neither the society nor any of its officers shall be held responsible for the same, unless notice in writing of the loss of the pass-book shall have pre- viously been given to the secretary. XV. PASS-BOOKS TO BE LEFT FOR AUDIT. Each member shall leave his pass-book at the offices of the society or of one of its agents, on or before the day of in each year, for the purpose of examination by the auditors, or in default thereof shall be fined There shall be delivered to him a receipt for his book, which we shall return on applying for the same at the annual meeting. XVI. QUALIFICATIONS OF MEMBERS. Art. 1. — The holder of a share or part of a share (unad- vanced or advanced) shall be deemed a member of this society. Art. 2. — At any time within, after the payment of the entrance fee by any person, the directors may decline admitting or continuing such person as a member; and notice thereof shall be given in writing to such person, and the entrance fee, and any other payment made to the society 548 APPENDIX I. by him, shall be returned or tendered to him by the secre- tary. Upon such notice being given, and payment or tender made to such person, he shall cease to be a member of the society, and the secretary shall strike out his name from the register book of members. Art. 3. — All shares on which the entrance fee only shall have been paid, shall be forfeited on the monthly subscription meeting next after such shares have been taken. XVII. REGISTERS OF MEMBERS, SHARES, ETC. Art. 1. — A register shall be kept, on which shall be entered the Christian and surname, occupation and place of abode, of every member of the society ; and as often as any mem- ber shall change his place of abode, he shall within give notice thereof to the secretary or forfeit for neglect. On such notice being given the alteration shall be entered in the register by the secretary, and all notice by circular shall be deemed duly given by the secretary by put- ting the same in the post office, at , addressed to the member according to the last entry on the register. Art. 2. — A register of every member of the society shall be also kept, in which shall be entered the number and numerical order of the shares held by him, the date of entry, transfer or cancelling of the same, and any other details deemed necessary. XVIII. MEMBERS MAT INSPECT BOOKS. Any member may inspect his account in the society's books during the time the books are open for the receipt of subscriptions, and any member may have a copy of his ac- count on applying to the secretary, after days' pre- vious notice in writing for that purpose, and the payment of XIX. — MARRIAGE OF FEMALE MEMBERS. Any female member who may marry, shall give notice in writing thereof to the secretary, and of the Christian and surname, place of abode, and profession or business of her husband ; and thereupon the shares of such female members shall be duly transferred into the name of her husband. Upon such transfer, the same fees and lines shall be payable as in other cases of transfer of shares. In case such notice as aforesaid shall not be given within one month after the marriage, ;i fine of per share shall be paid by such member to the society and ;i furl her fine of pershare For every additional month which shall elapse before the shares are duly transferred to the husband. RULES FOR BENEFIT BUILDING SOCIETIES. 549 XX. BANKRUPTCY OF A MEMBER. On any member becoming bankrupt, or making an assign- ment for the benefit of his creditors, or having any judgment or execution against his estate and effects, or if his shares or any of them shall be charged in favor of any person, by or through a judge's order, or otherwise, the assignee, execution creditor or person obtaining such charge, shall not by reason thereof become a member of the society, but shall be at liberty to sell or transfer the share or shares or interest of such member to any other person duly admitted a member of the society. Such shares shall, nevertheless, be subject to all the rules and regulations of the society to which they would have been liable in the hands of the member holding the same. XXI. LUNACY OF A MEMBER. Art. 1. — In the event of any member becoming lunatic or of unsound mind, no fines shall, during such lunacy or un- soundness of mind, be payable for arrears of subscription, or otherwise, on share or shares he may hold, but the committee or guardian of such afflicted member, legally ap- pointed, shall be entitled to withdraw the amount payable to such member in the manner prescribed in the rules for withdrawals. Art. 2. — In case no guardian or committee be legally ap- pointed, the board may direct payment of the amount to which such member would have been entitled on with- drawal from the society, to the person having the care of such member, at the expiration of three months after a request in writing, signed by such person, has been left with the secretary, upon evidence satisfactory to the directors of the lunacy or unsoundness of mind of the member being given, and upon such person giving such indemnity against all claims in respect of such shares as the directors think fit to require for the security of the society. Art. 3. — In case the afflicted member has received an ad- vance of shares, the committee or guardian having the care of such member may dispose of the mortgage property, or redeem the mortgage, and exercise any other privileges pertaining to the shares ; and in such case the transfer or re- demption fee chargeable by the society under these rules shall be reduced one-half ; provided, nevertheless, that, on application being made by the secretaiy in writing to some relative or interested friend of the afflicted member to see to the due payments of his subscriptions and other pay- ments, the full amount of all fees and fines that may there- after become due according to these rules may be enforced, 550 APPENDIX I. and the directors may then take the ordinary steps for the recovery of all arrear payments whatsoever, which may be then due in respect of the shares or mortgaged property of the afflicted member, and if requisite may proceed to a sale of such mortgaged property. XXII. DEATH OF A MEMBER. Art. 1. — Upon the death of the society holding shares, upon which no advance shall have been made, his legal personal representative shall, within one month afterwards, give notice thereof in writing to the secretary, stating the Christian and surname, place of abode, and profession or business of such personal representative, or of any other person or persons entitled to the shares of such deceased member, or in default thereof shall pay a fine of and upon such notice being given, the shares of such deceased member shall be transferred into the name of such personal representative, or other person or persons, and the same fees shall be payable upon such transfer as upon any other transfer of shares. In case such shares, or any of them, shall not be transferred as aforesaid, at or before the third monthly subscription meeting next after the death of such member, a fine of shall be paid to the society for every monthly subscription meeting which will elapse before such transfer shall have been made. Art. 2. — When the shares of the deceased member are transferred into the names of more than one person, the eldest in age only shall be entitled to vote. A bt. 3. — If no probate of will or letters of administration be produced to the directors at any meeting within three months after the decease of any member, the directors may, at or after the fourth monthly subscription meeting after such decease, pay or distribute the subscriptions paid by the said member to his widow or children, or next of kin, with any interest which may have been added thereto, pur- suant to these rules, provided the amount do not exceed £20; subject, however, to the same conditions as affect members giving notice of withdrawal, or as the directors for the security of the society may think proper to require from the parties receiving the money. SHAKES AM) SUBSCRIPTIONS. XXIII. — I'NAWVANCKI) SHAKES. Vltimate Value. A in [OLE 1.— The unadv.ineed sharesshall beof the ultimate Value of £ each, realizable by a monthly payment of RULES FOR BENEFIT BUILDING SOCIETIES. 551 in a period of years, and a month in a period of years, and also of such other amounts, and realizable in such periods of years, and in consideration of such payments or subscriptions as the directors from time to time deem fit. Akt. 2. — Each member shall pay an entrance fee of per cent, on the amount of his shares at the date of his sub- scribing for the same, and the subscription per share fixed by the board for and during the full term or terms in which the same may be realizable. XXIV. RECEIPT OF SUBSCRIPTIONS. All subscriptions for unadvanced shares, repayment sub- scriptions, fines, and other monies whatsoever, becoming due and payable to the society, shall be received only at the usual subscription meetings. All moneys so received at such subscription meetings shall be paid to the bankers of the society for the time being, and a book containing the banker's entries of money so paid, or the banker's receipt in lieu thereof, shall be produced at the next meeting of the directors, to be initialed by the chairman, as duly examined. XXV. CERTIFICATE OF SHARES. Each member upon subscribing for a share or shares shall be entitled to a certificate of such shares, specifying the number and amount thereof respectively, signed by three directors, and countersigned by the secretary, which certifi- cate shall be evidence of his title thereto. XXVI. PAYMENTS IN ADVANCE. The directors may allow interest, by way of discount, on subscriptions paid in advance at such rate (not exceeding per cent.), as they deem fit. XXVII. TRANSFER OF UNADVANCED SHARES. Any member may transfer his unadvanced shares to any person approved by the board, or to any existing member of the society, on payment to the society of all arrears, fines, and other payments then due, and of per share as a transfer fee. ]STo transfer shall be valid unless made in the form (B) annexed to these rules, and a proper record of all transfers shall be made in a book to be kept for that pur- pose by the secretary. XXVIII. WITHDRAWAL OF UNADVANCED SHARES. Art. 1. — Any member may withdraw his unadvanced shares on giving one month's notice, in writing, of his inten- 552 APPENDIX J. tion to do so to the secretary at any subscription meeting of the society, and leaving his pass book at the society's offices. Art. 2. — The board shall have full power, from time to time, to limit the number of shares that may be advanced in one month, but all prior application for an advance shall have priority over notices of withdrawal. Akt. 3. — In case any share is withdrawn, on which the member has been allowed interest for payments in advance, the directors shall deduct a proportionate part of such in- terest for the time not already expired (if any) in respect of which interest was allowed. Akt. 4. — Part of a share may be withdrawn and the re- mainder continue in force, entitled to the same privileges, and subject to the same conditions as the original share ; in which case a new certificate for the reduced amount bearing profits from the original date of the whole share) shall be issued. In like manner a part of a share may be transferred, and the remainder be retained by the original member. Such withdrawal or transfer shall be subject, how- ever, to the consent of the board, and to any regulations they ma} 7 make from time to time in respect thereto. Art. 5. — The following fees shall be paid upon the with- drawal of unadvanced shares, viz : — in the pound if the share be withdrawn during the first year after it shall have been issued, and in the pound if withdrawn during any subsequent year. [The amount of tin withdrawal fee should he determined by the special c'> mi instances of the locality.] Akt. 6. — Shares to be withdrawn (not wholly subscribed for) shall be paid out in rotation according to the order of the applicants on a list kept by the secretary for that pur- pose ; or if the directors should, from the number of appli- cations for withdrawal, think it desirable, then in such man- ner that each member may receive an equal proportion of his subscriptions paid in, so that all such members may be simultaneously accommodated with a portion of their shares. In cast; the expenses of the society, and any loss sustained by it, exceed the monies appropriated to the management and contingent fund, all withdrawn shares shall be chargeable with a due proportion (measured by number and amount) of such excess, according to the number of years such shares shall have been in Force; and this rule shall equally apply to members cancelling their unadvanced shares previously to their taking a loan from the society. Aim. 7. — In case of the death or insanity of a member before receiving an advance, and upon application of the RULES FOR BENEFIT BUILDING SOCIETIES. 553 wife, widow, or representatives of such member, she or they shall be entitled to a preference, before ordinary members. Art. 8. — Next after payment out of withdrawn shares of deceased and lunatic members, the persons holding unad- vanced shares realized by subscription for the term selected, shall have the preference, and shall, unless the directors decide otherwise, be paid out in rotation, according to the times at which the shares become realized, subject, however, to the aforesaid deduction for excess of expenses or losses (if any) ; and from the date of the realization until such pay- ment interest payable annually at a rate not exceeding 5 per cent, per annum shall be allowed to such members, on the amounts respectively due to them. Art. 9. — Subject to the provisions aforesaid, the sums payable on withdrawn shares, realizable in years (upon which all subscriptions and fines shall have been duly paid) shall be according to the following table : and where a member voluntarily withdraws his shares in course of a year, the sum set down in the tables at the close of the year previous shall be payable, with interest thereon, and also any monthly subscriptions subsequently paid ; and so in pro- portion for a fractional part of a share. {Here insert Withdrawal Tables.) The amount to be payable on the withdrawal of shares, realizable in other periods of years (if any), shall be deter- mined from time to time by the consulting actuary. [A very good principle to adopt in the constructions of withdrawal tables is that of an increasing rate of compound interest, so that members may have an inducement to abstain from withdrawing in the prospect of an increasing advantage by remaining members.^ Art. 10. — In every case of a member withdrawing from the society, all fees and fines due by him shall be deducted from the amount which he would otherwise be entitled to receive. Art. 11. — Shares in course of withdrawal shall be subject to such other conditions, payments, deductions and regula- tions as the directors determine, having reference to the capital, means, liabilities and general state of the aifairsand funds of the society, and the directors may reduce or ab- solutely waive the payment of the withdrawal fees provided for by clause 5 of this rule or may suspend the requiring payment of such withdrawal fees for any period they think expedient. 554 APPENDIX I. XXIX. — SURPLUS FUNDS. Art. 1. — The trustees may, from time to time, invest, pur- suant to 10 Geo. 4, c. 56, s. 13, any sums of money which the exigencies of the society do not call for the immediate application or expenditure of. In case a larger amount of money shall be at any time unappropriated and not applied for to meet advances or other claims than the board con- sider advisable so to invest, the directors, after giving notice of at least fourteen days prior to a monthly meeting, may cause the same to be taken by the investing members (not under notice of withdrawal, nor having received an advance), and the same shall be at once wholly withdrawn, or be taken by such members upon the security of mortgages in the usual w&y. Art. 2. — In case any member shall not attend to receive the same, and to give such acknowledgment of his share being paid off as the board may require, no further interest sh;ill be allowed on the amount standing to his credit in the books of the society. Art. 3. — In balloting for compulsory withdrawals each share shall be drawn separately, and no member holding- more than one share shall be liable to compulsory with- drawal of more than one, till every other member has with- drawn one, and in like manner if further compulsory with- drawals be necessary. ADVANCED SHAKES. XXX. ADVANCES OF MONEY. Art. 1. — Whenever the money in hand is, in the opinion of the directors, sufficient for the purpose, it shall be em- ployed in advancing the shares of those members whose subscriptions are not in arrear, and the order in which mem- bers become entitled to advances shall from time to time be determined by sale, the bidding to be by ticket, and the highest bidder to be entitled to the advance. Such sale shall take place at eight o'clock in the evening, to the exclusion of all oilier business. In case there be no bidding for the space of fifteen minutes, the members shall be entitled to an advance, without premium, in the order of their applying tor I he same. Art. '2. The paymentof the premium or premiums which a purchaser shall give for his share or shares may be secured to the society by the mortgage deed, and be made in any num- ber of equal monthly instalments, not exceeding to BULES FOR BENEFIT BUILDING SOCIETIES. 555 commence from the date of the purchase, and the purchaser shall be liable to the same fines and forfeitures for non-pay- ment of such instalments as are provided by Rule XL 1 1 1., in case of the non-payment of monthly repayment subscriptions. Akt. 3. — The advance shall be for terms from to years, repayable by monthly or quarterly contri tions, covering principal and interest, at the rati Iter specified, or at such other rates as the board, acting under the advice of the consulting- actuary, from time to time direct. {Here insert the Repayment Table.) Art. 4. — Any member not being in arrear for subscrip- tions or fines (and having made payment during at least three months on his shares), shall be eligible to bid or apply for an advance, not exceeding the realizable amount of his shares. Every application must be made in writing to the secretary in the form (C) appended to these rules, stating the amount desired. Every member applying for an ad vance shall receive notice of all subsequent meetings for advance of money, until declared entitled to an award. Art. 5. — No member will be allowed to receive an advance of shares exceeding the number he has previously subscribed for, unless he pay down the entrance fees, and continue to pay half the subscriptions on the whole number of shares required, from the date of his being placed on the list. Art. 6. — Every member entitled to an advance shall pay to the secretary a sufficient deposit to cover the solicitor's and surveyor's fees, in the event of the title or value of the property proving insufficient or inadequate as a security ; or of his otherwise failing to complete the same. Art. 7. — Every member entitled to an advance shall, within one month from the date of notice forwarded to him through the post-office, find a good and sufficient security by way of mortgage for the same, and in case of failure he shall be allowed a further period of one month to complete the same, provided he pay interest on the advance, at the rate of percent, per annum, to commence with the second month so allowed him, at the end of which time his right to such advance shall be forfeited to the next member then on the list, unless he consent to make his repayments in respect of his awarded advance from that date. Art. 8. — Every member entitled to an advance shall fur- nish duplicate particulars of the property proposed as secur- ity, on a form to be given him by the secretary ; and, the security being accepted by the directors, who shall have been previously satisfied by the surveyor and solicitor of the suffi- 556 APPENDIX I. ciency of the security offered, and all other preliminaries being arranged, the money agreed to be advanced shall be paid over to the member. In case the money is applied to the purchase of land, and afterwards to erect buildings thereon, the advance shall be made in such instalments as the surveyor shall advise the board of directors. Art. 9. — l>o money shall be advanced by way of a second mortgage, unless the prior mortgage be to the society. Art. 10. — If any member be desirous of ascertaining the amount which the directors would be willing to advance on any proposed security, in the event of his entitling himself to receive such advance, he shall give written notice to the secretary, and deposit with him the surveyor's fee, and the surveyor shall thereupon make his report to the directors, if required by them, and the directors shall announce to the member the amount they consider proper to be advanced on the property proposed as security. Art. 11. — When an advance is required for twelve years, not more than three-fourths of the value of the mortgaged property shall be advanced thereon, nor more than two- thirds of its value, when the advance is taken for any longer period. \For shorter periods it will be for the directors, on the ad/vice of the surveyor and solicitor, to decide what proportion of the value of the property shall be lent. They should bear in mind that the risk of subsequent deterioration in the value of a security increases with the length of the period of the mortgage.'] Art. 12. — Any member obtaining an advance from the society may continue to hold his unadvanced shares or can- cel the same, in which latter case the amount due to him under the rule for withdrawals shall be returned to him in cash. XXXI. EXPENSES OF SURVEY, MORTGAGES, ETC. The expenses of inquiry into title and of every survey, valuation, mortgage and supervision by the surveyor of the society, of any buildings erected upon property previously mortgaged to the society, and all expenses connected with the security, shall be borne by the member applying for or receiving the advance. The expenses of the mortgage, ex- cepting the cost of stamps, registration and other moneys paid out of pocket at the time by the solicitor or surveyor may be repaid by an additional and proportional monthly subscription, extending over a period not exceeding calendar months, [n case of default, the amount due from time to t ime shall l»e chargeable on t he mortgaged property and betreated as repaymenl subscriptions in arrear. RULES FOR BENEFIT BUILDING SOCIETIES. 557 XXXII. — COMMISSION. Art. 1. — A commission after the following scale shall be deducted from all advances made to members and 1x3 appro- priated to the expense and contingent fund. Jn considera- tion of the aforesaid commission, a borrowing member shall not be called upon to contribute, after the date of the ad- vance, in respect of the shares upon which lie has borrowed, any other sums towards expenses or contingencies, except- ing the quarterage, fines, transfer, and other fees and pay- ments mentioned in these rules. {Here insert Scale of Commission). {The rate of commission that should he charged is a matter for practical consideration, and varies with the circumstances of the locality.'] Art. 2. — Should the directors consider it expedient, at their own discretion in each particular case, the commission to be deducted as aforesaid may be allowed to stand over as a further charge upon the property mortgaged to the society, and be treated as an additional advance, subject to the same rate of repayment as provided in the rule applica- ble to advances. Art. 3. — If, at the first and subsequent divisions of profits, it should appear to the directors that the expenses or losses which the society has incurred anterior to such division of profits, or which in their estimation are likely to arise upon the mortgages then in force, have not absorbed the whole of the commission contributed by borrowers upon advances made upon them, then the directors, with the advice of the consulting actuary, may credit the borrowing members in proportion to the number of shares which shall have been advanced to them respectively (in diminution of their future repayment subscriptions), with such a bonus out of the unabsorbed commission above referred to as shall not exceed the bonus allotted to an unadvanced share of like standing. [The effect of this rule is to make the society a mutual one.] [These clauses would have to be modified where the bidding system is adopted^ XXXIII. ADVANCES TO PURCHASE AT AUCTION. Art. 1. — Should any member, having become entitled to any advance, as aforesaid, be desirous of purchasing prop- erty about to be sold by auction, and require the assistance 558 APPENDIX I. of the society to enable him to pay the deposit money pay- able at such sale, the directors may, upon such member making his desire known to them, in the form (D) annexed to these rules, order the surveyor to report, and the solicitor to investigate, the conditions of sale and the title of such property, so far as the same can be ascertained, upon pay- ment of the usual fees ; and may instruct the secretary to attend such sale, and (provided such member can buy such property at a price not exceeding the sum of money the directors are willing to advance on such property) to pay the amount of deposit at such sale, the balance of the pur- chase money to be advanced when the conveyance and mortgage are completed ; provided that, if the member shall bid a larger sum than the sum awarded by the directors, the difference between the sum awarded by them and the sum agreed to be given for the property, shall be deposited by the member in the hands of the secretary, before any deposit is paid, and the directors shall take such legal security for such sums paid on deposit as they may be advised. Art. 2. — When any member shall be desirous of building, the directors may, from time to time, make such advances during the progress of the building as they deem expedient, on having the amount secured on the property. Art. 3. — If any member, receiving an advance for the pur- pose of erecting or completing the erection of any buildings, shall leave the same unfinished, and shall not proceed to complete the same after the expiration of seven days' notice in writing given to the member, his executors or adminis- trators, by leaving the same upon the premises, the trustees of the society under the direction of the committee, may complete the same; and the trustees may also, with the sanction of the committee, sell the premises mortgaged, either in their incomplete state, or upon the same being completed, as aforesaid, in which case all the powers, trusts, clauses and provisions contained in the mortgage deed to arise and take effect, and be exercisable upon default being made in payment of any instalment, shall upon the expira- tion of such notice as aforesaid, arise, take effect, and be ex- ercisable in such and the same manner, and with the same consequences in all respects as if such default had really been made. XXXIV. AS TO MORTGAGES. Art. 1. — Every member executing a mortgage to the society, shall, within two days from the time of such ex- ecution, give to the secretary a written statement of any trade carried on, in or about any part of the premises com- RULES FOR BENEFIT BUILDING SOCIETIES. 559 prised in such mortgage or of the existence of any stove or furnace erected thereon, or other matter or thing which would in any way aifect the validity of the policy of insur- ance : and if at any subsequent period any such trade shall be commenced, or erection made, the like statement shall be given, and the member neglecting to give such statement shall pay a fine, at the discretion of the directors, of not more than ten shillings, but not less than one shilling per week for each share ; and the directors shall, if they think fit to do so, at least once in each year, appoint some com- petent person to obtain all the information he can, with respect to trades, etc., carried on, in or about the mortgaged premises, and to report to the board accordingly. Every borrowing member shall from time to time permit the directors or such person or persons as they appoint, to inspect the mortgaged premises, and to obtain information with respect to any trade or trades carried on therein ; or pay such fines as the directors shall think fit. Art. 2. — The repayment subscription for advances shall be made at the end of the first calender month, or of the first quarter (as may be agreed upon by the directors) next following the receipt of the advance, or any portion thereof, and shall continue to be so made for the full period for which the advance may have been originally taken, unless the mortgage be previously redeemed ; and in all cases, such repayment subscriptions shall be due on the first day of each month, and be respectively made thereon if it be a day of meeting, or on the first subscription meeting thence ensuing. Art. 3. — Every member obtaining an advance from the society shall be bound by and subject to these rules, and any alteration or amendment thereof, although the intent or meaning of the same or any part of them may not be fully set forth, or may be omitted in the mortgage deed or other security, and no defect or omission in any mortgage or security shall be available by any member if such defect or omission be provided for by the rules of the society. Art. -i. — Upon full payment being made of all the monthly repayment subscriptions, interest or other monies secured by any mortgage in accordance with these rules and the cove- nants therein contained, the trustees shall, at the request in writing of the directors, and under the advice of the solicitor to the society, deliver up to the members by whom such mortgage was effected, or to his legal or personal representa- tives, as the case may be, the title deeds and other documents which have been deposited with them by such member, and shall, free of all expense to such member, indorse on his mortgage security a receipt for all the monies intended to be 560 APPENDIX I. thereby secured, pursuant to the Act 6 and 7 William IV., cap. 32, sec. 5. XXXV. SECURITY FOE ADVANCES. All property on the security of which an advance is made to a member shall be mortgaged to the society until the ad- vance be repaid, and the mortgage deed shall be so prepared by the solicitors of the society, or their counsel, as to meet the requirements of each particular case, and for that pur- pose snail be in such form and contain such powers, covenants, stipulations, and conditions, as they consider necessary ; and among other things it shall be provided therein, that in case the mortgagor shall fail, neglect or refuse, for the space of four calendar months, to observe and perforin all or any of his covenants for pajmient of re- payment subscriptions, according to the terms and condi- tion of these rules, and the said mortgage as well as any fines inflicted for neglect of payment, on his part to be ob- served and performed, then the trustees named in the said mortgage, or the survivors of them, or the executors or administrators of the last survivor or the trustees, for the time being, of the society, may either with or without the privity or consent of said mortgagor, his heirs, executors, administrators or assigns, take absolute possession of the said premises and may let the same, and may appoint a person to be approved by the board, to collect the rent of the premises thereby mortgaged ; and may at anytime there- after absolutely sell all or any part of the said premises, either by public auction or private contract, and either to- gether or in lots, and at one time, or separate times, if desir- able, for the most money that can reasonably be had or gotten 1'or the same; ami every receipt of the trustees for the time being shall bea good and sufficient discharge to the purchaser paying the purchase money, who shall not be obliged to see the application of the same, nor be required to see whet her any or what monies shall be due under such mortgage, or whether there has or has not been any breach on the part of any such mortgagor of the rules of the society or of tin; stipulations of such mortgage deed, nor whether he has failed to pay any of the advanced repayments, lines or other payments either for the space of four calendar months, or for any other period, nor whether such trustees, or the executors or administrators of the last survivor of them, or t he trustees of t he society, for the time being, have or have not authority for disposing of the premises com- prised t herein, but tin; possession of the title deeds and mortgage deed, and the written instructions of the board of RULES FOR BENEFIT BUILDING SOCIETIES. 561 directors, shall be considered sufficient authority for the dis- posing of the said premises ; provided always that the money produced from such rents and profits, or such sale as afore- said, shall, in the first place, be applied in payment of all costs and expenses which may be incurred on account thereof ; and, in the next place, to reimburse the society in the amount of repayment subscriptions and, in the event of a sale, of the then value of the future repayment subscriptions then due and unpaid, together with all fines and commission in respect thereof; and, in the event of a sale, of the then value of the future repayment subscriptions in respect of such mortgaged property, with interest on the aforesaid amount of arrears and fines up to the completion of the sale, and on the then value of such future repayment subscriptions at the rate of per cent, per annum from the date of the first default. The present value of such future repay- ments shall be calculated by the consulting actuary from the date of the completion of the sale or sales to the end of the term for which the mortgage was originally taken, 1 discount being allowed at a rate to be fixed by a majority of the board of directors present at any meeting, not less than per cent, per annum on such future repayment subscriptions to the end of the mortgage term. In case the rents and profits of the mortgaged property, and produce of the sale thereof, after deducting expenses, be not sufficient to dis- charge the amount of such repayment subscriptions in arrear, with the present value of the future repayment subscriptions so calculated, and interest thereon, the mortgagor so in default shall immediately pay the balance due thereon to the society ; but the trustee shall pay the surplus (if any) arising from the receipt of the rents and profits, and from the sale of such premises as aforesaid to the said mortgagor, his heirs, executors, administrators, or assigns ; provided always, that in case any of the mortgagors named in any mortgage deed or his heirs, executors, administrators or assigns, having obtained an interest in such property (so long as the said premises continue in mortgage to the society) shall be im- prisoned for debt, or be made bankrupt, then such trustees, or the executors or administrators of the last survivor of them, or the trustees for the time being of the society, with the sanction of the board of directors for the time being, shall have full power and authority immediately to take possession of the premises mortgaged, and let and manage 1 The rate of discount to be al- be oppressive to the borrower, lowed on future subscriptions in should be such as to afford a suffi- case of sale under the provisions in cient protective margin in favor of this clause, while not so low as to the society. 36 662 APPENDIX I. the same, and collect the rents thereof, whether such mort- gagor, or his heirs, executors, administrators or assigns, be in arrear or not ; and to sell the said premises, if the rent so received be not sufficient to meet the repayment subscrip- tions falling due in respect thereof ; and in case any of the premises mortgaged to the society be left incomplete, the trustees for the time being, under the direction of the board, may complete the same, and the money expended and laid out in so doing shall be considered as part of, and in addition to, the original mortgage. And the said trustees shall also, with the sanction of the board, have the option of selling and disposing of the premises mortgaged, either in their incomplete state, or upon the same being so completed as aforesaid. XXXVI. REDEMPTION OF MORTGAGED PROPERTY. If any member be desirous of having his property dis- charged from the mortgage to the society, before the expi- ration of the full term thereof, he shall be allowed to do so on giving a notice of two clear calendar months prior to the ordinary meeting at which the redemption of such mortgage is proposed to be completed ; and on payment of all repay- ment subscriptions and fines due in respect thereof up to the time of such redemption, and of the present value of the future repayment subscriptions calculated by the consulting actuary upon the principle of payments made at the end of each year to the end of the original term, and discounted after a rate of interest to be fixed by the consulting actuary not lower than per cent, together with the redemp- tion fee of , the trustees for the time being shall, at the request of the directors, and at the cost of the member, cause to be indorsed on the mortgage deed a receipt or acknowledgment for the full payment of the amount secured in such mortgage in the form (E) annexed to these rules ac- cording to the Act 6 and 7 of Wra. IV., cap. 32, sec. 5. Members giving notice of a redemption of a mortgage shall be liable to the usual lines for non-payment of the repayment subscriptions up to the time such redemption shall be com- pleted. | In cases of redemption under this rule, the protective margin to the society need not be so large as in the case of sale under Rule 35.] RULES FOR BENEFIT BUILDING SOCIETIES. 563 GENERAL REGULATIONS AS TO SECURITIES. XXXVII. POWER TO EXTEND PERIOD OF REPAYMENT. Article 1. — In the event of a borrower being subsequently desirous of altering the period allowed for the repayment of an advance, he shall be allowed to do so subject to the con- sent of the directors, on giving not less than one clear cal- endar month's notice of the wish thereto, provided that the new term for the repayment of the remainder of his advance be approved by the directors, and that his monthly repay- ment subscriptions for the new term be after the same rates per centum for the remainder of his debt, according to the established rates for advances; the debt at the same time of the alteration of the term being estimated upon a compound interest table, at such rate of interest as the consulting actuary shall certify. Art. 2. — Previously to any alteration, the mortgagor shall furnish satisfactory evidence as to the unimpaired value of the security, and shall pay all expenses of procuring such evidence. Art. 3. — When an existing mortgage is to be altered, a percentage commission shall be charged, proportionate to the remaining amount due from the borrower, for the num- ber of additional years which he has added to the duration of the mortgage ; and the commission shall be after the same rate as that for new advances. xxxviii. — reduction of mortgage debt. If any member, who shall have mortgaged property to this society, shall at any period, after he shall have reduced his mortgage debt, be desirous of procuring any portion of the premises comprised in such security to be discharged from such mortgage, the directors may, upon being satisfied that adequate and sufficient security will remain to cover the payment of the future repayment subscriptions, direct the trustees to discharge such portion of the said premises as the directors think proper. xxxix. — transfer and sale of advanced shares. Art. 1. — Any member entitled to an advance on a share or shares, which he may have subscribed for, and upon which all subscriptions, fees or fines are paid, shall be allowed to transfer to any other member the right of such advance, 564 APPENDIX I. with or without the shares belonging thereto, on payment of a transfer fee 1 of per share to the funds of the society, provided, nevertheless, that every share so transferred shall be subject to the advance awarded or to be awarded on sucli share, and to all other charges payable according to these rules. Art. 2. — If any member, who shall have obtained an advance, be desirous to sell the property mortgaged, the purchaser, on becoming a member of this society, may take the property subject to such mortgage, and thenceforth shall become answerable for the payment of all repayment sub- scriptions in arrear, and tines then due thereon, as well as for all future repayment subscriptions and tines thereon from time to time to fall due in respect to such mortgaged prop- erty ; an account of all which repayment subscriptions and fines then due and unpaid shall be made up and acknowl- edged (in writing) by the persons proposing to receive such liabilities and property in mortgage, which said account shall be duly signed by the person so becoming a member, in the presence of the secretary, solicitor, or one of the directors of the society ; and provided the sanction of the directors be given to such transfer, the trustees for the time being shall, at the request and cost of the member so trans- ferring his interest in the mortgaged property, then release him from all future responsibilities in respect of such prop- erty so transferred. Art. 3. — Every such conveyance to a purchaser, subject to the mortgage, shall be pursued and settled by the solicitor of the society, at the expense of the mortgagor ; and shall, when executed, be delivered to the solicitor of the society, and by him deposited with the other title deeds relating to the property comprised therein, as a further security for the money secured by the mortgage. XL. SUBSTITUTION OF MORTGAGED PROPERTY. If any member be desirous of having his property be dis- charged from the claim of this society, he may, with the sanction of the directors, transfer the same toother premises of adequate value, either belonging to himself, or to any other person willing to take the transfer of the shares so advanced, and to give security for the same, to be approved of by the directors on the report of the surveyor. XLI. FIRE INSURANCE. Art. 1. — All property mortgaged to this society shall be 1 Tf it he thought undesirahle to advances, the transfer fee in this encourage traffic in the right to clause should he fixed high. RULES FOB BENEFIT BUILDING SOCIETIES. 5G5 insured, in pursuance of any covenant contained in the lease or deed under which such property shall be held, or as the directors shall determine; and the secretary shall imme- diately effect such insurance in the names of the trustees of the society, in conformity with written instructions to be furnished to him by the solicitor; or, in case of neglect, shall be fined twenty shillings ; and he shall pay all pre- miums for insurance of mortgaged property as the same shall respectively become due, or be fined twenty shillings for each insurance left unpaid; and the members on whose account such premiums for insurance shall be paid shall on demand refund the amount so paid. Art. 2. — Whenever any property mortgaged to this society shall receive any damages from fire, or any other cause for which the insurance company may be liable to give compensation, the trustees for the time being of the society shall receive the amount payable for such damage so sustained from the insurance company ; the receipt of three directors, countersigned by the secretary of the society, shall be sufficient discharge to the insurance office for the money herein expressed to be received ; and the directors shall have full power to settle and adjust with the insurance office any question relating to such insurance, and the amount to be paid by the insurance office in respect of the damage done to the premises; or to make such arrangements with the insurance office as the rebuilding or repairing of the said premises, or relating thereto, as the directors think reason- able. XLII.— -GROUND RENT AND OTHER PAYMENTS. When any property secured or mortgaged to the society is subject to any land or property tax, chief or ground rent, quit rent, fines, reliefs, heriots, or other payments, the mem- ber to whom the property belongs shall "furnish the secre- tary with a statement containing the amount of such payments, the name and address of the person or persons to whom, and the day or respective days on which the same becomes due and payable ; and shall from time to time pro- duce to the secretary a receipt or acknowledgment thereof respectively, within fourteen days after the same becomes due or payable ; or in default thereof shall pay a fine of In case any of the said payments be not duly made within such period as aforesaid, a further fine shall be paid by the member, for every £1 so due in respect to the said payments, and the directors shall order the sum due to be paid out of the funds of the society, and the mortgagor shall repay the amount at the next monthly subscription meeting, together 56Q APPENDIX I. with the said fines ; and, in default of payment thereof accordingly, the same shall be treated as repayment sub- scriptions in arrear, and be subject to further fines according to the Kule XLIII. OTHER REGULATIONS AS TO SHARES. XLIII. FIXES, AXD POWER TO SUSPEXD. Article 1. — The fines for non-payment of unadvanced shares subscriptions shall be at the rate of per pound per month for each default. Art. 2. — The fines for non-payment of repayment sub- scriptions on advanced shares shall be at the rate of in the pound per month on the amount thereof. 1 Art. 3.— When the fines on an unadvanced share equal the amount of subscriptions paid in respect of the same, the said share shall be forfeited to the societ\ r ; and the member to whom such share belonged shall thenceforth cease to have any interest in the funds of the society in respect to such share, but the directors may, at their own discretion, remit or waive such forfeiture, or allow a member specially to suspend his subscriptions on unadvanced shares, on such terms and conditions as they in each case may deem fit, on his making application to them for that purpose, prior to each subscription becoming due. [ This clause will enable the directors to meet the circum- stances of members who, through finding themselves tempo- rarily unable to Tceep up the payments, do not wish to relin- quish their shares, >>/■ withdraw from th<- society.'] Art. 4. — When an advance is made to a member, the directors shall have power, at their own discretion in each particular case, to allow the repayment subscriptions to be di'frrrcfl for a period not exceeding two years; provided interesl attherateof percent, per annum on the amount of the advance be paid monthly by the member during the time that the repayment subscriptions are so deferred. The drin for which an advance is so granted shall exceed oneof 1 he terms given in the table of repayment subscriptions by a number of months that the first repayment subscription has been allowed to be so deferred and the repayment subscrip- tions (including principal and interest) shall be made after the rates given in the said tables, from t he end of the period of deferment to the close of the term of the mortgage. 2 1 ia to fines, see Parker v. Butcher. ; v> i" i his rule, see Art. 69. M Law Journal [Ch.) 558. RULES FOR BENEFIT BUILDING SOCIETIES. 567 Art. 5. — If any member be in arrear in respect of his sub- scriptions, interest, or other sum for more than one meeting, every payment afterwards made by such members, if not sufficient to discharge the whole amount in arrear, shall be applied, first, to the liquidation of the fines incurred, and then in the liquidation of the subscriptions, interest, and other sums in arrear. Art. 6. — Members holding advances upon quarterly re- payment subscriptions shall be considered to be in arrear of four months when any quarterly repayment lias remained, unsatisfied for the period of one calendar month after the same became due. Art. 7. — When the consulting actuary is consulted by the directors , at the request of any member, or by cause of the default of a member, the fees payable to the consulting actuary shall be charged against the said member, and be treated as subscriptions in arrear. XLIV. ALTERATION IN RATE OF INTEREST. In order to meet the contingency of any alteration in the value of money, or of the current rate of interest, or if it hereafter appear that the well-being of the society shall so require, the directors may, on the advice of the consulting actuary, with the sanction of a majority of the members actually present at a meeting of shareholders specially con- vened for that purpose, reduce the rate of interest allowed on the amounts substituted by unadvanced shareholders (so that such decrease does not reduce the rate of interest to less than £3 per cent, compound interest, reckoned annually on the amount of subscriptions paid by them), and there- upon shall make a relative decrease in the monthly or quar- terly sums to be paid by the members who receive any ad- vance on their shares ; or, on the contrary, may increase the rate of interest to be paid on unadvanced shares, making a corresponding increase in the sums to be paid by advanced shareholders, in such manner as shall from time to time be deemed expedient, just, and equitable; provided that such decrease, or such increase, as the case may be, of the rates on unadvanced and advanced shares respectively shall in all cases bear the same relative proportion to each other as the tables herein contained for payment to unadvanced shareholders and payments by advanced shareholders, or as near thereto as possible; provided also that such deductions or alterations shall only affect the holder of shares which shall be issued or advanced respectively, after the time of making such decrease or increase, and provided such decrease 568 APPENDIX I. or increase shall be first submitted to the consulting actuary and be certified by him to be safe and equitable. MANAGEMENT AND OFFICERS. XLV. APPOINTMENT OF OFFICERS. For the conduct and management of the affairs of the society the following officers shall be appointed : Trustees, a board of directors, consisting of members, bankers, consulting actuary, auditors, solicitor, secretary, and such other officers as may be deemed necessary by the board, who shall fix the amount of their salaries, fees, and other re- muneration, and the duties from time to time to be per- formed by them respectively. The bankers, consulting actuary, solicitor, secretary, and other officers deemed necessary by the board, and appointed by them shall hold their respective situations at the pleasure of the board. [As to the officers, see Treatise, chapter 5.] XLVI. OFFICERS TO GIVE SECURITY. The directors may, if they think fit, require any officer or other person whatever, who shall be appointed to any office in any wise touching or concerning the receipt, management or expenditure of any money of the society, to give security by bond with two securities (in the manner mentioned in the Act 10, Geo. IV., cap. 56, sec. 11.) X L VII. TRUSTEES. I — Esquires, arc thereby appointed the first trustees of the society. Article 2. - All the monies and funds of the society shall be paid into the bands of the bankers, to the credit of t lie i rustees of 1 he society. Art. 3. All deeds, writings and securities in favor of the society shall be taken in the name of the trustees, and im- mediately on the receipt of anydeeds, writings or securities, on behalf of the society, the same shall be lodged at the society's solicitors, in a box furnished by the society; the and no documents whatever shall be allowed to be removed from such box, unless by an order of flic directors, signed by at least three members of the board then present. Aim. I. The trustees shall in no case be required to RULES FOR BENEFIT BUILDING SOCIETIES. 569 do any act without the express request and sanction of the directors in writing, and they shall, for every such act, be indemnified out of the funds of the society from any loss, damage, or expense, and a written indemnity shall, if demanded, be given by the directors, not being trustees, and countersigned by the secretary. Art. 5. — The trustees shall be ex-ojficio directors, but shall not vote on any question unless they are qualified in like manner as the directors. Art. 6. — In case the said trustees, or any or either of them, or any future trustees shall die, or be desirous of resign- ing or of being discharged from, or shall become incapable of acting in the trusts in them reposed, or be guilty of any gross neglect or improper conduct (of which the directors shall be the only judges), or shall remove a distance of more than twenty miles, or cease to have a place of business or residence within that distance ; or a difficulty of access to them shall impede the business of the society, or if they shall become bankrupt or shall compound with their creditors, the secretary shall convene a special meeting of the direc- tors, and the directors shall hear and determine thereon, and may thereupon remove such trustees ; and as often as any new trustee shall be elected or appointed, the trustee removed shall cease to be a trustee, and shall be incapable as acting as a trustee after such removal, or after the appoint- ment of a new trustee has taken place. Any vacancy in the office of trustee, from any cause whatever, shall be filled up at the quarterly meeting next ensuing by the members then present, and after every fresh appointment of a new trustee the resolution of the appointment shall be signed by the chairman of the directors for the time being, or by the chair- man of the meeting at which such appointment shall be made, and by two members and the secretary, and the same shall be duly entered on the minutes of such meeting, and be enrolled as a new rule of the society ; and the estate, monies, securities, funds, deeds, papers, and property of the society shall become at once vested (without any assignment) in the continuing and newly appointed trustees. Art. 7. — In the meantime, and until the appointment of such new trustee, the continuing trustees shall be competent to sit as fully as if they were the sole trustees of the society. Art. 8. — The trustees respectively shall be chargeable only for their own acts and defaults respectively, and not for the acts or defaults of the others or other of them, nor for the acts or defaults of any other person or persons. Art. 9. — In case it shall be deemed necessary or expedient to bring or defend any action, suit or prosecution at law or 570 APPENDIX I. in equity touching or concerning the property or assets rights or claims of the society, or touching or concerning the breach or non-performance of any of the articles, matters and things herein contained, or of the conduct of any member or officer of this society, the same shall be brought or defended by, or in the names of the trustee for the time being ; and they shall be indemnified from all loss or damage to be b} T them sustained in consequence thereof; but no such proceedings shall be taken or defended until the appro- bation of a majority of the members present at a special meeting, to be convened for that purpose, shall be first heard and obtained. Art. 10. — When any trustee of this society shall receive an advance on his shares, or do any act as a trustee of this society, emanating from himself alone, then all his securities and undertakings shall be made in the names of the other trustees of the society for the time being. XLVIII. DIRECTORS. Art. 1. — The elected directors shall be holders of at least one unadvanced share, and one-third of them shall go out of office after the first two years but be eligible for re-election. Art. 2. — The future election of directors shall take place at the annual general meeting, except in the case of death during the year, when any vacancy shall be filled up by the board. Art. 3. — If any director becomes bankrupt or resign, his office shall become vacant, and if during the } T ear, the va- cancy shall be filled up by the board, as in case of death. Art. 4. — The directors shall annually appoint, out of their body, a chairman and a deputy-chairman ; and, in the absence of either chairman or deputy-chairman, the directors shall appoint a chairman for the several meetings. Art. 5. — One of the directors (in rotation) with the secre- tary shall attend the meetings for the receipt of money, within the hours specified in these rules, or at such other time as the directors may think lit. Any director failing to attend his rotation at the receipt meetings, or to procure a substitute, shall pay a line of 2s. (Id. or if he fail to be presenl within ten minutes of the appointed hour, he shall forfeit one. shilling. Aim. 6. The directors may divide themselves into rotas, or can in it lees, for the conduct, of the business, as they may think fit (such committees or rotas to be open to the other members of the board); provided, however, no rota shall continue longer than three calendar months at one time, without some change of members. RULES FOR BENEFIT BUILDING SOCIETIES. 571 Art. 7. — The board shall, from time to time, inspect the books of the society. Art. 8. — Each director shall be paid s. for every attend- ance at a board, or, in rotation, at a subscription meeting; the chairman shall be entitled to s. per board meeting in addition. XLIX. SURVEYOR. Art. 1. — , of , is hereby appointed, surveyor of this society. Art. 2. — The following fees shall be allowed to him : (Here /Scale of Surveyors Zees.) Art. 3. — In all cases where the surveyor is required to superintend the erection of any buildings on behalf of the society, the remuneration shall be especially agreed upon by himself and the board. l. — SOLICITOR. Art. 1. — , of , is hereby appointed solicitor of this society. Art. 2. — The solicitor shall transact all the legal, equi- table, and conveyancing business of the society ; and, if any dispute arise with reference to his charges, the case shall be referred to , whose decision shall be final and conclusive. \In some cases colicitors agree f<> transact lusiness for building societies at fxed charges, depending on the amountqf the loan. Win re this is done the scale of charges should be inserted in the rule*.] LI. AGENTS. Art. 1. — The directors may, from time to time, appoint or remove any persons they think expedient to act as agents for the disposal of shares, or the promotion in any other way of the objects of the society. Art. 2. — The duties, powers and remuneration of the agents shall be fixed by the board from time to time. LII. BANKERS. Art. 1. — The directors shall, from time to time, select the bankers of the society, and the signature of a trustee shall not be necessary in any case to cheques drawn on the society's account. No payment shall be made out of the society's funds to the amount o.f £5 and upwards, except by cheque, to be signed by not less than directors, and countersigned by the secretary, and all payments so made 572 APPENDIX I. shall be valid and effectual as between the trustees and the members. Art. 2. — All money received from the members shall be paid in to the bankers to the credit of the society by the secretary, or such other person as the board appoint. Art. 3. — For the payment of current petty expenses, the secretary shall, from time to time, receive a cheque of pounds, which shall be duly renewed on a proper account of his former payments, to the amount of the last cheque re- ceived by him, being made to, and allowed by, the board. LIII. SECRETARY. Art. 1. — is hereby appointed the secre- tary of the society. Art. 2. — If the secretary shall neglect to attend any meetings of the society at the time named for the com- mencement of such meeting, without showing sufficient cause to the members then present, he shall be fined He shall enter minutes of all resolutions passed at the meet- ings of the board in the rough minute book, and the same shall be fairly copied into another, to be read as part of the business of the next meeting, and both to be signed by the chairman. He shall keep the accounts in order, in proper books to be provided for that purpose, shall send all circu- lars, conduct the correspondence of the society, and per- form such .other duties as the directors shall require. I.I V. AUDIT OF ACCOUNTS AND CONSULTING ACTUARY. Art. 1. — At the first meeting of the society two auditors shall be chosen, one by the directors and one by the mem- bers present, for the purpose of auditing the accounts and watching over the expenses of the society, prior to the annual general meeting. The future appointments of au- ditors shall be made at the annual general meetings, except in the case of death during the year, when the vacancy shall he Riled at the next monthly meeting by the directors and members respectively present. Art. 2. — The consulting actuary shall make an investiga- tion <>f the accounts of the society at the end of each year, and at such other times as the directors think right, and to him all questions, as they arise, relating to the value of shares, redemption of mortgages, etc., shall be especially referred. T/V. — REMUNERATION OP OFFICERS. The members, al an annual general meeting, may, with tin' advice <>f the consulting actuary, vote a sum of money to he paid to the < I i rei ■! ors ;nid auditors for the past year's RULES FOR BENEFIT BUILDING SOCIETIES. 573 services, and likewise to the other officers of the society, over and above any salaries, fees or other remuneration, which they may have had guaranteed to them. LVI. INDEMNITY TO OFFICERS. The trustees, directors, auditors, and other officers of the society shall be, and hereby are, indemnified and saved harmless out of its funds and property, from all losses, costs, charges, damages and expenses, which they may incur or bo put to in execution of their respective offices, services, or trusts; and none of them shall be answerable for any act or default of any other of them, or for the insufficiency or deficiency in title or otherwise of any security whatsoever which shall be taken for the repayment of any advance, or otherwise, on behalf of the society, unless the loss arising by any such means shall happen through their own wilful neglect ; nor shall they be liable for any banker, broker or any person with whom the funds of the society shall, from time to time, be deposited or placed out for safe custody, investment or otherwise ; nor for any involuntary loss, mis- fortune, or damage whatsoever, which may happen in the execution of their respective offices, services, or trusts, or in relation thereto, respectively. CONSULTING ACTUARY'S CERTIFICATE. I hereby certify that the rules and rates of the " Permanent Benefit Building Society" are founded upon equitable and sound principles, and may safely be adopted for its use. Consulting Actuary. "We hereby certify that the foregoing are the rules of the " Permanent Benefit Building Society." ) Three of the Mem- I bers of the said ) Society. Secretary. I hereby certify that the foregoing rules are in conform- ity to law, and with the provisions of the statute 6 and 7 "William IV., cap. 32. The Barrister-at-Law appointed to certify the Rules of Savings Banks. London, ,18 . Copy Sent to the Clerk of the Peace. 574 APPENDIX I. SCHEDULE OF FORMS. (A.) To the Directors of the " Permanent Benefit Building Society : " I request to be admitted a member of your society in respect of share. Dated this day of , 18 . Name Residence Occupation (B.) Form of Transfer. I , one of the members of the " Permanent Benefit Building Society," in consideration of , paid to me by , do hereby assign and transfer my share in the said society, numbered , to the said , his (or her) executors, administrators, and assigns, subject to the payments, rules and regulations prescribed by the society. And I, , sanctioned by the board of directors, do hereby agree to accept the said share (or shares) subject to the same payments, rules and regulations. As witness our hands and seals, this day of ,18 . (0.) To the Directors of the " Permanent Benefit Building Society : " I request that you will make an advance to me of £ , in respect of share No. I hold in the society, the advance to l)c repaid in years. Dated this day of , 18 . Name Address Occupation (D.) To the Manager of the " Permanent Benefit Building Society :" Sir:— -I send you the following particulars of property, RULES FOR BENEFIT BUILDING SOCIETIES. 575 which I am desirous of purchasing by auction, to be held at the in on the day , and I request that you will take the steps contemplated by Article I of Section XXXIII of the rules of the society. Dated this day of , 18 . Name Address No. of Certificate Date Description and Extent of Property. "Where situate — parish, county, etc. ? The value per annum ? By whom held ? To what use to be applied by applicant \ (E.) Receipt to he Indorsed on Mortgage Security. We, the undersigned, the trustees for the time being of the within-mentioned Permanent Benefit Building Society, do hereby acknowledge to have received of and from the within- named , his heirs, executors, administrators and assigns, all monies intended to be secured by the within- written deed. As witness our hands this day of , 18 MR. SCRATCHLEY'S FORMS OF ACCOUNT BOOKS AND EEGISTEES. SUITABLE FOR A BUILDING SOCIETY. REVISED ISSUE, 1884. LONDON : C. and E. LAYTON, FAEKINGDON BUILDINGS. NOTICE. The annexed specimens of the principal forms of account books and registers for building societies (including that given on pages 2 and 3 of the First Supplement) have been tested by the experience of more than a quarter of a century. They were originally prepared with the aid of our friend, the late eminent accountant, Mr. W. H. Grey, of Lincoln's Inn Fields, whose professional standing was marked by the fact that he was selected by the Government to assess and settle the payments to be made under the grant of £30,000 from Parliament, with respect to certain defalcations in savings banks. The forms have been revised to suit the latest systems, and will only occasionally require such modifications as may be dependent upon any special directions and provisions in the rules of the society adopting them. 2 Plowden Building, Temple, London. MEMORANDUM. I. — In addition to the books for which forms are given, .'i Ledger must also be kept, in which, among others, the fol- lowing accounts should be opened : 576 FOEMS. 577 (i) Investments on Subscription Shares. Paid-up Ordinary Shares. Paid-up Preferential Shares. (ii) Withdrawals on Subscription Shares. Paid-up Ordinary Shares. Paid-up Preferential Shares. (iii) Advances on Mortgage. Repayment Subscriptions. Redemption of Mortgages. Temporary Advances to Members for Insurance and Ground Rents, etc. Management and Contingent Fund. Debentures and Deposits. Interest. Bank. II. — The following are some of the subsidiary books : (i) A Book of the Management k prepared from this form is to be merely a register of i In' members, without any particulars respecting the shares held by i hem. Each member's name is to be entered once only. J roitMS. 579 No. 2. — Eeffister of Fnadvanced Shares. Date of Issue of Shares. Denomination of shares whether: — Subscription Shares (Class A.); Paid up Or- dinary Shares (Class P>) ; Paid-up Preferential Shares (Class C.) -c-a u c~° Mi .sjH 5 H 580 APPENDIX I. No. 3. — Register of Withdrawals. Investing Members who have given notice (in accordance with Rule ) , that they are desirous of withdrawing from the funda of the Society the present value of their share or shares. id - ft (3 .2 B U a < c a) ~ o ■73 0) O i"8 • ■2-S S P-g « Q 1-1-1 "o a> .a s 1 X. M > aj --2 e 2; Denomination of shares whether : — Subscription Shares (Class A) ; Paid-up Or- dinary Shares (Class B.) : Paid-up Preferential Shares ( Class C.) ■3 '1 0) ft Amount Withdrawn. < o.S u ~ u = 3 Subscrip- tions. Interest [and Eonusj. Total. roiiMS. 581 a si • w ft ft © if) © © •uoispaQ jo ajEQ •uo;jE3i[ddv aip no sjo)iaJi([ ju uoispaQ •saqpjpadg ■uonBAjasqo Nature of Title of Property. If Freehold ; If Copyhold, state name of Manor ; If Leasehold, state the number of years unexpired of the lease, and the rent. rt *. h — 0> V c 3 a. '■Sri o M « U Property Proposed as Security. Where Situated. Object for which advance is applied for : For Building Purposes. For Purchase of Land. For Purchase of Houses. For Redeeming Existing Mortgages. Number of Shares, and Sums Applied for. c a < 6 3.2 0) ■a O 3 V u • •uoiyeoqddY JO 3JEQ uaqum^ jajsiSa'jj i bb-2 APPENDIX I. - d eg © if © •(Xue ji ) SJEp^DllJEJ J31JJ0 P!M "3qA\ ana uaqAV •ju3}j punojQ jo junouiv * •prej uai [A \ ■ana «»qAV ■suimui3iescription oi Property Mortgaged and where Situate. ffjpf = | -ajqcAEj A\Of{ Repay •jaSpa^j 38e§jjoj\[ ( sjapioqa.iEqg p3DUE.\pV UI Ol[0,J •psjUEiS SEW SDUEApV 3l|l IpIqM J..' S.1B3X J" IIU3J, ■- -. ~ junomy |J«| | uaqurnN nnii--L|.\ Name of Member. ^ "fc» 5s -: «*» "K o ^ s ♦a o C i - o - — I. l'OKMS. 583 No. 6.— Register of Redemptions of Mortgages. Borrowing members who have given notice to the society ( in accor- dance with Rule ), that they are desirous of redeeming the mort- gages in connection with their advanced share or shares. 5 '/> « 2 £ Name of Borrowing Member. Amount of Redemption Money Pay Outstanding able rnclu- | „„_..„„„ & sive (if any) of Arrears Fines, Fees, and Expen- ses due. £. s. d. Bonuses Allotted (if any). £. s. d. — c - ■s.s^ 584 APPENDIX I. © © - ^© © Balance re- maining due, and to be carried for- ward to next month's account. saupung pus sauijj • uouduosqng •JO JO JfJ jaq:aq A V -d > u a 3 o E ■< •junoosiQ FJOX ■(Aire jt) sjusujXej JaqJO •s.iaquiaT\j oj saauEApy A"jEJoduia£ •(Xue gi) sapuaS -UJIU03 puE sasuadxjf spjE.woj suopnqujuof) •saaji jaqjo puE jajsuEJX •sauij •siuio j JaqtO P UE duag 's^oog ssej 'saitv^ •saaj aDUEJjug .2" J J 3 " en •auauiA'Eda-y •sjuaui;saAUj s Due :lusive flight n last innt. •ana p-'iox Total Amoun by each mei this month, in of arrears br forward froi month's ace •saup -ung piiEsauij ■suonduosqng Number of Shares held. •paauEApy paauEApEUj 1 •uorj -duasqng /CpqjuojA] )" junouiv •jaSpa r i aS«3}Jo|\; 's.iap[ou.i.u:qs [ pmia'Apv 10 ■ ii'"l i -ajEqs P" iiii.'Apru | ui o •jaqiunjti i° 3"JEfI ■inqiun\ j.i; -; , [ No. i nightly, to be tnt oj the a -[This tlily. ii .11 mui tin- colt form is an lib crip V'liere the Subs lunar m rwise, the net 1 • ti le I Th inns on this side mmettcet or a llen- :rip- fort- • en- are uent No. 2. — [The money, brought by the member each month, must be ap- plied to discharge — 1st, fines and fees; 2d, arrears; and 3d, current subscrip- tions due.) The entries in the columns on this side are made after the mem- bers have paid their motiey. FORMS. 585 © o 00 © •pnox •SIU3JI Jamo °X 'i"«a °x •jsajaiuj oj_ c to e o U ■• T> * 1 ll bo rt <5 O H •(Aue ji) 'sap -uaSuiuiof) puE sasuadxg pju.w -o) snoqnqiajuo3 •saaj jaqjo pUE J3JSUEJX •sautjj •suuojj Jaqjo puE duay 's^oog sse,£ 'sa[n^j_ ■saaj[ aDUEilug •sajru -uaqaQ jo sjisodaQ ox •sasiuiajj A\iE.iodiuax no saaq -uiaj\[ iuojj pa.uaDa^j ox •aSsS -jjojq jo suopduiapay; ox •uop -duosqng juaiuAEda^j ox 2 tS "en c a ° £ o H •3 sse(3 saiEqc; junua -japj j dn-piE<£ •g sse[3 •saiEqg Xjeu uoi^duasqng R CO to s-i C © or p _ O = to © ri -M 0; O) ^ © '/. >H r* J rf O D 03 3 = £3 -_ d - o «-> - o 2 jd — o o H co >> - J od p 01 o 01 = o ^ k 1 £ - o ctf z C o '-( be© — - -i-2 rj (1> - ■— - © en k Q rj _r z ■r - - H — a | = **> — m 0) - >> C _: © fc - ►*i o aJ o CWZ2 586 APPENDIX I. O IBIOX •SU13JI J3l|JO *a w*u *a •}S8J3JU[ A; J JJ0 piE,I S3.U1J -usqaQ jo snsodag Xg SJaquOJA] 01 IsaauEApY' XjEJodwaj, Xg •pun j luaSupuo > pUE JUOUiaSl-'UEJ^ X;| c o "a "5 >. - (D s |E1JU3 -jajnj t [ dn piv ( | 0a - ! : acqs ajeu -\\,m , dn piE,| 'ssjeqs Ivance on Mortgage. Jan. March April June July y. FORMS. 587 3 ?.) - m ft? CD if ~ Q 39 0) -J „ o - £ Si a; -r Mi r. — «M c o r. ^ — - sj X A 6 ^ - •p3ZI[K3>l U3l(.\\ 3JEl|g 3l[J JCJ ].IEdSE JOS[E.\\Eip *0 •S3JIU[S }0 IlOTlEZI[B3'a jo [E.wEjpqii \\ ao piEclay uouduasqng pun .j oi[} O) "'airr,-! ,\q p3LUE3 jsajaju] Jo nop -duDsqng uo sSejuso -J3i uor.duDsqng t» •saupung puE S33J pUB S3UI j U3 tt c o ft 3 •JE3JJV UI LO ana ■* •S>[JEUI3>J « •°!I°J N •a;EQ H (a) The amount received under this head for fines, etc., should at the yearly or half-yearly balancing of this account be transferred to the ace ount ap-\ iointed by the Rules, which should provide therefor. (b) If column (S I credits a lower rate of interest, by a Withdrawal Table,\ than is necessary for the realization of the Shares, a margin will have to | be inserted in Col. (y) at the Annual Estimates of Liabilities. APPENDIX II. PEEMIUM PLANS. The following pages contained in Appendix II have been taken from the Ninth Annual Report of the United States Commissioner of Labor (1893), Hon. Carroll D. Wright. PREMIUM PLANS. The funds of associations are loaned to shareholders as the by-laws may prescribe — usually to those who offer the highest premium. Some associations, however, have a fixed or established premium i-ate, and, in these cases, loans are awarded to the members in the order of their applications or by lot. The premium is the amount which the borrower pays in excess of the legal interest ; or it may take the shape of a certain number of payments of dues or of interest to be made in advance. Loans are usually made only to the shareholders. If, however, there be no demand for money from the shareholders, some associa- tions provide for loaning their funds to persons not shareholders upon such terms and conditions as may be approved by their directors. Loans are secured to the association by mortgage on real estate and by a pledge of the stock held by the borrowing member or any other security acceptable to the directors. When the loan is for the purpose of erecting a house the real estate is the house lot, which must be owned in fee simple, and the house to be built upon it. The borrower continues the regular payment of dues on his shares and interest on his loan, and, if the premium is not entirely paid in advance or de- ducted from the loan in advance, then such portions of the premium as the rules of the association may require. In other words, dues and interest are usually paid periodically and premium may be. As a rule the plans of the associations provide that loans on real estate shall run to the maturity of the shares pledged, the maturing value of the shares being equal to the loan and by maturity satisfying the loan. In some associations, however, the loans run for a fixed period, but in nearly all associations they may be terminated at any time by repayment. The regulations governing loans on the shares held by a stockholder, without real estate security, commonly called stock loans, vary in different associations. While some advance only the withdrawal or present values (the latter usually spoken of as " book values ") of the shares, or only a certain percent, of such values, others advance the full maturing value of each share borrowed on. but in such cases bor- rowers are required to pledge such additional security as may be acceptable to the directors of the association. Some associations apply the same rules to both real estate and stock loans, while others have adopted different rules for each. 589 590 APPENDIX II. PLAN 1. In this plan there is no auction of money or bidding for loans. Loans are usually awarded to members in the order of their appli- cations or by lot. The borrower makes his regular payments of dues and interest on his loan until the shares pledged for such loan have reached maturing value, unless the loan is previously settled ; or the number and the amount of his payments are fixed by the rules of the association. PLAN 2. Under this plan there is no premium, but interest on the loan, whether at a fixed rate or at a rate determined by bid, is paid by the borrower in advance, either for a fixed period or for a period covered by bid in cases of competition for loans. The borrower receives the remainder and pays no further interest until the interest paid in ad- vance has been consumed. No part of the interest paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration: A member secures a loan on five shares of a maturing value of $200 each, on which lie agrees to pay interest at 9 per cent. per annum for two years in advance. He receives $820, but gives security for .$1,000. During the first two years he pays only his regular dues. At the expiration of two years his monthly payments are as follows: Dues at $2 a share, $10 ; interest on $1,000 at 9 percent, per annum, $7.50; total, $17.50. These payments continue until the loan is settled by the maturity of the shares or by repayment. PLAN 3. Under this plan there is no premium. The funds of the association are loaned to the stockholder who bids to make the greatest number of payments of dues and interest in advance for the right of prece- dence in obtaining such loan: The borrower receives the remainder and pays no further dues and interest until the amount of such advance payments has been consumed. illustration: A member secures a loan on one share of a maturing value of $100, having agreed to pay dues and interest for twenty weeks in advance. Dues are 25 cents a week and interest at the rate of 6 per cent, per annum, payable for forty-eight weeks each year, is 12^ cents a week. The borrower receives $100, Less $5 dues and $2.50 interest, the amount covered by his bid, or a net amount of $92.50. During the first twenty weeks of his loan he is exempt from all payments. At the expiration of this period be begins the payment of his regular monthly instalment dues and interest on his loan, which he continues until the loan has been satisfied. PI, AX 4. I rnder tins plan there is no premium. The borrower pays interest on his loan in regular instalments, but the principal is reduced period- ically by the amount of dues paid in by the borrower, and interest is charged <»n the balance onlj . Illustration: A shareholder having borrowed $1,000 on ten shares of a maturing value of $100 each at 8 per cent, per annum interest pays, during the first year, in add it ion to his weekly dues of 25 cents a bare, $80 interest in monthly instalments of $6. 66f-. The dues paid by him during the year amounting to $\'M) are deducted from the prin- cipal al the end of the year, leaving $870 as a balance of principal on ii he pays $69.60 interest in monthly instalments of $5.80 each dur- ing the second year, the amount on which interest is paid being in this way reduced each year until the loan has been satisfied. PREMIUM PLANS. 591 PLAN 5. Under this plan there is no premium. The principal is reduced periodically hy the amount of dues and interest paid by the borrower, and interest is charged on the balance only. Illustration: A shareholder borrows on one share $200, which he receives in full. His first monthly payment will be dues $1, and interest on $200 at 4+ per cent, per annum, 75 cents. The second month lie pays interest on $198.25, the interest-bearing principal being reduce. I by $1.75, the amount of dues and interest paid during the preceding month. The amount on which interest is paid being in this way re- duced each month until the loan has been satisfied. PLAN 6. Loans are awarded to shareholders bidding the highest premium. The amount thus bid is deducted from the maturing value, and the borrower receives the remainder. He gives security for the gross amount and pays interest thereon. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A loan is made on five shares of a maturing value of $200 each at a premium of 5 per cent., or $50. The borrower receives $950, and thereafter pays interest at the rate of 6 per cent, per annum « mi si ,000, in monthly instalments of $5 each, in addition to his monthly dues on five shares of stock at $1 a share. PLAN 7. Loans are awarded to shareholders bidding the highest premium. The premium bid is deducted from the maturing value, the borrower receiving the remainder. He gives security for the gross amount and pays interest thereon. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares, determined by the length of time the scheme of the association assumes it will take shares to mature. Illustration : A shareholder secures a loan on one share of a matur- ing \ali:e of $200 at 10 per cent, premium. He receives $180 in cash and pays interest on $200 at 6 per cent, until his loan is satisfied. His monthly payments are as follows : Dues, $1 : interest, $1. It is assumed his shares will mature in one hundred months. If he repays his loan before maturity, he will be allowed one one-hundredth part of the premium paid by him in advance for each remaining month. PLAN 8. Loans are awarded to shareholders in the order of their applications or by lot. A fixed premium is deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross amount, and pays interest thereon either for a fixed period or until his loan is satisfied, according to the rules of the association. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the expiration of the period or the maturity of the shares. Illustration : A shareholder secures a loan on two shares of stock of a maturing value of $500 each. The by-laws of the association provide for a uniform premium of $10 on each share. In this case the borrower receives $0,s0 cash, but gives security for $1,000 and pays interest thereon. In addition to his weekly dues of $2 he pays $1.20 interest per week. PLAN !>. Loans are awarded to shareholders in the order of their applications or by lot. A fixed premium is deducted from the loan in advance, the 592 APPENDIX II. borrower receiving the remainder. He gives security for the gross amount, and pays interest thereon, either for a fixed period or until his loan is satisfied. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the expira- tion of the period or the maturity of the shares. Illustration : A shareholder secures a loan on five shares of a matur- ing value of $100 each at a fixed premium of 20 per cent. He receives in cash $400, but gives security for $500 and pays interest on the same. His monthly payments are as follows : Dues at fifty cents a share, $2.50 ; interest on $500 at 8 per cent, per annum, $3.33+ ; total pay- ments each month, $5.83|. If the loan is repaid before the expiration of the eighth year after the issue of the series of stock on which the loan has been made, one thirty-second part of the premium paid will be refunded for each quarter of a year of the said eight years then unexpired. PLAN 10. The premium, whether a fixed rate or determined by bid, is deducted from the loan in advance. The borrower receives the remainder and gives security for the gross amount, on which he pays interest. The interest is reduced periodically by crediting the principal with the amount of instalment dues paid in, and charging interest on the bal- ance only. Illustration : A shareholder secures a loan on five shares of a matur- ing value of $200 each at a premium of 10 per cent. He receives $900. but gives security for $1,000, on which he pays interest at the rate of 6 per cent, per annum. His payments during the first three months are as follows: Dues on five shares at $1 per share a month, $15; intei'est on $1,000 for three months at 6 per cent, per annum, $15 ; total for first three months, $30. During the next, and each succeeding three months, the sum total of the dues paid in by the borrower on his shares during the preceding three months is deducted from the prin- cipal, and he pays interest on the remainder. His payments during the second three months are : Dues. $15 ; interest on $985 for three months, $14.77+ total, $29.77|. The amount on which he pays interest is thus reduced" every three months until the loan is satisfied. PLAN 11. The premium bid by the bor - rower is deducted from the loan in ad- vance, tin- borrower receiving the remainder. He gives security forthe gro s amounl and pays interest thereon. He has the option of nol par- ticipating in the profits, ami in lieu thereof has his inter* st reduced periodically by crediting the principal with the amount of dues paid in and paying interest on the remainder only. One one-hundredth part (,t the premium paid in advance is returned to the borrower for each unexpired month in case of the repayment of the loan before the ma- turity Of I he shares. Illii trillion I.: The borrower participates in the profits. A share- holder secures ;i Loan on one share of a maturing value of $200 at a premiumof 10 percent.; the borrower then receives $180. He gives security for $200, on which he paj 3 interest. 1 lis monthly payments are lows: Dues, $1 ; interest on$200a1 6 per cent, per annum $1. Illustration II. : The borrower who selects the interest -reduction plan i icipate in the profits. Taking the above Loan, the monthly payments during the firsl j ear would be as follows : Dues, $1 ; interest on ■ tit. per annum, $1 ; total payments each month during the ar, $2. At the end of the year the principal is credited with the In ■ paid in during the year, reducing the interesl bearing debt to on which t he borrower pays interesl during the second year, his monthly payments being as follows: hues, si ; interesl on $188 at <"> per cent, per annum, 94 cents ; total pa\ mentseach month during the PREMIUM PLANS. f>!i:J second year, $1.94. The amount on which the borrower pays interest is thus reduced annually until the loan has been repaid. PLAN 12. Loans are awarded to shareholders bidding the highest premium. The premium I >i < I by the borrower together with the interest for the full term for which the loan has been made are deducted from the loan, the borrower receiving the remainder. He repays his loan in equal monthly instalments in the time specified for the loan. No part <>t the interest ur premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A member secures a loan on forty shares of a maturing value of $25 each the first month of a new series at a premium of 5 per cent. It is estimated that the shares will require seventy-six months to mature. The interest on $1,000 for this period, fixed by the association at $428, and the premium bid by the borrower, amounting to $50, are deducted from the loan, leaving the borrower $522. His monthly pay- ments then consist of $10 dues until maturity of his shares. PLAN 13. This plan is in every respect similar to plan 12, except that a part of the interest paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. PLAN 14. Loans are awarded to shareholders bidding the highest premium. The premium, if any, is deducted from the loan, the borrower receiving the remainder. He gives security for the gross amount of the loan, and pays interest thereon. The premium bid determines the time for which the loan is to run, the time decreasing as the premium increases. No part of the premium is returned to the borrower in case of the re- payment of the loan before the expiration of the time for which it is made. Illustration : Weekly payments on each loan of $100 are as follows : Dues, 25 cents ; interest, 15 cents ; total, 40 cents, On a loan made at par these payments continue for eighty-five months ; on a loan made at 10 per cent, premium, payments continue seventy-five months, and so on reducing the time one month for each $1 of premium bid, except that on loans running for less than four years one month is deducted for each $1.25 of premium bid. PLAN 15. Loans are awarded to shareholders bidding the highest premium. The premium is deducted from the loan in advance, the borrower receiv- ing the remainder, He pays interest only on the amount actually received. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illusti-ation : A member obtains a loan on one share of a maturing value of $100 at 10 per cent, premium. He receives $90 cash and pays interest on this amount at the rate of 6 per cent, per annum. His pay- ments are as follows : Dues per week, 25 cents ; interest per month, 45 cents. These payments continue until the share has reached the maturing value of $100. PLAN 16. Loans are awarded to shareholders bidding the highest premium. The amount thus bid is deducted from the loan, the borrower receiving the remainder. The borrower pays interest only on the amount actually 594 APPENDIX II. received. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A shareholder secures a loan on one share of a maturing value of $300 at 10 per cent, premium. He receives $180 and pays interest on this amount. His monthly payments areas follows : Dues, $1 ; interest on §180 at 6 per cent, per annum, 90 cents. These pay- ments continue until the share has reached the maturing value of $200. One one-hundredth part of the premium paid in advance is returned to the borrower for each unexpired month in case of the repayment of the loan before the maturity of the share. PLAN 17. Loans are awarded to shareholders in the order of their applications or by lot. The premium, a fixed rate, is deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross amount, but pays interest only on the amount actually received. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A member secures a loan on one share of a maturing value of $100. A fixed premium of 10 per cent, is deducted in advance, the borrower receiving $90, on which he pays interest at the rate of 8 per cent, per annum. His monthly payments are as follows : Dues, 50 cents ; interest, 60 cents. PLAN 18. Loans are awarded to shareholders in the order of their applications or by lot. A fixed premium is deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross amount, but pays interest only on the amount actually received either for a fixed period or until his shares mature. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. I llnst rat ion : A shareholder secures a loan on one shareof a maturing value of $200. A fixed premium of $10 is deducted in advance, the borrower receiving $190, on which he pays interest at the rate of 6 per cent, per annum. His payments are as follows: Dues per week, 50 cents ; interest per quarter, $2.85. PLAN 19. Loans are awarded to shareholders bidding the highest premium. The premium is deducted from t he loan in advance, the borrower receiv- ing the remainder. Be pays interest only on the amount actually received. The principal is reduced periodically by the amount of instal- ineiit dues paid in, interest being charged only on the balance. Apart of the | Hen hii in paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. I lln-l rat ion : A shareholder secures a loan on oneshare of a maturing value of $200, at a premium of $20. The borrower receives $180, on which he pass interest at the rate of 6 per cent, per annum. The principal is reduced annually by the amount of dues paid in, and inter- i i i charged on the balance remaining at the end of each year. The monthly payments for the first year are as follows : Dues, $1 ; interest ,i 6 per cent, per annum, 90 cents. For the second year : Dues, ui: iv ! on $168 at 6 percent, per annum. s| cents. The amount (.n which the borrower pave interest is thus reduced annually until the loan ha i been repaid. PREMIUM PLANS. 595 PLAN 20. Loans are awarded to shareholders bidding the highest premium. The borrower receives the full amount of his loan and pays interest thereon. The premium is divided into a certain number of equal parts, usually into as many parts as the scheme of the association assumes it will take months or other periods of time for shares to mature. These premium instalments are paid periodically, usually at the same time with the dues and interest. They continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled either by repayment or by the maturity of the shares. Illustration: A shareholder secures a loan of $200 at a premium of 5 per cent., and, assuming that it will take one hundred months lor the shares to mature, his monthly payments for one hundred months are as follows : Dues, $1 ; interest on $200 at 6 per cent, per annum, si ; premium, one one-hundredth part of $10, 10 cents ; total payments each month, $2.10. PLAN 21. Loans are awarded to shareholders in the order of their applications or by lot at a fixed premium. The borrower receives the full amount of his loan and pays interest on the same. The premium is divided into a certain number of equal parts, usually into as many parts as the scheme of the association assumes it will take months or other periods of time for shares to mature. These premium instalments are paid periodically, usually at the same time with dues and interest. They continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled by repayment or by the maturity of the shares. Illustration: A loan of $1,000 is awarded to a member at a fixed premium of 25 per cent. The premium is divided into ninety-six equal parts ; one of such equal parts is paid monthly at the same time with dues and interest. The monthly payments are as follows : Dues on five shares at $1 a share, $5 ; interest on $1,000 at 8 per cent, per annum, $6. 66$ ; premium, $2.60. These payments continue until the loan has been settled, either by repayment or by reason of the shares having reached the full value of $200 each. PLAN 22. Loans are awarded to shareholders bidding the highest premium. The total amount of the premium bid is divided into a certain number of equal parts, usually into as many parts as the scheme of the associ- ation assumes it will take months or other periods of time for shares to mature. A certain number of these premium instalments are deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross amount and pays interest on the same. The payment of the remaining instalments begins either immediately or at the expiration of the period for which the premium was deducted and continues until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled either by repayment or by the maturity of the shares. Illustration : On a loan on five shares of a maturing value of $200 each, at a premium of 30 per cent., the total premium of $300 is divided into one hundred equal parts of $3 each. Twelve of such parts are deducted from the amount of the loan, leaving the borrower $964. The payments each month for eighty-eight months are as follows : Dues at $1 a share, $5 ; interest on $1,000 at 6 per cent, per annum, $5 ; premium, $3 ; total, $13. If, at the end of eighty-eight months, the shares have not matured the borrower continues to pay dues and interest to ma- turity. 596 APPENDIX II. PLAK 23. Loans are awarded to shareholders in the order of their applications or by lot at a fixed premium. Part of the premium is deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross amount and pays interest on the same. The balance of the premium is paid in equal instalments, usually at the same time with dues and interest, payment beginning either at once or upon the expiration of the period for which the premium was deducted, and continuing during the entire term of the loan or ceasing at the end of a fixed period, after which the borrower pays only dues and interest until the loan has been settled either by repayment or by the maturity of the shares. Illustration : A member secures a loan on five shares of a maturing value of §200 each, at a fixed premium of 30 per cent., or a total of $300. Ten per cent, of the premium, or $30. is deducted from the amount of the loan, leaving the borrower $970. The balance of the premium, $270, is divided into one hundred equal parts of $2.70 each. The monthly payments are as follows : Dues at $1 a share, $5 ; interest on $1,000 at 6 per cent, per annum, $5 ; premium, $2.70 ; total, $12.70. If, at the end of one hundred months, the shares have not matured, the borrower continues to pay dues and interest to maturity. PLAN 24. Loans are awarded to shareholders bidding the highest premium. The total amount of the premium bid is divided into a certain number of equal parts. A certain part of the premium and the interest on the loan for a certain period are deducted in advance, the borrower receiving the remainder. During the period covered by the prepay- ment of the premium and interest the borrower pays only his regular dues, but at the expiration of this period, in addition to his dues, and at the same time, he pays one of the remaining premium instalments and interest on his loan. Illustration : A member secures a loan on ten shares of a maturing value of $100 each, at 40| per cent, premium. Two-tenths of the premium together with the interest for one year at the rate of 60 cents a share per month are deducted from the loan, leaving the borrower $8 17. During the first year of his loan he pays only his regular dues of 50 cents a share per month. After the first year his monthly pay- ments are as follows: Dues, $5; interest, $6; and premium, $3.75; being one one-hundred-and-eighth of the premium bid by him upon the purchase of his loan. PLAN 25. The premium, whether a fixed rate or determined by b ; d, is divided into a certain number <>!' parts, usually into as many parts as the scheme of tint association asumes it. will lake i i ion t lis or other periods of time for shares to mature. These premium instalments are paid period- ically, usually at the same time with dues and interest. They con- tinue until the entire amount of the premium lias been paid, after which the borrower pays only dues and interest until the loan lias been settled by repayment or by the maturity of the shares. The borrower receives the full amount of the loan, and pays interest on the same : but the principal is reduced periodically by the dues paid in, and intent i , charged on the balance only. Illustration : A member secures a loan on five shares of a maturing value of $200 each, at a premium of $90. Assuming that it will take ninety months for the shares to run to maturity, the premium is divided into ninety equal parts, one of which he pays each month. He LVeS the full amount of his loan, on which he pays <'» per t, The principal is credited every three months with PREMIUM PLANS. 597 all dues paid in during the preceding three months, and interest is charged only on the remainder. The payments each month during the first three months are as follows : Dues at 50 cents a share, $2.50 ; interest on $1,000 at 6 per cent, per annum, $5 ; premium, $1; total payments each month during first three months, $8.50. Payments each month during the next three months are : Dues, $2.50 ; interest on $992.50 at 6 percent, per annum, $4.96£ ; premium, $1 ; total payments each month during the second three months, $8.46^. The amount on which the borrower pays interest is thus reduced quarterly until the loan has been repaid. PLAK 26. Loans are awarded to shareholders bidding the highest premium. The premium is divided into a certain number of equal parts, payable at such times as the rules of the association may require. An arbitrary reduction in the interest rate is made periodically. Illustration : A member secures a loan on ten shares of a maturing value of $100 each, at a premium of §100, the loan having been taken during the first year of the series. The premium is divided into five annual payments, one of which is payable each year. The interest during the first year is 10 cents per week per share, second year 9 cents, third year 8£ cents, fourth year 7 cents, fifth year 6 cents, sixth year 5 cents, seventh year 4 cents, after that 3 cents per week per share. The payments each week during the first year are as follows : Dues at 25 cents a share, $2.50 ; interest on $1,000 at 10 cents on each §100, $1 ; total payments each week during first year, $3.50. The payments each week during the second year are : Dues, $2.50 ; interest, 90 cents ; total, $3.40 ; the interest being reduced each year according to the foregoing interest table. PLAN 27. Loans are awarded to shareholders bidding highest premium. The premium bid is a certain rate per cent, per annum, or a certain amount each month, or at such periods of time as the rules of the association require. The payment of premiums either continues during the entire term of the loan or ceases at the end of a fixed period. The borrower receives the whole amount of the loan and pays interest on the same. Illustration : A member secures a loan of $2,000, requiring ten shares of stock, on which he has bid 10 cents per share per month. His monthly payments are as follows : Dues at $1 a share, $10 ; interest on $2,000 at 6 per cent, per annum, $10 ; premium, $1 ; total payments each month, $21. These payments continue until the loan is settled by the maturity of the shares or by repayment. PLAI 2§. Loans are awarded to shareholders in the order of their applications or by lot. The borrower receives the full amount of his loan and pays interest on the same. The premium is a certain rate per cent, per annum or a certain amount each month, or at such periods of time as the rules of the association require. Illustration : A member secures a loan of $1 ,000 at 6 percent, interest per annum and at a fixed premium of $6.25, paj-able monthly. He pledges ten shares of stock, payable monthly, at 62^ cents per share, to be applied to the payment of the loan. He is also required to carry one additional share called premium stock for each $100 borrowed, to be applied to the paymant of the premium. His monthly payments are as follows: Dues, $6.25; premium, $6.25; interest at 6 per cent, per annum, $5 ; total payments each month, $17.50. 39 598 APPENDIX II. PLAN 29. Loans are awarded to shareholders bidding the highest premium. The premium bid is either a certain rate per cent, per annum or a cer- tain amount each month, or at such periods of time as the rules of the association require. A certain number of these premium instalments are deducted from the loan in advance, the borrower receiving the remainder. The payment of the remaining premium instalments begins either at once or at the expiration of the period covered by the advance payment and continues during the entire term of the loan, or ceases at the end of a fixed period. The borrower pays interest on the gross amount of the loan. PLAN 30. Loans are awared to shareholders in the order of their applications or by lot. The premium is either a certain rate per cent, per annum or a certain amount each month, or at such periods of time as the rules of the association require. The premium for a certain period is deducted from the loan in advance, the borrower receiving the remainder. The payment of the remaining premium instalments begins either at once or "at the expiration of the period covered by the advance payment, and continues during the entire term of the loan, or ceases at the end of a fixed period. The borrower pays interest on the full amount of the loan. Illustration : A member secures a loan on ten shares of the maturing value of $100 each, at a fixed premium of 50 cents a share per month. The premium for the first six months is deducted in advance, the bor- rower receiving $970. During the first six months he pays only dues and interest on his loan. After six months his monthly payments are as follows : Dues at 60 cents a share, $6 : interest at 6 per cent, per an- num, $5 : premium at 50 cents a share, $5 ; total payments each month until maturity of shares, §16. PLAN 31. The premium, whether a fixed rate or determined by bid, is either a certain rate per cent, per annum or a certain amount each month, or at such periods of time as the rules of the association require. The bor- rower receives the full amount of the loan and pays interest on the same ; but the principal is reduced periodically by the amount of dues paid in, and interest is charged on the balance only. Illustration : A member secures a loan of §200 on one share, at a pre- mium of ten cents a month. He receives the full amount and pays in- terest on the same. The "payments each month during the first year are as follows : Dues on one share, si ; interest on §200 at 6 per cent, per annum, si ; premium, 10 cents : total payments each month during the firs! year, $2.10. Payments each month during the second year are : Dues, §1 ; interest on $188 at 6 percent, per annum, 94 cents ; premium, 10 cents ; total payments each month during the second year, .-.'hi ; and so on, the interest being reduced each year until the settle- ment of 1 be loan. PL AX 32. This plan is in every respect similar to plan 31, except that the prin- cipal is periodically reduced by the amount of t he dues and premiums pai per cent, of the premium and interest hid. until the sixth year, when the principal is further reduced by the total amount of in- stalment dues paid up to that period and premium and interest reduced accordingly. PLAN 12. Loans are awarded to shareholders bidding the highest premium. The premium is deducted from the loan in advance, the borrower re- ceiving the remainder. He gives security for the gross amount and pa inter t on the same. Or, if the borrower elect, he may receive the- lull amount of liis loan without premium, hut in that case he pays a higher interest rate. A part of the premium paid in advance is re- turned to the borrower in case of the repayment of the loan before t he mat urity of t he shares. Illustration I.: \ member secures a loan on five shares of a maturing value of $200 each, at a premium of 10 per cent. He receives $900, hui i ecurit} for $1,000 and pays interest on the same at the rate PREMIUM PLANS. G01 of 10 cents per week on eaoli $100. His bi-weekly payments are as fol- lows : Dues at $1 a share, $5 ; interest on $1,000 at 10 cents a week per $100, $2; total of each bi-weekly payment, $7. These payments con- tinue until the maturity of the shares, unless the loan has been settled by repayment before the expiration of the sixth year from the date of issue of the shares, in which case one-sixth of the premium will lie re- funded for every entire year of the six then unexpired. Illustration II. : A member secures a loan on five shares of a matur- ing value of $200 each and receives the full amount. $1,000. He pays no premium, but interest at the rate of 7 per cent, per annum on liis loan. His bi-weekly payments are as follows: Dues at $1 a share, $5 ; interest on $1,000 at 7 percent, per annum, $2.69 T 8 7 ; total of each bi- weekly payment, $7.69 T s g. These payments continue until the loan has been settled either by maturity of shares or repayment. PLAN 43. Loans are awarded to the shareholders in the order of their applica- tions or by lot. A fixed premium is deducted from the loan in advance. The boiToVer receives the remainder but gives security lor the gross amount, and pays interest on the same. Or. if the borrower elect, he may receive the full amount of his loan without premium, but in that case he pays a higher interest rate. In either case the monthly pay- ments continue until the maturity of the shares, unless the loan has been previously settled by repayment. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a matur- ing value of $200 each, at a fixed premium of 15 percent. He receives $850, but gives security for $1,000 and pays interest on the same at 7 per cent, per annum. His monthly payments are as follows : Dues at $1 a share, $5 : interest on $1,000 at 7 per cent, per annum, $5.83^ ; total payments each month. $10.83 .'. . Illustration II.: A member secures a loan on five shares of a matur- ing value of $200 each, and receives the full amount, $1,000. He pays no premium, but interest at the rate of 10 per cent, on his loan. His monthly payments are as follows : Dues at $1 a share. $5; interest on $1,000 at 10 per cent., $8.33J- ; total payments each month. $13.:;:.; . PLAX 44. Loans are awarded to shareholders in the order of their applica- tions or by lot. A fixed premium is deducted from the loan in advance. The borrower receives the remainder but gives security for the gross amount and pays interest thereon. In addition to the premium deducted in advance, he pays a fixed instalment premium at the same time with his dues and interest until the loan is set lie! either by repayment or by the maturity of the shares. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A member secures a loan on ten shares of a maturing value of $100 each, at 10 per cent, premium. He receives §900, but gives security for $1,000. on which he pays interest at the rate of ''>' per cent, per annum, and an additional fixed premium of 12 cents per share. His weekly payments are as follows : Dues at 25 cents a share, $2.50 : interest on $1,000 at 6i per cent, per annum, $1.25 ; premium, $1.25 ; total payments each week, $5. PLAJf 45. Loans are awarded to shareholders in the order of their applications or by lot. A fixed premium is deducted from the loan in advance, the borrower receiving the remainder. He gives security for the gross 602 APPENDIX II. amount and pays interest on the same. In addition to the premium deducted in advance, the borrower pays a fixed instalment premium at the same time with his dues and interest until the loan has been settled either by repayment or by the maturity of the shares. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A member secures a loan on ten shares of a maturing value of $100 each. A premium of 10 per cent, is deducted from the loan in advance, the borrower receiving the remainder, $900. He gives security for the gross amount, $1,000, and pays interest and a fixed premium of 5 per cent, per annum on the same. His monthly payments are as follows : Dues at 75 cents a share, $7.50 ; interest on $1,000 at 5 per cent, per annum, $4. 16| ; premium on $1 ,000 at 5 per cent, per annum, $-t.l6jj ; total payments each month, $15.83$. A rebate of one-eighth of the premium deducted in advance is refunded for each unexpired year, if the loan is repaid before the maturity of the shares. PLAN 46. Loans are awarded to shareholders bidding the highest instalment premium in addition to the fixed premium, which is deducted from the loan in advance. The borrower gives security for the gross amount and pays interest on the same. The instalment premium bid is paid at the same time with dues and interest. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration : A member secures a loan on ten shares of a maturing value of $100 each, at a premium of 2 T 6 ^ per cent, per annum, or 5 cents per week. A fixed premium of $10 per share is deducted from his loan in advance, leaving him $900. He gives security for $1,000 and pays interest on the same at 6 per cent, per annum. The weekly payments are 25 cents per share, which includes dues, interest and premium. Every six months the interest and premium are deducted from the total payments- and the remainder is credited to the stock as dues. The total payments on ten shares for six months are $65 : this amount includes $30 interest and $13 premium, which, deducted from $65, leaves $22 to be credited to the stock as dues. PLAN 47. Loans are awarded to shareholders bidding the highest premium. The premium is either deducted from the loan in advance or paid in instalments, as the borrower may elect. In the latter case it is divided into a certain number of equal parts, which are paid at the same time with dues and interest. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the trial urity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of s-.'OO each, at a premium of 10 per cent. He receives $900, but gives security for $1,000, and pays interest on the same at the rate of 10 per cent, per annum. His monthly payments are as follows : Dues at .si a share, $5 ; interest on $1,000 at 10 per cent, per annum, $8.33$-; total paj ments each month, $13.33$-. Illustration II.: If the borrower elect to pay his premium in instal- ments, i he amount of the premium bid, taking the above case, would be divided into one hundred equal parts, one of which is payable uioi'l hly at t he same t hue w it h dues and interest. He receives the full amount of his loan, for which be gives security, and on which he pays interest. His monthly payments are as follows: Dues, $5 : interest, premium, si ; total payments each month, $14.83$. These pay- ment i continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest, until the loan ieen lettled bj repayment, or by the maturity of the shares. PREMIUM PLANS. 603 PLAN 48. Loans are awarded to .shareholders bidding the highest premium. The premium is either deducted from the loan in advance or paid in instalments, as the borrower may elect. In the latter case the pre- mium is divided into a certain number of equal parts, which are paid periodically at the same time with dues and interest. When the entire premium lias been paid in advance, a part of it is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on ten shares of a maturing value of $100 each, at a premium of 15 per cent. He receives $850, but gives security for the gross amount, $1,000, and pays interest on the same. His monthly payments are as follows : Dues at 50 cents a share, $5 ; interest on $1,000 at 5 percent, per annum, $4.1G : -; ; total payments each month, $9.16f. In case of the repayment of the loan before the end of the eighth year, one-eighth of the premium is refunded for each year that remains to the maturity of the shares. Shares are supposed to mature in eight years. Illustration II. : If the borrower elect to pay his premium in instal- ments, the amount of his premium bid, taking the above case, would be divided into one hundred equal parts, one of which is payable monthly at the same time with dues and interest. He gives security for $1 ,000, and pays interest thereon at the rate of 5 per cent, per annum. His monthly payments are as follows : Dues on ten shares at 50 cents a share, $5; interest on $1,000 at 5 per cent, per annum, $4.16£; pre- mium, $1.50; total payments each month, $10.66|. These payments continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled by repayment or by the maturity of the shares. PLA\ 49. Loans are awarded to shareholders in the order of their applications or by lot at a fixed premium rate. The premium is either deducted from the loan in advance or paid in instalments, as the borrower may elect. In the latter case the premium is divided into a certain num- ber of equal parts, which are paid at the same time with dues and interest. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of §200 each, at a fixed premium of 15 per cent. He receives $850, but gives security for the gross amount, $1,000, on which he pays interest at the rate of 10 per cent, per annum. His monthly payments are : Dues at $1 a share, $5 ; interest, $8.33* ; total payments each month, $13.33§. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration II. : If the borrower prefers to pay his premium in monthly instalments, it is divided into one hundred equal parts, one of which is payable at the same time with his dues and interest. He receives the full amount of his loan, for which he gives security and on which he pays interest. Taking the above case, his monthly payments are as follows : Dues on five shares at $1 a share, $5 ; interest. $8.33^ ; premium, $1.50 ; total payments each month, $14.83^. These payments continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled by repayment or by the maturity of the shares. PLA^J 50. Loans are awarded to shareholders bidding the highest premium. The premium is either deducted from the loan in advance or paid in 604 APPENDIX II. instalments as the borrower may elect. In the latter case the premium is divided into a certain number of equal parts, a certain number of winch ai'e deducted from the loan in advance and the remainder paid at the same time with dues and interest. The borrower gives security for the gross amount of the loan and pays interest on the same. IS'o part of the premium paid in advance is returned to the borrower in of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of $200 each, at 15 per cent, premium. He receives $850, but gives security for $1,000 and pays interest on the same. His monthly payments are as follows : Dues at $1 a share, $5 ; interest on $1,000 at 8 per cent, per annum, $6.66£ ; total payments each month, $11. 66$. Illustration II. : If the borrower selects the instalment plan and the premium bid is 30 per cent., the total premium of $800 is divided into one hundred and twenty equal monthly instalments of $2.50 each. Twelve of these monthly instalments are deducted in advance, leaving the borrower $970. He gives security for $1,000 and pays interest thereon. His monthly payments are as follows : Dues on five shares at $1 a share, $5 ; interest on $1,000 at 8 per cent, per annum, $6.G6£ ; premium, $2.50 ; total payments each month, $14.16|. These payments continue for one hundred and eight months, after which only dues and interest are paid until the loan has been settled by repayment or by maturity of the shares. PLAX 51. This plan is in every respect similar to plan 50, except that borrowers in this case pay no interest. PLAN 52. Loans are awarded to shareholders bidding the highest premium. The premium is either deducted from the loan in advance or paid in instalments, as the borrower may elect. In the latter case, the premium is divided into a certain number of equal parts, a certain number of which are deducted from the loan in advance and the remainder paid at the same time with dues and interest. When the entire premium has been paid in advance a part of it is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on ten shares of a maturing value of $100 each, at a premium of 15 per cent. He receives $850, but gives security for $1,000 and pays interest on the same. His monthly payments will be as follows : Dues at 50 cents a share, $5 ; interest on $1,000 at 6 per cent, per annum, $5 ; total payments each month, $10. In case of the repayment of the loan before the maturity of the shares all the premium paid in advance with the exception of one-forty-eighth pari for each full month the loan has run is returned to the borrower. Qlustration II. : If the borrower elect to pay his premium inmonthly instalments, the premium is divided into forty-eight equal parts. One of these parts, equal to .-•:;. p.".. is deducted in advance I rom the amount of the loan, leavingthe borrower $996.87^. He gives security tor $1,000 and pays interest on the same. His monthly payments are as follows : Dues on ten shares at 50 rents a, share, $5 ; interest on $1,000 at 6 per cent, per annum, $5; premium, $3. 12£ ; total payments each month, $13.12£. These payments continue until the entire amount of the premium lias been paid, after which the borrower pays only dues and mterei I unl il I be loan has been settled by repayment or by the maturity of the shares. PLAN 53. Loans are awarded <<> shareholders in tl rder of their applications or by lot at a fixed premium. The premium is cither deducted from the loan in advance or paid in instalments as t he borrower may elect . [n the latter case the premium is divided into a certain number of equal PREMIUM PLANS. 605 parts, a certain number of which are deducted from the loan in advance, and the remainder paid at the same time with dues and interest. The borrower gives security for the gross amount of the loan and pays interest on the same. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of $200 each at a fixed premium of L5 per cent. He receives $850, but gives security for $1,000 and pays interest on the same. His monthly payments are as follows : Dues at §1 a share. $5 ; interest on $1,000 at 8 per cent, per annum, $0,6G;j ; total payments each month, fll.66*. Illustration II. : If the borrower selects the instalment plan, the pre- mium, a fixed rate of 30 per cent, equal to $300 on a loan of si ,000, is divided into one hundred and twenty equal instalments of $2.50 each. Twelve of these instalments are deducted from the loan in advance, leaving the borrower $970. He gives security for $1,000 and pays in- terest on the same. His monthly payments are as follows: Hues on five shares at $1 a share, $5 ; interest on $1,000 at 8 per cent, per annum, $6.66£ ; premium, $2.50 ; total payments each month, $14. 10.;. These payments continue until the entire amount of the premium has been paid, after which the borrower pays only dues and inter. I . until the loan has been settled by repayment or by the maturity of the shares. PL.AW 54. Loans are awarded to shareholders in the order of their applications or by lot at a fixed premium. The premium is either deducted from the loan in advance or paid in instalments as the borrower may elect. In the latter case the premium is divided into a certain number of equal parts, a certain number of which are deducted from the loan in advance, and the remainder paid at the same time with dues and interest. The borrower gives security for the gross amount of the loan and pays interest on the same. A part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of $200 each, at a fixed premium of 15 per cent. He receives $850, but gives security for $1,000 and pays interest on the same at 7 per cent, per annum. His monthly payments are as follows : Dues at $1 a share, $5 ; interest on $1,000 at 7 per cent, per annum, $5.83^ ; total payments each month, $10,831. Such part of the premium paid in advance as the board of directors may determine is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration II. : If the borrower selects the instalment plan, the pre- mium, a fixed rate of 30 per cent., equal to $300 on a loan of $1,000, is divided into one hundred and twenty equal instalments of $2.50 each. Twelve of these instalments are deducted from the loan in advance, leaving the borrower $970. He gives security for $1,000 and pays interest on the same, His monthly payments are as follows : Dues on five shares at $1 a share, $5 ; interest on $1,000 at 7 per cent., $5.83| : premium, $2.50 ; total payments each month, $13. 33^. These payments continue until the entire amount of the premium has been paid, after which the borrower pays only dues and interest until the loan has been settled by repayment or by the maturity of the shares. PLAN 55. Loans are awarded to shareholders bidding the highest premium. The premium is either deducted from the loan in advance or paid in instalments as the borrower may elect. In the latter case the premium 606 APPENDIX II. is divided into a certain number of equal parts, which are paid at the same time with dues and interest. The borrower pays interest not only on his loan but also on the balance of his premium remaining unpaid. "When the entire premium has been paid in advance a part of it is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on one share of a maturing value of $200, at 20 per cent, premium. He receives §100, but gives security for $200, and pays interest on the same. His monthly pay- ments are as follows : Dues, $1 ; interest on $200 at 6 per cent, per annum, $1 ; total payments eath month, $2. Illustration II. : If the borrower selects the instalment plan, the premium is divided into a number of equal parts equal to the number of months remaining of the existence of the series of stock upon which the loan is made, calculating upon the basis of eight years for the existence of each series. Assuming the loan to have been made at the beginning of a series, the premium of $40 would be divided into ninety- six equal parts of 41| cents each. The borrower receives $200 and pays interest on both principal and the premium remaining unpaid. The interest on the premium is averaged yearly, making all monthly instal- ments payable during any year equal in amount. The monthly pay- ments during the first year are as follows : Dues, $1 ; interest on loan, $1 : premium, 41 f cents ; interest on premium, 18f cents ; total, $2.60 T 5 o. Monthly payments second year : Dues. $1 ; interest on loan, $1 : premium, 41| ; interest on premium, 16^ cents ; total, $2.57-j4 ; and so on, interest on the premium decreasing each year by 2| cents per month. The premium is averaged annually as follows : Total premium for eight years $40.00 Total payment of premium during the first year 5.00 Leaving balance of premium due at end of first year 35.00 Add to this one-half of premium for first year 2.50 Compute interest at 6 per cent, per annum on 37.50 PLAX 56. This plan is in every respect similar to plan 55, except that loans are made at a fixed premium rate instead of to the highest bidder. PLA1V 57. Loans are awarded to shareholders bidding the highest premium. Tli'- l>i\ the board of directors, is made if the premium is paid in advance. Supposing a reduction of 40 per cent, is allowed, it would leave a premium of $216 to be deducted from the loan, leaving the borrower $~S4. He gives security for $1,000, and pays interest on the same at 7 per cent, per annum. His monthly payments are as follows : Dues on 608 APPENDIX II. five share? at $1 a share, $5 ; interest on $1,000 at 7 percent, per annum, $5,834. No part of the premium paid in advance is returned to the borrower in case of the repayment of the loan before the maturity of the shares. PLA1V 60. Loans are awarded to shareholders binding the highest premium. The entire premium is either deducted from the loan in advance or part of it is deducted in advance and the balance paid in instalments. In either case the borrower gives security for the gross amount of the loan and pays interest on the same. When the entire premium has been paid in advance a part of it is returned to the borrower in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a maturing value of $200 each, at a premium of 50 cents a share per month. Twelve instalments, equal to $30, are deducted from the loan in advance, leaving the borrower $970. He gives security for $1,000 and pays interest on the same. The remaining premium instalments are paid monthly, with dues and interest, beginning from date of loan and continuing for not more than one hundred and eight months, making a total premium of $300. The monthly payments for one hundred and eight months are as follows : Dues on five shares at $1 a share, $5 ; inter- est on $1,000 at 7 per cent, per annum, $5.83£ ; premium at 50 cents a share, $2.50 ; total paj'ments each month for one hundred and eight months, $13. 33 J. The subsequent payments are: Dues, $5 ; interest, $5,83£; total payments each month, $10.83^. Illustration II. : In this case the premium bid, 50 cents a share per month on five shares, equal for ten years $300. A reduction of this of 40 per cent, is made if the premium is paid in advance, or an amount equal to $120, leaving the premium to be deducted in advance $180. The borrower then receives $820, but gives security for $1,000, and pays interest on the same at 7 percent, per annum. His monthly pay- ments will be : Dues on five shares at $1 a share, $5 ; interest on $1,000 at 7 per cent, per annum, $5.83J. In case of the repayment of the loan before the maturity of the shares, one-tenth of the premium paid in advance is returned to the borrower for each unexpired year. FLAW 61. Loans are awarded to shareholders bidding the highest premium. The premium is cither deducted from the loan in advance or paid in instalments. It is, however, not forfeited to the borrower, but is placed to his credit, either in whole or in part. He gives security for the lull amount of the loan and pays interest thereon. illustration I. : If the maturing value of a share is $200 and a member bids 'J5 per cent, premium, he receives in cash $150 hut pays interest on $200. When the dues and profits equal the net amount received by the borrower, his loan is cancelled. on II. : At a premium of $1 a share a loan of $200 costs the borrower, bi-weekly, 50 cents' dues, $1 premium, and $1 interest — total of each bi-weekly payment, $2.50. Of this amount $1.50 paid on account. of dues and premium is credited to the borrower, only the interest ■ to the association. If the borrower bids a premium of more t han $1 . I he excess goes to the general fund of (he associal ion and not to individual credil of the borrower. The payments continue until t h^ dues, together with the premium and dividends, equal the amount «,t the loan. PLAN 62. Under this plan I he premium is either a fixed rate or determined by bid. The borrower receives the full amount of the loan, lml gives irity covering both the loan and the premium, and pays interest PREMIUM PLANS. 609 on the amount actually received by him until the shares reach the value of the face of the mortgage. Illustration: A member borrows on one share $100, at a premium of 10 per cent. He gives security for both the loan and premium, $1 10, but he pays interestonlyon$l00, on amount received. His weekly pay- ments areas follows : Dues, 25 cents ; interest on $100 at 0.24 per cent, per annum, 12 cents ; total payments each week. M7 cents. These payments continue until the share lias reached the value of §110, unless the loan has been previously repaid. PLASi 63. Under this plan the premium is either a fixed rate or determined by bid. The borrower receives the full amount of the loan, but gives security covering both the loan and the premium, and pays interest on both until the shares reach the value of the face of the mortgage. Illustration : A member secures a loan of $200 on one share, at a premium of 20 per cent. He receives the full amount of $200, and gives security for $240, on which he pays interest. His monthly payments are as follows : Dues, $1 ; interest on $240 at 6 per cent, per annum, $1.20 ; total payments each month, $2.20. These payments continue until the share has reached the value of $240, unless the loan has been previously repaid. PLAN 64. Under this plan the premium is either a fixed rate or determined by bid. The borrower receives the full amount, but gives security covering both the loan and the premium, and pays interest on both. The premium is paid in instalments, usually at the same time with dues and interest. Payments of dues, premiums, and interest continue until the shares reach maturing value. Illustration: A member borrows $1,000 on ten shares of a maturing value of $100 each, at a premium of 25 per cent. He receives $1,000, but gives security for $1,250. the amount of his loan and premium. He pays the premium in monthly instalments by taking three additional shares and paying dues thereon. His monthly payments are as follows : Dues on ten shares at 50 cents a share, $5 ; dues on three additional shares in payment of premium, $1.50 ; interest on $1,250 at 7 per cent, per annum, $7.20 J- ; total payments each month, $13. 79$. These payments continue until his shares have reached maturity, when he receives $50, the difference between the debt and the maturity value of thirteen shares. PLAIS 65. In this case the borrower receives the full amount of the loan, but gives security covering both the loan and the premium, and pays interest on both until the shares pledged for the loan reach maturing value. Illustration : A member borrows $150 on one share, at a premium of 10 per cent. He receives the full amount of $150 and gives security for $165, on which he pays interest at the rate of 6 percent, per annum. Payments are bi-weekly and are as follows : Dues, 50 cents ; interest on $165 at 6 per cent., 38^ cents. These payments continue until the share has reached the value of $150, being the maturing value of shares, unless the loan is previously repaid. Although the premium is included in his mortgage, the borrower does not really pay it ; in fact, the only premium he pays is the interest on the difference between $105 and $150, the amount actually received. PLAN 66. Loans are awarded to shareholders bidding the highest premium. The borrower gives security for the loan, the premium, in whole or in part, and the total dues for a definite period. This he pays off in equal 610 APPENDIX II. instalments extending over a definite period, at the expiration of which the loan is cancelled. A rebate is allowed if the loan is repaid before the end of the period. Illustration : A loan of $500 is made at a premium of $100 ; these two amounts are added to the dues on one share of stock for ten years, which at 25 cents per week amount to $130. The borrower receives $50 I, but gives security for $780. the total sum of the loan, dues, and premium. The total amount cf his mortgage is paid in ten years in monthly instalments of $6.08|each. If more than $100 premium is bid, the excess is deducted from the $500, the borrower receiving the remainder, but giving security for the full amount, and discharging his debt by monthly payments as illustrated above. If a loan is repaid before maturity, rebates are allowed as follows : If repaid at any time prior to the expiration of five years, the borrower is allowed a rebate of one-half of the premium instalments for five years, and all the dues for five years. For example : At the end of the year he has paid $73 on his mortgage, of which $50 is return of loan. $10 is premium, and $13 is dues. He now desires to pay off his entire indebtedness, and the cash required of him for this purpose is $567, stated as follows: Original amount of mortgage $730.00 Deduct amount paid during one year 73.00 Balance due 657.00 From this balance deduct 50 per cent, of five years' premium instalments (50 per cent, of $50) $'35.00 Also deduct all of five years' dues ($13X5) 65.00 90.00 Amount required to pay off indebtedness 567.00 If the debt is paid at any time after the expiration of five years, the borrower is allowed a rebate of 50 per cent, of the premium instal- ments, and all of the dues unpaid. Members who borrow after having paid dues prior to borrowing are given credit for the withdrawal value of their stock at the time the loans are made, but such credit is not given until the expiration of one year from date of loan. Thus, suppose in the case of the borrower above cited, his share at the time he secured his loan had a withdrawal value of $'25. During the first year of the loan he is required to pay the full amount of instalments, $73. At the end of the year he is credited with the withdrawal value of his share, $25, and during the second year of his loan he is required to pay only $48. After the second year until the loan is paid off, he pays the full amount, $73, each year. PLAN 67. Loans are awarded to shareholders bidding the highest premium. Tli.' premium is either deducted from the loan in advance or the bor- r< »wer receives the full amount as may be agreed upon. If the premium is deducted, the borrower receives the balance, but gives security for the full amount and pays interest thereon. If the borrower receives the full amount of the loan, he gives security for both loan and pre- mium, and pays interest on the same. Payments of dues and interest continue until the shares reach a value equal to the amount of the se- curity given by the borrower. No pari of the premium paid in advance i returned to the borrower in case of the repayment of the loan before t he mat in il \ of 1 he shares. Illu tration t. : A mber secures a loan of five shares of a maturing value of $100 each, a1 a premium of id |mt cent. He receives $150, but hi itj for $500, "u which he pays dues and interest. PREMIUM PLANS. (311 Illustration II. : In this case the borrower receives $500, but gives security for $550, on which he pays dues and interest until the shares reach the value of $550, unless previously repaid. PLAN 68. Loans are awarded to shareholders bidding the highest premium. The premium is either deducted from the loan in advance or the bor- rower receives the full amount as may be agreed upon. If the pre- mium is deducted, the borrower receives the remainder, hut gives se- curity for the gross amount and pays interest thereon. If the bor- rower receives the full amount of the loan, he gives security on both loan and premium and pays interest on the same. In either case the principal is reduced periodically by the amount of dues paid in on the shares borrowed on, and interest is charged on the remainder. No re- bate of premium is allowed in case of the repayment of the loan before the maturity of the shares. Illustration I. : A member secures a loan on five shares of a matur- ing value of $200 each, at a premium of 10 per cent. He receives $900, but gives security for $1,000. His monthly payments for the first three months are as follows : Dues. $5 : interest on $1,000 at 6 per cent. $5 : total. $10. At the end of three months the principal is credited with $15. the dues paid in, leaving $985 principal, on which interest is charged. Monthly payments during the second quarter are : Dues. $5 : intereston $985 at 6 per cent, per annum, $4,92| ; and so on. reducing the principal each quarter until the loan is discharged. Illustration II. : In this case the borrower receives $1,000, but gives security for $1,100, on which he pays interest at 6 percent, per annum. His monthly payments for the first quarter are as follows: Dues. S5 ; interest on $1,100 at 6 per cent, per annum, $5.50 ; total, $10.50. At 1 he end of three months the principal is reduced by $15, leaving $1,085 principal, on which interest is charged. Monthly payments during the second quarter are as follows: Dues, $5; interest on $1,085 at 6 per cent, per annum, $5. 42£ ; total, $10.42£ ; and so on, reducing the prin- cipal each succeeding quarter until the loan' is discharged. PLANS OF DISTRIBUTION OF PROFITS. While a great variety of plans are in vogue for the payment of pre- miums, it is also true that there are many plans for the distribution of profits. The investigation discloses twenty-five different rules or methods of distribution of profits. The amount of interest which a member has in a building and loan association is indicated bythe number of shares which he holds, the age of the shares, and their maturing value. Shares are of three kinds, called — instalment or running shares, pre- paid shares, and paid-up shares. When a member desires to make weekly, monthly, or other periodical payments, he subscribes for in- stalment shares and indicates the amount of the periodical payments he desires to make by the number of shares for which he subscribes. These payments are continued until the instalments and the profits on the shares have caused them to reach their maturing or par value, when they are wound up by returning to the non-borrowing members the value of their shares in cash, and to the borrowing members their mort- gages and cancelled obligations. Prepaid shares, known also as partly paid-up shares, are issued by some associations at a fixed price per share in advance : such shares 612 APPENDIX II. usually participate as fully in the profits as the regular instalment shares, and when the amount originally paid for such shares, together with the dividends credited thereon, reaches the maturing or par value then such shares are matured, and are disposed of in the same manner as regular instalment shares. A few associations, however, instead of crediting all the profits made on this class of shares, allow a fixed rate of interest on the amount paid therefor at each dividend period, which is paid in cash to the holders thereof. This interest is then deducted from the profits to which the shares are entitled, and the remainder is credited to the shares until such unpaid portion of the profits, added to the amount originally paid, equals the maturing or par value. Some associations allow their members to pay in the full maturity or par value of their shares at any time, and a certificate of paid-up stock is then issued, and the owners thereof are entitled to receive in cash the amount of all dividends declared thereon . subject to such conditions or limitations as the board of directors of each particular association may have adopted. In some instances these shares participate as fully in the profits as the regular instalment shares ; but in most cases a fixed rate of inter- est only is allowed, the holders of the shares usually assigning to the association all right to profits above that amount. In some cases the holders of regular instalment shares that have arrived at maturity value do not desire to draw out their money, but prefer to leave it with the association as an investment. Associations allowing this to be done issue to holders of matured shares what are known as certificates of matured shares, which are usually governed by the same conditions as are attached to paid-up shares. In the descriptions of the various plans for distributing profits which follow, only the regular instalment shares have been considered. The most common as w T ell as the most important difference between the methods of distributing profits employed in national associations and those employed in local associations is the following : In local associations the total amount of dues paid in by the shareholders forms the basis for such distribution ; while in nearly all national asso- ciations only a portion of the dues paid in by the shareholders figures in the distribution. For instance, in national associations the dues are generally (>0 cents a share per month, out of which either 8 or 10 cents are carried to an expense fund, the remainder being credited to the loan fund. The expense fund thus created is lost to the share- holders, except in the case of a few associations which carry the unex- pended balances to the profit and loss account, and whatever profits are made are apportioned on the amount of dues credited to the loan fund only. The tables following give a general summary of the situation in respect, to the twenty-five plans in use : PI..1N 1. This plan apportions the profits among series just as profits among partners are apportioned in a linn where the partners enter at different e LCh scries represent Lng a partner. 1. Multiply the dues pa ill in on t lie shares in force in each series by t !"■ equated t ime of in\ est menl ■ .'. Take I he sum of t hese products and then find what fractional part each product is of the sum. '.',. These fractions are the parts of the total net. profits belonging to each Series. 'I'm illustrate the rule, let us suppose that, an association whoso in .hi iil\ dues are $1 per share had three series in force at the end of the third year, and that the number of shares in each series ami f heir Value per 'hari' were as follows : Firsl 'lie., 500 shares, value per share $38.87; second series, 600 PREMIUM PLANS. 613 shares, value per share $25.27 ; third series, 400 shares, value per share $12.32 ; that a fourth series of 500 shares is then issued ; the net profits for the fourth year are $3,000. and the total net profits for the four years are $5,325. Required : The value of a share of each series ;it the end of the fourth year. The first series above alluded to lias run four years, or forty-eight months. Forty-eight $1 payments have therefore been made on each share of stock. The first dollar paid has been invested forty-eight months ; the second dollar paid, forty-seven months ; the third dollar paid, forty-six months, etc., the last dollar of the forty-eight having been invested one month. The times of investment thus form a i\*'- ci'easing arithmetical series, with forty-eight for the first term, one for the last term, and forty -eight for the number of terms. The total investment is thus equal to SI invested for 1,176 months (the sum of the series), equivalent to $48 invested for 24| months. Treating the other series in the same way, we find that $36 paid per share in the second series has been invested for 18A months ; $24 paid per share in the third series, for 12-J months ; and $12 paid per share in the fourth series, for 6J months ; then — $48 X 500 X 2U = $588,000, first series' investment for one month. $36 X 01)0 X 18£ = $399,600, second series' investment for one month. $24 X 400 X 12jr= $120,000, third series" investment for one month. $12 X 500 X 6£ = $39,000, fourth series'investment for one month. $1,146,600, total investment for one month. Hence the total net profits are divided as follows : ttWWo or tVtt or * t ae total profits belong to the first series. YYY''Y'>'f '"' I'YY'i "'' ,il( ' total profits belong to the second series. TTTifVo'V or t/tt °f the total pi*ofits belong to the third series. TTTsljInT or xf it °f * ne total profits belong to the fourth series. Total profits to be divided are $5,325. Y'.m'Y of $5,325 = $2,730.77, first series' share of the profits. i'i'YY °t $5,325 = $1,855.81. second series' share of the profits. tYtt o f $5,325 = $557.30, third series' share of the profits. t! it °t $5,^25 = $181.12, fourth series' share of the profits. $2,730.77 h- 500 + $5.4(5, profit of a share of the first series. $1,855.81 h- 600 + $3.09, profit of a share of the second series. $557.30 -H 400 + $1.39, profit of a share of the third series. $181.12 -s- 500 + $0.36, profit of a share of the fourth series. $48.00, dues paid, + $5.46, profit, = $53.46, value of a share of the first series. $36.00, dues paid, + $3.09, profit, = $39.09, value of a share of the second series. $24.00, dues paid, -+- $1.39, profit, = $25.39, value of a share of the third series. $12.00, dues paid, + $0.36, profit, = $12.36, value of a share of the fourth series. In the above example, all the net profits made during the four years have been apportioned to the several series, but some associations apportion only each year's profits in this way. Other associations using this plan simplify the process, but obtain the same results, by dividing the total investment for one month (or for one week, as the case may be), into the profits to be apportioned, for the profit on $1 invested for one month, which is then multiplied successively by the sum of the number of weeks, months, or other periods of time for which each dollar of dues in each series has been invested. The products will be the amount of the profits belonging to a share in each series. 614 APPENDIX II. A few associations have been found that arrive at the same results by using the following methods, which is known as Clark's plan : 1. Multiply the number of shares in force in each series by the quotient obtained by dividing the sum of the number of weeks, months, or other periods of time for which each dollar of dues in each series has been invested by the product obtained by multiplying the dues paid in on one share during the first year by the average time of invest- ment, for the equalized results for each series. 2. Take the sum of these results and divide it into the total profits since the beginning of the association, for the rate per cent, of profit. 3. Multiply the quotients already found by the rate per cent, of profit, for the profit of a share in each series. We have before seen that §48 dues per share in the first series have been invested for 24+ months, which is equal to §1 invested for 1.176 months. In like manner §36 dues per share in the second series have been invested for l&J months, which is equal to $1 invested for 666 months ; $24 dues per share in the third series, for 12£ months, which is equal to $1 invested for 300 months ; and §12 dues per share in the fourth series for 6+ months, weich is equal to §1 invested for 78 months. The average time of first year's payments is simply half the time of investment, which is 6 months. Twelve dollars invested for an average period of 6 months is equal to $1 invested for 72 months. Then: 1,176 -- 72 = 16.333. 666-^-72= 9.250. 300 -h 72= 4.166. 78 -h 72 = 1.083. 500 X 16.333 = 8,166.50, equalized result for the first series. 600 X 9.250 = 5,550.00, equalized result for the second series. 400 X 4.166 = 1,666.40, equalized result for the third series. 500 X 1.083 = 541.50, equalized result for the fourth series. 15,924.40, equalized result for all series. $5,325, the total profits, — 15.924.40 = 33.4392, the rate per cent, of profit. $0.334392 X 16.333 = §5.46, profit of a share of the first series. $0.334392 X 9.250 = §3.09, profit of a share of the second series. $0.334392 X 4.166 = §1.39, profit of a share of the third series. $0.334392 X 1.083 = §0.36, profit of a share of the fourth series. For the value of each share, add the dues as above. There is a modification of plan 1, which follows the same general method as that shown in the first illustration, but differs in certain pari icularsand gi ves a different result. The modification is as follows : Instead of finding the exact equated time of investment, many associ- ations arrive al an approximate equated time by taking one-half the number of months a series has run. Using the same data as in the above illustration, we get 24, I s !, 12, and (! as the average number of months the series have run. It is this modification that is commonly, lull erroneously, called the partnership plan. [LLUSTRATION. $48 < r.iil) x 24 = $576,000, first series' investment for one month. 600 • L8 $388,800, second series' investment for one month. 100 I.' $115,200, third series' investmenl for one month. 500 •'. $36,000, fourth series' investment for one month. ' . I 16,000, total invesl nienl for one month. The total net profits are then divided in proportion to each series, I iik nl for one monl h, t hus : PREMIUM PLANS. 615 YVVr,''.;;;',, or flfc of |5,325 = $2,748.39, first series' share of the profits. i : mV.,"h"m (,r fiir °f $5,325 $1,855.16, second series' share of the profits. -lYi'Vo'iMi or i'.-."o "'' $5,325 = $549.68, third series' share of the profits. Tii""!!.. or ,?,-, of $5,325 = §171.77. fourth scries' share of the profits $2,748.39 -*■ 500 = $5.50, profit of a share of the first scries. $1,855. 16 -5- 600 = $8.09, profit of a share of the second series. $549.68 -*- 400 — $1.37, profit of a share of the third series. $171.77 -s- 500 = $0.;i4, profit of a share of the fourth series. This modification of plan 1 lias been simplified, the principle con- sisting in casting out common factors in the process of multiplication. The first series lias run 48 months ; the second, 36 months; t he t hird, 24 months ; and the fourth, 12 months. The average time of invest- ment, as we have before seen, is 24, 18, 12, and (i. respectively. Then we proceed thus . 48, age in months, X 24, average time, X 500 shares. 36, age in months, X 18, average time, X 600 shares. 24, age in months, X 12, average time, X 400 shares. 12, age in months, X 6, average time, X 500 shares. It will be readily seen that 12 is a factor common to all the numbers of the first column, and that 6 is a factor common to all the numbers in the second column. Casting out these factors, we have — 4 X 4 X 500 = 8,000. Hence T 8 5 °g of the total profits belong to the first series. 3 X 3 X 600 = 5,400. J& of the total profits belong to the second series. 2 X 2 X 400 = 1,600. T W of the total profits belong to the third series. 1 X 1 X 500 = 500. T fg of the total profits belong to the fourth series. Total, 15,500. Briefly put, then, the simplification is as follows : Multiply the num- ber of shares in force in each series by the square of the time of investment expressed in terms or periods corresponding to the inter- vals between the series, and then divide the profits in proportion to these products. The foregoing simplification has been still further simplified by find- ing the profit of a share in each series directly, instead of finding each series' share of the profit, as follows : 1. Multiply the number of shares in force in each series by the square of the time of investment expressed in terms or periods corre- sponding to the intervals between the series. 2. Divide the sum of these products into the results obtained by multiplying the total net profit by the square of the time of investment expressed as above. The total of the products as in the last illustration is 15.500 ; then — $5,325, total profits, X 4 X 4 -r- 15,500 = §5.50, profit of a share of the first series. $5,325, total profits, X 3 X 3 -f- 15,500 = §3.09, profit of a share of the second series. $5,325, total profits, X 2 X 2 -=- 15,500 = §1.37, profit of a share of the third series. §5,32.-). total profits, X 1 X 1 -*- 15,500 = §0.34, profit of a share of the fourth series. A share of the first series receives 16 times as much profit as a share of the fourth series ; a share of the second series, 9 times as much ; and a share of the third series, 4 times as much. This method, therefore, reveals the fact that, by multiplying the number of shares in force in each series by the square of the time each series has been invested, expressed in years, half years, quarter years, etc.. corresponding to the intervals between the series, a correct basis of calculation is reached. 616 APPENDIX II. These simplifications, however, are practicable only where series are issued at regular intervals, as fractions complicate the operation. This simplification is known as Rice's rule. A few associations arrive at the same results by dividing the total investment for one month into the profits, for a rate per cent, of profit, and then applying the rate to each series' investment for one month for each series' share of the profits. The process is also varied in the following manner : Find what annual rate of interest the profits are equivalent to on the amount of dues paid for one-half the time that all the dues have been invested, and apply this rate on the dues paid per share for one-half the time of investment, for the profit of a share in any series. Other variations are the following : 1. The profits are distributed on the amount of dues actually paid in on the shares in force in each seizes (not what the regular payments should have amounted to), multiplied by one-half the time of invest- ment. 2. The profits are distributed on the total amount of dues standing to the credit of the shareholders in the loan fund multiplied by one- half the time of investment. 3. The series are not allowed to participate in the profits for the term in winch they were issued. 4. The profits are distributed on the amount of dues actually paid in on all shares in force that are three months old or over, multiplied by one-half the time of investment, shares less than three months old not participating. 5. The profits are distributed to the free shares only, dues on shares borrowed on being credited on loans. 6. Profits arising from withdrawals are divided equally among the shares of the respective series from which the shares were withdrawn. ?. Profits arising from entrance fees are divided equally among the shares of the respective series in which the shares are taken. 8. A profit of $1 is given to all shares six months old or over. The remainder of the profits is distributed on the dues paid in on the shares in force six months old or over multiplied by one-half the time of in- vestment. 9. Profits arising from premiums are divided equally among all the shares in force at the end of the period during which the loans were made Profits from all other sources are distributed in accordance with the modified rule. 10. A fixed rate of interest is given on the total amount of dues paid on the shares in force at each apportionment. This interest is deducted from the profits for tbe term and the remainder distributed according to the modified rule. 11. A fixed rate of interest is given on the value of the shares in force as declared by the last report. This interest is deducted from the profits for the term and the remainder is distributed according to the modified rule. 12. A portion of the total amount of premiums received by and due the association is arbitrarily determined upon, and held in reserve to be applied in future dividends ; the amount thus determined upon is ded net I'd from the total profits, and the remainder of the profits is dis- t ributed as follows : The interest and dividends allowed on free shares withdrawn are added to t be dues paid in on such shares, and the sum total of said interest and dividends is deducted from the amount of dis- tributable profits; t be balance is distributed among all the shares in accordance with the foregoing modified rule. There is still another modification of plan 1. as follows: Multiply each series' in vest nun t r t bat is. the dues paid in on the shares in force) by one half t be number of moid lis invested plus one and apportion the profits in proportion to these products. PREMIUM PLANS. 617 Using the same data as before we proceed as follows : ILLUSTRATION. $48 X 500 X 23 = $600,000, first series' investment for one mouth. $36 X 600 x 19 = $-110 4(i0, second scries' investment for one month. $24 x 400 x 13 = $124,800, third series' investment for one month. $12 X 500 X 7 = $42,000, fourth series' investment for one month. $1,177,200, total investment for one month. Then, proceeding as before, we find that — r \%%%%% or fff of $5,325 = $2,714.07, the first series' share of the profits. ^V^,% or fff of $5,325 = $1,856.42, the second series' share of the profits. TTTTinfr or 'si of $5,325 = $564.53, the third series' share of the profil 5. T 4-K'»;; ri or Jfo of $5,325 = $189.98, the fourth series' share of the profits. $48, dues, + ($2,714.07 -^- 500)=$53.43,value of a share of the first series. $36, dues, + ($1,856.42 -r- 600)= $39.09, value of a share of the second S61"16S $24, dues, + ( $564.53 -v- 400) = $25.41, value of a share of the third series. $12, dues, + ( $189.98 -^ 500) = $12.38, value of a share of the fourth series. PLA.\ 2. 1. Give to each series, except the last, interest at the legal rate upon the value of the shares in force as declared at the last report. 2. Deduct this interest from the profits for the term and divide the remainder equally among all the shares. Assuming that 6 per cent, is the legal rate, and using the same data as in the illustration of plan 1, the plan is worked out as follows : ILLUSTRATION. $38.87 X .06 = $2.33, interest on one share of the first series. $25.27 X .06= $1.52, interest on one share of the second series. $12.32 X .06 = $0.74, interest on one share of the third series. $2.33 X 500 =$1,165, interest belonging to the first series. si .52 X 600 = $912, interest belonging to the second series. $0.74 X 400 = $296, interest belonging to the third series. $2,373, total interest belonging to the old series. $3,000, the profits for the term, — $2,373 = $627, profits remaining to be divided. $627 -h 2,000, total shares in force, = $0.31, profit of each share. $38.87, previous value, + $2.33, interest, + $0.31, profit, + $12, dues, = $53.51, value of a share of the first series. $25.27. previous value, + $1.52, interest, + $0.31, profit, + $10. dues, = $39.10, value of a share of the second series. $12.32, previous value, +$0.74, interest, + $0.31, profit, + $12, dues. = $25.37, value of a share of the third series. $0.31, profit, + $12. dues, = $12.31, value of a share of the fourth series. Undivided profits. $7. This is known as Wrigley's rule. Many associations using this plan of distributing profits allow a higher or a lower rate of interest than the legal rate, but no separate classification of such associations lias been made. The above plan is varied by different associations in the following manner : 1. Interest is allowed on all the series except the last. 2. Interest is allowed on the dues paid in up to the last report on the shares in force. 618 APPENDIX II. 3. Interest is allowed on the withdrawal value of the shares in force. 4. Interest is allowed on the value of the shares in force as declared by the last report, plus all the dues paid in during the term. 5. Shares less than six months old do not participate in the profits. 6. Interest is allowed on the value of the shares in force as declared by the last report plus one-half the dues paid in during the term. T. Interest is allowed on all the dues paid in on the shares in force for one-half the time they have been invested. 8. Alter the legal rate of interest has been deducted from the total profits, the remainder of the profits is divided in proportion to the amount of dues paid in during the term. 9. Profits arising from withdrawals are divided equally among the shares of the respective series from which the shares were withdrawn. 10. After the legal rate of interest has been deducted from the total profits the remainder of the profits is divided as follows : Ail shares in force at last report receive an equal part, while shares three months old receive one-fourth as much as shares one year old, shares six months old receive one-half as much as shares one year old, etc. 11. Shares less than three months old are not allowed any part of the profits. 12. This variation of the rule is made by some national associations : After the interest has been deducted from the total profits the remainder of the profits is divided among all the shares in force, in proportion to the amount of dues paid into the loan fund during the term. 13. Each series except the larst is given interest at the legal rate upon the value of the shares in force as declared by the last report ; the first scries is then given credit for all the interest paid during the term on loans made prior to the issuing of the second series. The first and second series together are given credit for all the interest paid during the term on loans made during the existence of the second series and prior to the issuing of the third series, the apportionment being made equally to the shares in each ; and so on for any number of series. The remainder of the profits is divided equally among all the shares in force. 14. A fixed rate of interest is allowed on the value of all shares in force as declared at the last report. This interest is deducted from the profits and the remainder divided among all shares three months old or over, in proportion to the amount of clues paid in during the term. PLAX 3. 1. To the value of all the shares in force as declared by the last reporl add one-half the dues paid in during the term. '.'. Divide the profits for the term by tin's sum for the rate per cent. of profit . :;. To the value of each share as declared by the last report add one- the dues paid in during the term ami multiply the sum by the per cenl . of profit, Tor t he profit of each share. 4. To the value of each share as declared by the last report add the ihics paid in on the same during the term and the profit of each share, for i he presenl value. I ing the same data us in the previous illustrations the result is as follows : II. IJ STB \TImN. ; Mm $19,435, value of first series at last report. 600 $15,162, will f second series at, last report. 1,928, value of third series at, last report. $39,525, value of all series af last report. PREMIUM PLANS. 619 $l + 22+ 2,000 = $12,000, one half the flues paid during the year. $39,525 + $12,000 = 151,525, total dividend bearing capital. §3,000 the profits for tlie term, -5- $51,525 = 5.8224, the rate per cent, o!' profit. ($38.87 + $6) X .058224 = $2.61, profit of a share of the first series. ($25.27 + $6) X .058224 =$1.82, profit of a share of the second series. ($12.32 + $6) X .058224 = $1.07, profit of a share of the third series. $6 X .058224 = $0.35, profit of a share of the fourth series. $38.87, previous value, X $2.61, profit for term, X $12, dues, = 5 present value of a share of I he first series. $25.27, previous value, + $1.82, profit for term, + $12, dues, = $39.09, present value of a share of the second series. $12.32, previous value. + $1.07, profit for term, X $12, dues, = $25.39, present value of a share of the third series. $0.35, profit for term, + $12, dues, = $12,35, present value of a share of the fourth series. The above rule is known in some sections of the country as the third dividend rule. It is varied by different associations in the following manner : 1. To the value of all the shares in force as declared by the last report add one-third of the dues paid in during the term for the dividend bearing capital. 2. To the value of all the shares in force as declared by the last report add two-thirds of the dues paid in during the term for the dividend bearing capital. 3. To the value of all the shares in force as declared by the last re- port add eight-thirteenths of the dues paid in during the term for the dividend bearing capital. 4. To the value of all the shares in force as declared by the last re- port add three-eighths of the dues paid in during the term for the divi- dend bearing capital. 5. To the value of all the shares in force as declared by the last re- port add one-half the dues paid in during the term, not including the last regular payment, for the dividend bearing capital. 6. Shares less than six months old do not participate in the profits. 7. Instead of ascertaining a rate of profit according to the rule, each series' share of the profits is represented by a fraction whose numer- ator is the dividend bearing capital of the respective series and whose denominator is the total dividend bearing capital of all the series. 8. Profits arising from withdrawals are divided equally among the shares in force of the respective series from which the shares were withdrawn. 9. The profits belonging to the series issued since the last report are kept separate and are divided equally among the shares of that series. 10. The rate of profit is found according to the rule, but this rate is applied upon the dues paid in at the last report plus one-half the dues paid in since, previously apportioned profits being disregarded; the remainder of the profit being held in reserve. 11. The rate per cent, of profit annually based on the free shares only is found according to the rule, and the board of directors arbitrarily declares what part of said rate shall be distributed to the free shares, the l-emainder being carried to the reserve fund. The shares borrowed on do not participate in the profits, their dues being credited on the principal of the loan. 12. All of the profits are distributed to the free shares only. The shares borrowed on do not participate in the profits, their dues being credited on the principal of the loan. 13. To the value of the free shares as declared by the last report add one-half the dues paid in during the term on all the shares in force, for the dividend bearing capital. The shares borrowed on receive profits G20 APPENDIX II. on one-half the dues paid in during the term only. These profits and the dues paid in are credited on the principal of the loan. 14. This variation from the rule is largely used throughout the New- England states, and is known as the Eldredge plan. It differs from the rule, in that the rate per cent, of profit is not computed in the usual way, but instead the division of profits is based on an assumed rate per cent. This assumed rate of profit is distributed to each share as under the rule. If a portion of the profits still remains undistrib- uted, the profit per share is increased by one-half per cent., one fourth per cent., etc., according to the amount of profit remaining. To illustrate the plan, suppose the last annual report shows a share of a given series to be worth $38.87, and that a rate of 6 per cent, is assumed. $38.87 X .06 = $2.33, profit on previous value at the assumed rate. $6.00 X .06 = $0.36, profit on one-half the dues at the assumed rate. $2.69, total profit of the share at the assumed rate. The same computation is made upon all the shares in force of the existing series, which gives the total profit of all shares in force at the assumed rate, 6 per cent. If, after deducting this profit from the total profits, it is found that the profits are sufficient to allow 6£ per cent, instead of 6 per cent, the profit per share is increased one- twelfth; if sufficient to allow 7 per cent., the profit per share is in- creased one-sixth, etc. 15. The series issued since the last report is given all the entrance fees. The profits arising from withdrawn shares are divided equally among all the shares in force of the series in which the withdrawals took place, and the preceding ones. To illustrate, suppose the with- drawal profit was made in the second series ; then such profit would be divided equally among all the shares in force of the first and second series ; if the withdrawal profit was made in the third series, it would be divided equally among the shares in force of the first, second, and third series, etc. 16. A fixed rate of interest is allowed upon the value of all the shares in force as declared by the last report plus one-half the dues paid in during the term. The remainder of the profit is arbitrarily divided among all the shares in force, a large portion being given to the shares of the older series than to those of the younger series. 1 7. Sonic permanent associations vary the rule in the following man- ner : Members may pay more than the regular required weekly or monthly dues, but no dividends are allowed on such overpayments until tin- dose of the current term in which they are paid. Members may also withdraw all or any part of the dues paid or of the dividends declared, future dividends being based on the amount standing to the members' credit at the beginning of the term and on one-half the reg- ular dues paid during the term. l'LAN 1. I. Tit he value of all the shares in force as declared by the last re- port . add t lie equated amount of dues paid in (luring the term. •. Divide the profits for the term l>y the sum. for the rate per cent. of profil . :;. Mull [ply each share's investment by the rate per cent, of profit, to lind t he gaill on one shale. I ' in- i he : ame data as before t he result is as follows : PREMIUM PLANS. 621 ILLUSTRATION. *7 + $6.50, equated dues), X 500 = $22,685, dividend bearing capi- tal of 1st series. ($25.27 4- $6.50, equated dues), X 600 = $19,062, dividend bearing capi- tal of 2d series. ($12.32 + $6.50, equated dues), X 400 = $7,528, dividend bearing capi- tal of 3d series. $5.50, equated dues, X 500 = $3,350, dividend bearing capi- tal of 4th series. $52,525, dividend bearing capi- tal of all series. $3,000, the profits for the term, -h$52,525 = 5.7115, the rate per cent, of profit. ($38.87 + $6.50) X .057115 = $2.59, profit of a share of the first series. ($25.27 + $6.50) X .057115 = $1.81, profit of a share of the second series. ($12.32 + $8.50) X .057115 = $1.07, profit of a share of the third series. $6.50 X .057115 = $0.37. profit of a share of the fourth $38.87 + $12 + $2.59 = $53.46, value of a share of the first series. $25.27 + $12 + $1.81 = $39.08, value of a share of the second series. $12.32 + $12 + $1.07 = $25.39, value of a share of the third series. $12 + $0.37.= $12.37, value of a share of the fourth series. $6.00, profits undivided. This rule is known as Dexter's rule. Some associations arrive at the same results by using the following method: (1) To the value of the shares in force in each series as de- clared by the last report, add the equated amount of dues paid in each series during the term, and multiply each sum by the number of months in the term, for each series' investment for one month. (2) Find the sum of these products, which gives the entire capital invested for one month, and then divide the jn-ofits of the term in the same proportion that each series' investment for one month bears to the en- tire capital invested for one month, for each series' share of the profits. (3) Divide the profits of each series by the number of shares therein r for the profit of one share. The process is also varied in the following way : The total invest- ment for one month is divided into the total net profits for a rate per cent., which is applied to each series' investment for one month, for profit of each series. Other variations are the following : 1. An assumed rate of profit (generally 6 per cent.) is given on the previous value of the shares and on the equated amount of dues paid in during the term. If a portion of the profits still remains undistrib- uted sufficient to allow one-fourth per cent, or one-half per cent, more, each share's investment is then allowed this additional rate of profit. 2. Multiply the value of the shares in each series as declared at the last quarterly apportionment by 3 and to these products add twice the amount of dues paid in on each series during the current quarter. Divide each of these sums by 12, for the dividend bearing capital of each series. Divide the net profits of the quarter by the dividend bearing capital of all the series, for the rate per cent, of profit. Mul- tiply the dividend bearing capital of each series by the rate per cent. 622 APPENDIX II. of profit, for the profit of each series. Divide the profit of each series by the number of shares in the series, for the profit of a share in the series. Using the same data as before, except that quarterly profits of $7 07. 28 are assumed instead of yearly profits of $3,000, we proceed thus : (*:;s. 87X500X3) + (§3x500x3) -h12=$5, 108. 75, dividend bearing capital of the first series. ($25.27X600X3) + ($3x600X2) -f-12=$4,090.50, dividend bearing capital ofthe second scries. ($12.33X400X3) + ($3X400X2) -s-12=$l,432,00, dividend bearing capital of the third series. (3X500X2) -h 12= $350.00, dividend bearing capital ofthe fourth series. §10,881.35, dividend bearing capital of all series. $707.38-5-810,881. 35=6.5, the rate per cent, of profit. $5,108.75 X.065=$332.07, profits of the first series. $4,090.50X.065=$265.88, profits of the second series. $1,432.00X.065=$93.08, profits of the third series. $250.00X.065=$16.25, profits of the fourth series. 3. The profits are distributed to the free shares only. The shares borrowed on do not participate in the profits, their dues being credited on the principal of the loan. 4. Profits arising from entrance fees are divided equally among the shares of the respective series in which the shares are taken. 5. Profits arising from withdrawals are divided equally among the shares of the respective series from which the shares are withdrawn. 6. The dividend bearing capital of the free shares is ascertained according to the rule. The dividend bearing capital of the shares borrowed on consists of the equated amount of dues paid in during the term. The dues paid in on shares borrowed on during the term, together with the dividends thereon, are credited on the loans. 7. Instead of finding an exact dividend rate, some associations use a fixed rate, which is applied accordingto the foregoing rule. The re- maining profits are divided equally among all the shares or are held in reserve. 8. Instead of finding the dividend bearing capital of the series as in the foregoing rule, all the dues paid in on the shares in force up to the last report, plus the equated amount of dues paid in during the term, form the basin fori he distribution of the profits. 9. A certain rate of interest is given to each series based on the value (if the shares in f< >rce as declared by the last report. The pre- miums received during the term are divided among the series in pro- portion to the receipts of each series during the term from dues, hues, and the interest allowed on the previous values. The remaining profits are di\ ided among all the shares in accordance with the rule. Hi. Payments are made weekly. Each shareholder's weekly payment di' dues is multiplied by the number of weeks invested less one and then averaged for the equated investment of each shareholder's dues tor the term. Then the equated investment of all the shareholders' dues for t he term, added to the amounl standing to the credit of the shareholders at the beginning of the term, gives the dividend bearing capital for (lie term. This capital divided into the profits for the term the rate per cent, of profit. This rate is thenapplied to each I, a re holder's dividend bearing capital to ascertain the a mount of profit belonging to each. l»l,A\ r>. I. To the previous ralue Of a share in each series add the dues paid in during the term, and mull iply i he sum by the number of shares in the eries. PREMIUM PLANS. 623 2. Add these products and then divide the sum into the profits for the term for the rate per cent, of profit. Using the same data as in the preceding illustrations, the rule is worked out as follows: ($38.87+$12) X500=$25,433, dividend bearing capital of the first scries. ($25.27+$12)X600=$22,362, dividend bearing capital of the second series. ($12.32+$12) X400= $9,728, dividend bearing capital of the third series. ($12X500= $0,000, dividend bearing capital of the fourth series. $63,555, dividend bearing capital of all series. $3,000, the profits for the term, -=-$63,525=4.7225, the rate per cent, of profit. $25,435X.047225=$1,201.17, the first series" share of the profits. $22,362X.047225=$1. 056.05, the second series' share of the profits. $9,728X. 047225= $459.40, the third series' share of t he profits. $6 , 000 X. 047225= $283.35, the fourth series' share of the profits. $l,201.17-=-500=$2.40, profit of a share of the first series. |l,056.05-r-600=$1.76, profit of a share of the second series. $459.40-f-400=$1.15, profit of a share of the third series. $283.35-^500=$0.57, profit of a share of the fourth series. $38.87+$12+$2.40=$53.27, value of a share of the first series. $25.27 -t-$12+$1.76=$39.03, value of a share of the second series. §12.32+$12-|-$1.15=$25.47, value of a share of the third series. $12+$0.57=$12.57, value of a share of the fourth series. $0.03, profits undivided. The following modifications of plan 5 have been found : 1. The profits are distributed only upon the free shares. 2. Profits are distributed to all shares six months old and over in accordance with the rule, shares less than six months old not partici- pating in the profits. 3. Profits are distributed on the amount standing to the credit of shareholders three months previous to the dividend day. 4. Profits are distributed on the values of the shares at the last report, and on all the dues paid in during the term except the last regular payment. 5. Profits are distributed to all shares thirty weeks old and over, shares less than thirty weeks old not receiving any profit. G. Instead of finding an exact dividend rate, as in the foregoing rule, an arbitrary rate, within the limit of the profits, is allowed. 7. A fixed rate of interest is allowed on all balances at the beginning of the year and on the dues paid in on shares then in force. The same rate of interest is allowed on the dues paid in on shares less than a year. but more than three months, old. Shares exactly one year old reeei . e a much higher rate of interest ; but, if allowed to remain in the associ- ation, the dvies and dividends would become a balance on which the lower rate of interest would be allowed at the end of the following year. 8. A fixed rate of interest is allowed on the values of the shares in force as declared by the last report and on all the dues paid in during the term. This interest is then deducted from the profits for the term. and the remainder divided in proportion to the age of the shares. 9. Profits arising from premiums are distributed in accordance with the rule. All other profits are divided equally among the shares of the respective series in which such profits were made. 10. Profits arising from interest, fines, withdrawals, etc.. are distrib- uted among all shares three months old or over in accordance with the rule. Profits arising from premiums are divided equally among all the shares in force three months old or over. 11-, Profits arising from interest and from premiums on interest are 624 APPENDIX II. apportioned according to the rule. Profits arising from fines and from premiums other than on interest are divided equally among all the shares in force. 12. A fixed rate of interest is allowed on the amount standing to the credit of the shareholders at each semi-annual term. This interest is then deducted from the profits for the term, and the remainder is divided equally among the borrowing shares. 13. Profits arising from interest are apportioned according to the rule. All other profits are apportioned on the basis of the dues paid during the term plus the interest credited for the term. 14. The rate per cent, of profit is found in accordance with the rule ; but the rate thus obtained is applied to each shareholder's account on his dues only, the remainder of the profits being held in reserve. 15. The profits are distributed every month. The gross profits of the month are divided by the total capital, for the rate per cent, of profit, which is then applied successively to the values of the shares in each series as determined at the previous apportionment, for the gross profit on each share. The monthly expenses are apportioned to each share on the same basis, and the net profit of each share is the difference between the gross profit of each share and the expense of each share. PLA5J 6. 1. Divide the net profits for the term by the total amount of dues paid in on all the shares in force, for the rate per cent, of profit. 2. Multiply the total dues paid in on one share of each series by the rate per cent, of profit, for the profit on one share. Using the same data as before the result is as follows : ILLUSTRATION. $48 X 500 = $04,000, total dues paid in first series. $36 X 600 = $21,600, total dues paid in second series. $2 I X 400 = $9,600, total dues paid in third series. $12 X 500 = $6,000, total dies paid in fourth series. $81,200, total dues in all series. $3,000, the profits for the term, -h $61,200 = 4.9019, the rate per cent of profit. sis x .049019 = $2.35, profit of a share of the first series. $36 < ,049019= §1.76, profit of a share of the second series. $24 X .0101)19 = §1.18, profit of a share of the third series. si J X .049019 = $0.59, profit of a share of the fourth series. $38.87 1 $2.35 + $12 = $53.22, value of a share of the first series. $25.27 - L $1.76 + $12 = $39.03, value of a share of the second series. $12.32 -f $1.18 + $12 = $25.50, value of a share of the third series. $0.59 + $12 = $12.59, value of a share of the fourth series. $2.00, profits undivided. This rule is known in some sections of the country as the second dividend rule. The following variations differ from the rule only in the method of computation, as exactly the s;une results are obtained : 1. Multiply the number of shares in force in each scries by the num- ber of months Hie series have run. Add these products and divide the sum into the net profits for the term, for the profit of one share for one monl h. Then mull [ply the profil pershare per month by the num- ber of months t lie series lias run. for t lie profit of a share in any series. j, Multiply the number of shares in force in each series by the time of inve tmenl expressed in terms or periods corresponding to the inter- vals bet we. n the series, ^dd these products and divide the sum into the profits for the term, for the profit of a share of the youngest series. PREMIUM PLANS. 625 Shares twice the age of a share of the youngest series will receive twice as much profit ; a share three times as old will receive three times as much, etc. 8. Multiply the number of shares in each series by the dues paid in per share, or by one-half the dues paid in, according to the practice of the association. Add these products and find what fractional part each product is of the sum of all the products. These fractions represent the parts of the total profits belon^in^ to each series. 4. Multiply the dues on the shares in force for one-half the time of investment by an assumed rate per cent, of profit, for the assumed profits. Divide the actual net profits of the term by the assumed profits and multiply the quotient by the assumed profits of each series, for the actual profits of each series. 5. The legal rate of interest is allowed on the total dues paid in all the series, and the remainder of the profits divide among all the shares in proportion to the total amount of dues paid in each series. The variations from the rule which give different results are the fol- lowing : 1. Only the dues standing to the credit of the shareholders six months prior to the dividend day participate in the profits. 2. Shares must be three months, six months, or one year old, as the rules of the association may provide, before they are allowed to partici- pate in the profits. 3. The last three months' payments of dues do not participate in the profits. 4. A fixed rate per cent, of profit is allowed and profits are dis- tributed only when a sufficient amount has accumulated to give to each share this rate per cent, on the dues paid in. 5. A rate per cent, of profit is ascertained by dividing the net profits for the last year by the total amount of dues standing to the credit of the free shares, plus the dues paid in on the pledged shares during the year. This rate is applied on the dues standing to the credit of each share at the end of the year and the profit belonging to the free shares goes to increase their value, while the profit belonging to the pledged shares, with the dues paid on them during the year, is credited on the loan as a partial payment. (5. The profits are distributed to the free shares only. All payments made on pledged shares are credited on the loans. 7. The legal rate of interest is allowed on all the dues paid in except the last regular payment. The remainder of the profits is held in reserve. 8. Profits arising from fines and transfer fees are divided equally among the shares of the series in which such profits were made. The remainder of the profits is distributed in accordance with the rule. 9. A fixed rate of interest is allowed on all the dues paid in. 10. Profits arising from interest and fines are distributed in accord- ance with the rule. All other profits are divided equally among all the shares in force. 11. Profits arising from premiums are divided equally among all the shares in force. All other profits are distributed among all shares three months old or over, according to the rule. 12. Profits arising from interest are divided in accordance with the rule. All other profits are divided among all the shares in force, in proportion to the amount of dues paid in during the term. 13. No profit is allowed on the dues paid in during the term. PLAN 7. 1. To the amount of dues paid in on one share in each series up to the last report add one-half the dues paid in during the term, and mul- tiply these sums by the number of shares in each series, for the dividend bearing capital of each series. Q2Q APPENDIX II. 2. Add these products and divide the sum into the profits for the term, for the rate per cent, of profit. 3. Multiply the dividend bearing capital of each series by the rate per cent, of profit, for the profit of each series. 4. Divide the profit of each series by the number of shares in the series, for the profit one share in each series. Using the same data as before we proceed thus : ILLUSTRATION. ($36 + $6) x 500 = $21,000, dividend bearing capital of the first series. ($24 + §6) X 600 = $18,000, dividend bearing capital of the second series. ($12 -+■ $6) X 400 = $7,200, dividend bearing capital of the third series. $6 X 500 = $3,000, dividend bearing capital of the fourth series. $49,200, dividend bearing capital of all series. $3,000, the profits for the term, h- $49,200 = 6.0975, the rate per cent. of profit. $21,000 X .060975 = $1,280.48, the first series' share of the profits. $18,000 X .060975 = §1,097.55, the second series' share of the profits. $7,200 X .060975 = §439.02, the third series' share of the profits. §3,000 X .060975 = §182.93, the fourth series' share of the profits. $1,280.48 h- 500 = $-2.56, profit of a share of the first series. $1,097.55 -r- 600 = $1.83. profit of a share of the second series. $439.02 h- 400 = §1.10, profit of a share of the third series. $182.93 -f- 500 = $0.37, profit of a share of the fourth series. $38.87 + $12 + $2.56 = §53.43, value of a share of the first series. $25.27 + $12 + §1.83 = $39.10, value of a share of the second series. $12.32 + $12 - si .10 = $25.42, value of a share of the third series. si2 + $0.37 = $12.:>7. value of a share of the fourth series. §0.02, profits undivided. The following variations of this rule have been found : 1. The profits are distributed to the free shares only. 2. The dividend bearing capital of the free shares is ascertained in accordance with the rule. The dividend bearing capital of the shares borrowed on is found as follows: At the end of the first half of the year one-half of the dues paid in on such shares during the period is taken; al the end of the second half of the fiscal year, all the dues paid in during the first half of the year, and the dividend thereon, plus one-half of the dues paid in during the second half year, forms the di'. id end bearing capital of such shares. In such cases the association makes an annual settlement with its borrowers, and credits the dues paid in and dividends declared each year on their loans. :;. Profit arising from entrance and transfer fees are divided equally among all the shares. PLAN §. 1. Find the legal rate of interest on the values of the shares as de- clared by the lasl reporl and deduct it from the profits of the term for t he net profil . 2, Divide the net profit by the sum of the dues paid in during the term and the interest on the previous series, for the rate per cent, of profit. :;. Multiply the Bum of the interest ami dues for the term on one re of each series by i be rate per cent of profit, for the profit on one share. I. Add the previous value of a share of each series, t he legal interest PREMIUM PLANS. 627 on this value, the dues paid in during the term, and the profit on the share to find the present value of a share of each series. Let the legal rate of interest be 6 per cent., and using the same data as in the preceding illustrations, we proceed thus : ILLUSTRATION. $38.87 X .06 = $2.33, interest on a share of the first series. $25.27 X .06 = $1.52, interest on a share of the second series. $12.32 X .06 = $0.74, interest on a share of the series. $2.33 X 500 = $1,165, interest on first series. $1.52 X 600 = $912, interest on second series. $0.74 X 400 = $296, interest on third series. $2,373, total interest on old series $3,000, the profits for the term, - $2,373 = $627, the net profits. $12 X 2,000, the number of shares in force, = $24,000, the dues paid during the term. $24,000 + $ 2,373 = §26,373, the active capital. $627-h $26,373 = 2.3774, the rate per cent, of profit. ($12 + $2.33) X .023774 = $0.34, the profit of a share of the first SPF1PS ($12 + $1.52) X .023774 = $0.32, the profit of a share of the second series. ($12 + $0.74) X .023774 = $0.30, the profit of a share of the third series. $12 X .023774 = $0.29, the profit of a share of the fourth series. $38.87 + $2.33 + $12 + $0.34 = $53.54, value of a share of the first scries $25.27 4- $1.52 + $12 + $0.32 = $39.11, value of a share of the second series. $12.32 + $0.74 + $12 + $0.30 = $25.36, value of a share of the third $12 + $0.29 = $12.29, value of a share of the fourth series. The above rule is known as Brooks' rule. Some associations using this rule vary it by allowing less than the legal rate of interest on the old values, but no separate classification of such associations has been made. Another variation from the rule consists in allowing the legal rate of interest, not only on the values of the old series at the beginning of the term, but also on the equated amount of dues paid in on all the shares during the term. Another variation from the rule is as follows : After the legal rate of interest for the term on the values of the old series has been deducted from the profits for the term, the remainder of the profit is divided by the sum of the value of all shares at the beginning of the term, the dues paid in during the term, and the interest for the rate per cent, of profit. This rate is then applied to the sum of the previous value of each share, the dues paid in during the term, and the interest on the share for the profit on one share. PLABf 9. The profits are divided equally among all the shares in force. This plan is used principally by terminating associations. The following variations of this rule have been found : 1. The profits for each term are divided equally among all the shares in force. 2. The profits for each term are divided equally among all shares 628 APPENDIX II. three months old or over, six months old or over, or nine months old or over, as the rules of the association may provide. In such cases shares less than three months, six months, or nine months old do not partici- pate in the profits. 3. Shares less than a year old are given such portion of the profits as the board of directors may allow. The remainder of the profits is divided equally among all the shares one year old or over. 4. The profits for each term are divided equally among the free shares. 5. Shares one year old or over receive equal amounts of the profits for the term. Shares nine months old receive three-fourths as much as those a year old ; shares six months old one-half as much, etc. 6. The profits made by each series are kept separate, and are divided equally among all the shares of the series. 7. Profits arising from premiums and fines are divided equally among the shares of the series in which such profits were made. All other profits are divided equally among all the shares.* PLAN 10. The profits ai - e distributed according to the value of the shares as de- clared by the last report disregarding dues paid in during the term. ILLUSTRATION. Value of all shares in force at last report, $25,800. Profits to be distributed, $1,612. $1,612 h- $25,800 = 6.248, rate per cent, of profit. Suppose the value of a given share at the last report to be $52.60. Then : $52.60 X .06248 = $3.28, profit for the term. $52.60, previous value, + $3.28, profit + $12, dues paid during term, = $67.88, present value. The above rule is slightly varied by some associations that reserve a small portion of the profits which is arbitrarily distributed to the series issued during the term. The remainder of the profits is divided ac- cording to the rule. Another variation from the rule is made by associations that distrib- ute the profits to the free shares only. PLAN 11. 1. The legal rate of interest is allowed on the dues standing to the credit of shareholders at the beginning of the year, but no interest is allowed on the first year's payments. 2. Dun one share the lirst year $12.00 I nteresl or I bis amounl at end of second year 72 Dues paid during the second year 12.00 1 Hid. st on the dues paid during the second year 27 Value of t he share at the end of the second vear 24.99 PLAN 12. 1. Members who have $100, or any multiple thereof, iii the associa- tion at the beginning of the term (quarter) , and leaving said money with the a ociation during the term, shall receive a fixed rate of in- 1 t hereon. PREMIUM PLANS. 629 2. All the remaining profits are divided equally among all shares that are three months old or over. ILLUSTRATION. Let us suppose that A, B, and C are shareholders. A begins the quarter with $98 paid in as dues, B with $216, and ('with $398.50. Now, A would get nothing under the fixed interest rate. B would get the fixed rate of interest on $200, and C the fixed rate of interest on $300. In addition, A, B, and C would get an equal amount per share of the remaining profits. PLAN 13. 1. Profits arising from interest on loans are divided equally among the shares of the series in force when the loans were made. 2. The remainder of the profits is divided equally among all the shares in force. To illustrate the rule, let us suppose that an association is three years old and has in force three series of one hundred shares each. At the end of the second year the report showed the value of a share in the first series to be $26, and in the second series $12.40. During the third year a profit of $220 was made, of which $25 was interest on loans made when only the first series was in existence ; $30 was interest on loans made after the second series was issued and before the issuing of the third series ; and $45 was interest on loans made after the third series was issued. ILLUSTRATION. $25 -r- 100 = $0.25, interest due each share of the first series, on loans made prior to issuing the second series. $30 -r- 200 = $0.15, interest due each share of the first and second series, on loans made after second series was issued and prior to issu- ing the third series. $4.") -=- 300 = $0.15, interest due each share of first, second, and third series on loans made after the third series was issued. $220, profit, - $100, interest, = $120, net profit to be divided equally among all the shares in force. $120 -r- 300 = $0.40, profit due per share in each series. $26, previous value, + ($0.25 + $0.15 + $0.15). interest, + $0.40, profit, + $12, dues, = $38.95, value of a share of the first series. $12.40, previous value, + ($0.15 + $0.15), interest, + $0.40, profit, + $12. dues, = $25.10, value of a share of the second series. $0.15, interest. + $0.40, profit, + $12, dues, = $12..-).-,, value of a share of the third series. PLAN 14. The value of shares at each quarterly meeting shall be ascertained and adjusted as follows : The shares of each series shall be given credit (1) for the value of the shares at the previous quarterly meet- ing ; (2) for the dues paid in on the shares during the quarter ; (3) for the interest paid during the quarter on loans as follows : The first series shall be given credit for all the interest paid during the quarter on loans made prior to the issuing of the second series ; the first and second series together shall be given credit for all the interest paid during the quarter on loans made after the issuing of the second series and prior to the issuing of a third series, to be apportioned between said two series in proportion to the amount of accumulations of the respective series during the existence of the second series and prior to the issuing of a third series, asshown by the previous quarterly statement, and so on for any number of series ; provided, however, that should any loan he paid off after the issuing of a second or any later series the money actually paid on such loan, exclusive of dues, pre- miums, fines, and interest shall be immediately reinvested, and there- 41 630 APPENDIX II. after all the series which were in existence at the time of making the original loan shall be entitled to interest on the amount so reinvested at the rate of 6 per cent, per annum, to be apportioned between the said series in the same manner as interest on the original loan was apportioned prior to the paying off of said original loan, and the inter- est so credited shall be deducted from the interest to which the series in existence at the time of such reinvestment would otherwise have been entitled ; and provided also, that the amount so paid off and rein- vested shall not be regarded as receipts of the current quarter to be apportioned among the then existing series, the same having already- formed part of the value of shares of the series which existed at the time of making the original loan ; (4) the remainder of the receipts during the quarter, after deducting all expenses of the association, shall be apportioned among the several series in proportion to the amount of dues and interest hereinbefore directed to be credited to the respective sei-ies during said quarter. If at the time of issuing any new series there shall not be sufficient funds in the treasury to meet all payments that may be due to bor- rowers upon loans made prior to the issuing of such new series and to pay all debts of the association then due, then the amount that shall be required to meet said payments shall bear interest at the rate of 6 per cent, per annum, and the amount of said interest shall thereafter be credited to all the series in existence at the time of such payments, to be apportioned among said series in proportion to the amount of dues paid by each series during the quarter that said payments shall be made, and the amount of said interest so credited shall be deducted from the interest to which the series which existed prior to the issuing of such new series would otherwise have been entitled. Should there be any funds in the treasury remaining uninvested at the time of the issuing of any new series above the amount of debts of the association then outstanding and not required to meet payments that may be due to borrowers upon any loans made prior to the issuing of said new series, the series which were in existence prior to the issuing of such new series shall be entitled to interest from the time of investment of said money at the rate of 6 per cent, per annum upon the net amount of said funds, said interest to be apportioned among said last mentioned series in the same manner as the interest upon loans is hereinbefore directed to be apportioned, and the amount of said interest shall be deducted from the interest to which the series in existence at the time such funds shall lie invested would otherwise have been entitled. Should any shares be redeemed or cancelled, the money paid for such redemption or cancellation shall be deducted from the accumulations of the current quarter belonging to the series to which said shares so redeemed or cancelled belonged, and the value of said shares shall be credited to the remaining shares of said series in equal proportions. Should any loss occur on any loan, the amount of such loss shall be deducted from the value of the shares of the several series w Inch were in existence at the t ime of making said loan, to be apportioned among said series in the same manner as the interest on said loan is herein- before directed to be apportioned. PLAN 15. The profits are distributed annually on the ha sis of each $10 paid into the association. A member who has paid in $100 receives ten parts; one who has paid in (40 receives (our parts; one who has paid in $52 ives five parts, etc., the excess of dollars over a multiple of §10 not part icipal [ng in the profits. PLAN 16. N ociations using this plan declare a semi-annual dividend, but Bhare le than a year old are not allowed any part of the profits. PREMIUM PLANS. 631 The rate per cent, cf profit is ascertained by dividing the net profits by the amount of dues standing to the credit of the shares at the time of the last report, plus the profits that were credited six months previous to the last report. ILLUSTRATION. Total dues paid up to last report $18,120 Total profit credited six mouths previous to last report 1,240 Profit made during the term 908 Then : $968-=- ($18,120 + $1,240) = 5, rate per cent, of profit. Total dues paid on a share $36.00 • Dues paid on a share at the last report 30.00 Profit credited on a share at last report 3.40 Profit credited on a share six months previous to last report. . . . 2.50 $30 + $2.50 = $32.50, amount per share entitled to dividend. $32.50 X .05 = $1.62, dividend per share for the term. $36 + $3.40 + $1.62 = $41.02, present value of a share. pc ax ir. 1. Divide the net profits for the term by the total number of shares issued since the organization of the association. 2. Multiply the quotient by the total number of shares issued in each series, for the profit of each series. 3. Divide the profit of each series by the number of shares in force in each series, for the profit per share. •ies 1 9, ILLUSTRATION. Shares issued. 500 600 Shares in force. 400 350 3 4 400 500 Total 2.000 250 300 1.300 $0.75 X $0.75 ;■ $0.75 X $0.75 -*- $375 -f- |450 -f- $300 -4- $375 -^- Profit made during the term, $1,500. $1,500 -=- 2,000 = $0.75, profit per share issued. 500 — $375, the first series' share of the profit. 600 = $450, the second series' share of the profit. 400 = $300, the third series' share of the profit. 500 = $375, the fourth series' share of the profit. ■ (oo SO. Ill pniiit <>f a share of t lie first series. 350 = $1.29, profit of a share of the second series. 250 = $1.20, profit of a share of the third series. 300 = $1.25, profitofa share of the fourth series. PLAN 1§. 1. To the value of the free shares as declared by the last report add one-half the clues paid in on the free shares during the term, for the dividend bearing capital of the free shares. 2. To the value of the shares borrowed on. as declared by the last report, add the interest paid in up to the beginning of the term and one- half the dues and interest paid in on the borrowed shares during the term, for the dividend bearing capital of the shares borrowed on. 3. Add the dividend bearing capital of the free shares to the dividend bearing capital of the shares borrowed on. and divide the sum into the profits of the term, for the rate per cent, of the profit. 632 APPENDIX Ho ILLUSTRATION. Suppose the dues to be 50 cents a share per month ; the rate of interest paid by borrowers, 8 per cent. ; maturing value of shares, $100 ; the rate of earnings, 7 per cent. ; and profits divided annually. Non-borrower's account. First year's dues on one share $6.00 First year's dividend at 7 per cent, on half the dues .21 Value of a free share at end of first year 6.21 Add half the dues paid the second year 3.00 Amount on which dividend is reckoned the second year 9.21 Second year's dividend $0.64 Value at end of first year 6.21 Second year's dues 6.00 Value of a free share at end of second year 12.85 Borrower's account — Loan of $100. First year's dues on one share $6.00 First year's interest on loan 8.00 Total payments of dues and interest 14.00 First year's dividend at 7 per cent, on half of dues and interest $0.49 First year's dues 6.00 Value of a share borrowed on at end of first year 6.49 Add the interest paid the first year . 8.00 Add one-half the dues and interest paid the second year 7.00 A uut on which dividend is reckoned the second year 21.49 Second year's dividend at 7 per cent $1.50 Value at cud of first year 6.49 Second year's dues 6.00 Value of a share borrowed on at end of second year 13.99 PL.AN 19. 1. Give a fixed rate of interest to the various series in proportion to the amount of invested capital as determined at the previous month's apporl Lonment. •j. Give the profits from withdrawals, premiums, and fines, etc.. to the series which have furnished the money from which the profits have been made, taking into consideration, with each item of profit, the amounl of m y furnished by each series and the length of time for which it is furnished. This rule is applicable only to associations organized on the serial plan, time limil of series, gross premium fully earned, and monthly payments. II. 1. 1 STR \TI<>\. Lei there be three series of 1,000 shares each, series A being 24 moid lis old, erie B 12 months old, and series C jusl issued. Lei the invested capital at the beginning of the month be $33,000 for series A and $15,- 000 for series B. Lei 108 months be the length of time each series is to run. line, on interest in arrears are counted as interest. lie, on dues in arrears are credited to the respective series in which the ilin v ere iii arrears, as di PREMIUM PLANS. 633 Let the interest paid at end of month on invested capital, together with tines paid on interest in arrears, be $ 320 Let dues and tines paid on dues in arrears in series A at end of month be 1,000 Let dues and tines paid on dues in arrears in series B at end of month be 1 000 Let dues and fines paid on dues in arrears in series C at end of month be ] ,000 Total casli paid during the month (including interest on capital) 3,320 Let $850 of this cash be used in withdrawing stock, as follows : Book value of 85 shares withdrawn from series A at, $33 $825 : 16 shares from series B, at $15.00 $240 Cash paid for the same by the association, at $2(5=$G50 ; for with- drawals from series B, at $12.50 200 The profit made from withdrawals = 175 -f- 40 or $215 in all At the end of the month series A has yet to run 83 months ; series B, 95 months ; and series C, 107 months. Earned gross premium for loan of 83 months, stock of series A bor- rowed 'on, loan of SI. 000 = $210. Earned gross premium for loan of = 95 months, stock of series B bor- rowed on, loan of $1,000 = $240. Earned gross premium for loan of 107 months, stock of series C bor- rowed on, loan of 81,000 = 8270. For simplicity of illustration, the matter of expense is not considered, but the expense is distributed in proportion to the total cash received during the month. The interest and fines on interest in arrears received during the month, and amounting to $320, are distributed to series A and B in proportion to the invested capital of each series at the beginning of the month, series A thus receiving $220. and series B, $100. The cash contributions during the month were, therefore, as follows : By series A ft 1 . 000 + $221 1 — $1,220. Bv series B $1.000 +$100 = $1,100. By series C $1,000. The withdrawal profit, amounting to $215. is then divided in propor- tion to the monthly contributions of each series, which gives a with- drawal profit of $79 to series A, $71 to series B, and $05 to series C. Profits arising from premiums are distributed thus: 1. For the loan of $1,000 for 83 months with stock borrowed on from series A, a gross premium of $210 was paid. The money furnished for this loan by the various series all remains for 83 months, so that in this case the question of time is eliminated and the distribution of the premium is the same as for profits on withdrawals. This gives $77, as series A's share of series A's premium ; $70. as series B's share of A's premium ; and $03. as series C's share of series A's premium. 2. For the loan of $1,000 for 95 months with stock borrowed on from series B. a gross premium of $240 was paid. The money furnished by series A for this loan remains only 83 months (as series A matures then), while the money furnished by series B and C remains for 95 monl lis : therefore, $1,320 for 83 months = $101,200, series A*s investment for one month. $1,100 for 95 months =$104,500, series B's investment for one month. $1,000 for 95 months = $95,000, series C's investment for one month. $300.7C>0. total investment for one month. The premium of $240 is then apportioned as follows: $300,700 : $101,260 : : $240: $81, series A's share of B's premium. $300,700: $104,500 : : $240 : $83, series l»*s share of B's premium. $300,700 : $95,000 : : $240 : $76, series C's share ^ A's share of interest and inter t premium ; f real ing each series, 15, C, etc., in the same way, to find i heir respeel ive shares. Ailil lines' share of premium ami lines received during the term and divide among the series, as follows: The amount of dues received by all -erics during term is to the'dues' share of premium and lines received during the term, as the amounl of L's dues received during the term, is to \'s share : treating each series, B, C, etc., in the same way, to find their re ipeel ive shares PREMIUM PLANS. 635 Expenses are divided among the series by the following proportions : The amount of total receipts from dues, interest, and interest share of premium during the term is to the total expense during the term, as the amount of A's receipts from dues, interest, and interest share of pre- mium for the term is to A's share of expense ; treating eacli series, B, C, etc., in the same manner. Each series' net gain since last apportionment of profits is found by adding their respective shares of interest and interest share of pre- mium and their dues, share of premium and lines together, and taking from this result their share of expense and whatever incidentals there may be, such as interest on withdrawals, etc. To this remainder add dues and entrance fees received during the term and each series' share of the profits for the value of the series. PLAK 21. 1. A fixed rate of interest is given upon the value of the shares as de- clared by the last report plus the equated amount of dues paid during the term. 2. Profits arising from withdrawals are divided equally among the shares of the respective series from which the withdrawals took place. 3. The remainder of the profits is divided equally among all the shares. To illustrate the rule, suppose that at the end of the second year of the existence of an association there were two series in force ; first series, 100 shares, present value, .$26 : second series, 200 shares, present value, $12.40. At the beginning of the third year another series of 150 shares was issued. During the year a general profit of $569.50 was made, and, in addition, a withdrawal profit of $15 in the first series and $12 in the second series. ILLUSTRATION. $26.00, previous value, + $6.50, equated amount of dues, = $32.50, amount per share of first series entitled to interest. $12.40, previous value, + $0.50, equated amount of dues, = $18.90, amount per share of second series entitled to interest. $6.50. equated amount of dues, = amount per share of third series entitled to interest. $32.50 X .06 = $1.95, interest on one share of the first series. $18.90 X .06 = $1.13, interest on one share of the second series. $ 6.50 X .06 = $0.39, interest on one share of the third series. $ 1.95 X 100 = $195.00, interest belonging to the first series. $ 1.13 X 200 =$226.00, interest belonging to the second series. $ 0.39 X 150 = $ 58.50, interest belonging to the third series. 8479.50, interest belonging to all series. $569.50 - $479.50 = $90.00, net profits due all the series. $ 90.00 -r- 450, shares in all series, = $0.20, profit per share. $ 15.00 -r- 100, shares in first series, = $0.15, withdrawal profit per share in first series. $ 12.00 -i- 200, shares in second series = $0.06, withdrawal profit per share in second series. $ 26.00 + $1.95 + $0.20 + $0.15 + $12.00 = $40.30, value of a share in first series. $ 12.40 + $1.13 + $0.20 + $0.06 + $12.00 = $25.79, value of a share in second series. $ 0.39 + $0.20 + $12,00 = $12.59, value of a share in third series. PLAN 22. 1. Multiply the total amount of interest collected by the average rate paid for premiums during the year and add the pi-oduct to the interest collected. 636 APPENDIX II. 2. Divide this sum among the shares in forco in proportion to their previous values and the average amount of dues paid in during the year. 3. Deduct the premiums already apportioned from the total amount of premiums collected during the year and divide the remainder in pro- portion to the dues paid in during the year. 4. Divide the gross losses in proportion to the previous values of the shares and the average amount of dues paid in during the year. 5. From the sum of the profits gained on one share deduct the loss on the share for the net profits of one share. PLAN 23. This rule applies to some associations whose various series are divided into separate classes. For instance, the monthly series issued during the first year form class A ; the monthly series issued during the sec- ond year form class B, etc. The rule is as follows : 1. Profits arising from fines and transfer fees are credited to the shares in the class in which they occur. 2. Interest and premiums are distributed to the different classes in proportion to the amount of dues paid into the loan fund. 3. The total profits apportioned to each class are divided by the amount of dues paid into the loan fund for the rate which is applied upon the dues standing to the credit of each share. PLA1V 24. 1. Multiply the total value of all the shares in force as declared by the last report plus the dues paid in during the term by half the time of investment for the dividend bearing capital. 2. Divide the net profits by the dividend bearing capital, for the rate per cent, of profit. 3. The dividend bearing capital of a share multiplied by this rate given the profit per share. PLAN 25. The net profits for the first six months are assigned to the first series ; the net profits of the second six months are divided between the first ami second series, giving 19 parts to the former and 7 parts to the latter ; for the third six months the division is made by giving to the first series :»1 parts, to the second series 19 parts, and to the third series 7 parts ; and for any period of six months the number of parts assigned to any series is 12 units greater than the number as- signed to the same series the preceding six months, but no series which has not been in existence for a full period of six months is entitled to share in I lie distribution. WITHDRAWAL PLANS. \ in i in- case of premium plans and plans for the distribution of profits there are various rules for withdrawals. They are not so numerous, however, as in the other eases, although there are twelve such. Shares are issued by building and loan associations upon the theory thai when the periodical dues paid thereon, together with the profits earned thereby, amounl i<> the ultimate, or, technically, (he maturing ol i'm- hares, (!><• holders shall be entitled to receive, in cash. PREMIUM PLANS. 637 such value, if the shares have not been pledged for loans ; if pledged for loans, equal in amount to their maturing value, the loans shall be cancelled ; if the loans do not equal in amount the maturing value of the pledged shares the holder shall receive, in rash, the difference between the amount of the loans and the maturing value of the shares. Shareholders are not, however, as a rule, required to continue the periodical payment of dues until the maturity of their shares, but may. if they so desire, cease paying such dues, and, ii their shares are unpledged for loans, withdraw the amounts already paid in. subjecl l<> widely varying regulations ; if the shares have been pledged for loans, ami the holders desire to settle their indebtedness before the shares mature, they are usually permitted to do so by paying the difference between the withdrawal value of the pledged shares and the amount of their indebtedness. Provision is usually made in the constitutions or by-laws of building and loan associations for the giving of notice by shareholders desiring to withdraw, ranging from one week to ninety days. Such not ice is not, however, universally provided for, ami when provided for is fre- quently not enforced if sufficient funds are on hand to permit with- drawal without notice. It is also usually provided that only a certain portion, as one-third or one-half, of the receipts of the association shall be applicable to the demands of withdrawing shareholders, and in such case, should the notices of intended withdrawals call for more money than the designated portion of receipts could satisfy, the withdrawing shareholder would be compelled to wait until future receipts should supply the deficiency. In nearly all national associations a certain portion of the periodical dues are set aside for expenses, as explained in Chapter IV. relating to the distribution of profits, the remainder of the dues being carried into what is ordinarily termed the loan fund. The money in the loan fund is used for the purposes of making loans to members, of paying off shares which have reached maturity, and of meeting the demands of withdrawing shareholders ; and, usually, only the portion of the dues included in the loan fund is returned to such shareholders, with what- ever allowance of interest or profit thereon the particular withdrawal plan of each association may provide for, the portion of the dues carried into the expense fund, generally amounting to about one-sixth of each payment, being retained by the association. In some national associations the loan fund is credited with whatever balance of the expense fund remains unexpended at the end of certain fixed periods, and withdrawing shareholders may derive some benefit from such unexpended balance, but this course is exceptional. The plan of separating the periodical dues into a loan fund and an expense fund is pursued by a few local associations, but the general rule in such asso- ciations is to return to withdrawing members all the dues paid in by them, with or without interest or profits. In associations which pay to withdrawing shareholders annual inter- est on dues paid in prior to withdrawal there are two methods of cal- culating such interest. First. The interest is calculated on the total amount of dues paid in for one-half the time during which they have been paid, commonly called the average time of investment ; for example, in an association requiring monthly payments of clues at the rate of $1 per share, if 6 per cent, per annum is allowed upon withdrawal, a member withdraw- ing at the end of one year would receive his dues, $12, and G per cent, interest thereon for six months, or 36 cents, making a total of $12.36 per share. This method, on account of its simplicity, is the one ordinarily used ; a few associations, however, use the following method : Second. The interest is calculated on the total amount of dues paid in for the true average, or equated time of investment, which is ascer- 638 APPENDIX II. tained by taking one-half of the sum of the extremes of the arithmet- ical series representing the periods of time during which the periodical payments of dues have been invested ; thus, using the illustration given above, monthly dues having been paid for twelve months, the extremes of the series representing the periods of investment of the monthly payments are 1 and 12 ; one-half of the sum of the extremes is 6i. which is the true average time of investment, in months, and 6 per cent, on $12 for &J- months amounts to 39 cents, which added to the dues paid in gives a withdrawal value of §12.39 per share at the end of one year. No reference is made to these two methods of calculating interest in the descriptions of withdrawal plans which follow, the difference between the amounts obtained by them being small and growing pro- portionately smaller as shares increase in age. For the sake of uni- formity, therefore, and because it was the simpler, the first method has been used in all the illustrations. The withdrawal value of shares, by whatever plan it may be deter- mined, is always subject to the deduction of any fines charged against their holder for non-fulfilment of his obligation to promptly make pay- ment of his periodical dues. In some cases shareholders desiring to withdraw are required to pay fees for the privilege of so doing ; for instance, 25 cents or 50 cents may be exacted for each share upon which withdrawal is made. The range of such fees is stated under the descriptions of the different withdrawal plans in connection with which they are charged. A few associations do not permit their members to withdraw prior to the maturing of their shares ; in such cases the only method by which a shareholder can realize upon his shares is by selling them to some other person at whatever price he can obtain. PLAN 1. Withdrawing shareholders receive the duties paid in without interest or profit. Under this plan withdrawing shareholders receive only the dues paid in on the shares upon which withdrawal is made, the profits earned by said shares being retained by the association. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. No wit hdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Three months; six months; one year. 2. Only a certain portion of the dues paid in can be withdrawn, vary- ing, in the associations reporting such a regulation, as follows : 75 per cent.: 90 per cent.; 95 per cent. ; 95 per cent, if I lie shares upon which withdrawal is made are less than six months old ; 95 per cent, or 9frper cent, if the shares upon which withdrawal is made are less than one year old; 95 percent, if 1 lie shares a pun which withdrawal is made are than two years old ; 95 per cent, if the shares upon which with- drawal is made are less t han one year old ; 97$ per cent, if one year but Man t wo years old. :;. Among the associations reported .is operating under this plan and its modifications the following regulations regarding withdrawal fees a re found : c I > Wit hdrawal fee of 10 cents, 25 cents. 50 eenls, or $1 per share is Withdrawal fee of 25 cents per share is charged, but not more 1 ha a ■<< per t ransacl ion. (8) Withdrawal fee of 50 cents per transaction is charged if the On which wit hdrawal is made are less I han one year old. PREMIUM PLANS. 639 (4) The dues withdrawn are discounted, the rate of discount being graduated according to the age of the share upon which withdrawal is made. PLA\ 2. Withdrawing shareholders receive the dues paid in and a fixed rate of interest per annum on such payments. Under this plan withdrawing shareholders receive the dues paid in on the shares upon which withdrawal is made with a fixed rate of interest thereon per annum, which varies in different associations. Illustration : In an association in which the dues are $1 per month per share 6 per cent, interest on the dues paid in is allowed withdraw- ing shareholders. If a shareholder withdraws when his shares arc four years old he will receive on each share upon which withdrawal is made $48, the dues paid in thereon, with 6 per cent, interest on the same for two years, the average time of investment, or $5.76, making the total amount he will withdraw on each share $48 plus $5.76, or $53.76. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. The total amount to be withdrawn must not exceed 95 per cent, of the present value (consisting of dues and apportioned profits) of the shares upon which withdrawal is made. 2. This plan is applied to withdrawals in all series except the oldest one in force, in which either the full value of the shares may be with- drawn, or an arbitrary allowance is given. 3. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies idi different associations as follows: Two months; three months; four months; six months : one year ; two years ; three years ; any time which may be fixed by the board of directors. 4. No interest is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : One month ; two months ; three months- four months ; six months ; eight months; ten months; one year: thirteen months; eighteen months; two years; twenty-six months: three years ; four years. 5. Among the associations reported as operating under this plan and its modifications the following regulations concerning withdrawal fe.es are found : (1) "Withdrawal fee of 5 cents, 10 cents, 20 cents, 25 cents, 50 cents, si. or $2 per share is charged. (2) Withdrawal fee of 5 cents per share is charged for each month the shares upon which withdrawal is made have been in existence. (3) Withdrawal fee of $1 per share is charged if the shares upon which withdrawal is made are less than six months old. (4) Withdrawal fee of $1 per share is charged if the shares upon which withdrawal is made are less than one year old. (5) Withdrawal fee of $2 per share is charged if the shares upon which withdrawal is made are less than two years old. (6) Withdrawal fee of 50 cents per share is charged, but not less than Si nor more than 82 per transaction. (7) Withdrawal fee of 50 cents per share is charged, but not less than si nor more than $2.50 per transaction. (8) Withdrawal fee of 50 cents per share is charged, but not less than 81 nor more than s:! per transaction. (!)) Withdrawal fee of 50 cents per share is charged, but not more than $5 per transaction. (10) Withdrawal fee of $1.30 per transaction is charged. (11) Withdrawal fee of $3 per transaction is charged if the shares upon which withdrawal is made are less than one year old. 640 APPENDIX II. (12) Withdrawal fee of $1 per transaction is charged if withdrawal is made upon less than six shares ; if upon six shares or more $3 is charged. (13) Withdrawal fee of 1 per cent, of the dues paid in is charged. (14) Withdrawal fee of 5 per cent, of the dues paid in is charged. (15) Withdrawal fee of 5 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than one year old. (16) Withdrawal fee of 5 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than one year old and 2$ per cent, if one but less than two years old. ( 17) Withdrawal fee of 5 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than three years old. (18) Withdrawal fee of 10 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than one year old. (19) Withdrawal fee of 5 per cent, of the present value of the shares upon which withdrawal is made is charged. (20) Withdrawal fee is charged of a rate per cent, of the dues paid in. graduated according to the number of months the shares upon which withdrawal is made have been in existence, if the shareholder withdraws during the first year of the existence of the shares. (21) Withdrawal fee is charged of a rate per cent, of the dues paid in, graduated according to the number of months the shares upon which withdrawal is made have been in existence, if the shareholder withdraws during the first two years of the existence of said shares. (22) Withdrawal fee is charged of the interest at the fixed rate on the dues paid in during the first year of the existence of the shares upon which withdrawal is made. (23) Withdrawal fee is charged of the interest at the fixed rate on the dues paid in during the last six months of the existence of the shares upon which withdrawal is made. (24) Withdrawal fee is charged of one-tenth of the total interest cal- culated at the fixed rate on the dues paid in on the shares upon which withdrawal is made. PLAX 3. Withdrawing shareholders receive the dues paid in and a graduated rate of interest per annum on such payments. Under this plan withdrawing shareholders receive the dues paid in on the shares upon which withdrawal is made, with interest thereon at various increasing rates per cent, per annum, graduated according to the age of the shares. Illustration: A member holding shares which are six years old. four years old, and two years old, respectfully, desires to withdraw from the association. He has paid $72 per share as dues in the first class, $48 per share as dues in the second class, and $24 per share as dues in the third class. The conditions governing withdrawals are as follows : Shares withdrawn during the first two years receive 3 per cent, per annum on the average investment ; during the third year, 4 per cent. ; during the fourth and the fifth years, 5 per cent, and after the fifth year, '"> per cent . ( m each share six years old t he withdrawing share- holder would receive the dues paid in by him, $72, with interest thereon al the rate of 6 per cent, per annum for the average time of investment, amounting to $12.86, making a withdrawal value of §84.96. On each re four years old he would receive the dues paid in by him, $48, with interest thereon al the rate of 5 per cent, per annum for the average time of investment, amounting to $4.80, making a wit hdrawal value of ich -hare t wo years old he would receive the dues paid in it 1 1 interest thereon at the rate of '■> per cent, per annum for the avera ' investment., amounting to 72 cents, making a wit hdrawal iralue of $24.72. PKEMIUM PLANS. 041 Among the associations reported as operating under this plan the following modifications and regulations are found : 1. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Three months ; six months ; one year ; two years. 2. No interest is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows: One month; three months; six months ; nine months ; one year ; eighteen months ; two years ; three years ; four years. 3. Some associations operating under this plan permit withdrawal on only ten shares at any one time and require six months to elapse before another withdrawal can be made by the same person. 4. Among the association reported as operating under this plan and its modifications the following regulations regarding withdrawal fees are found : (1) Withdrawal fee of 5 cents, 10 cents, 25 cents, 50 cents, or $1 per share is charged. (2) Withdrawal fee of 8 cents or 10 cents per share is charged for each month the shares upon which withdrawal is made have been in existence. (3) Withdrawal fee of 10 cents per share per month is charged if the shares upon which withdrawal is made are less than two years old. (4) Withdrawal fee of 25 cents per share is charged if the shares upon which withdrawal is made are less than two years old. (5) Withdrawal fee of $1 per share is charged if the shares upon which withdrawal is made are less than one year old. (6) Withdrawal fee of $1 per transaction is charged. (7) Withdrawal fee of 50 cents per share is charged and, in addition thereto, 2 per cent, of the dues paid in. (8) Withdrawal fee of 2 per cent, of the dues paid in is charged. (9) Withdrawal fee of 10 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than six months old. (10) Withdrawal fee of 8 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are more than six months and less than one year old ; 2£ per cent, of the dues paid in if more than one year and less than eighteen months old. (11) Withdrawal fee of 5 per cent, of the dues, or of 10 per cent, of the dues, is charged if the shares upon which withdrawal is made are less than one year old ; 2-J- per cent, of the dues, or of 5 per cent, of the dues, is charged if the shares are more than one year but not exceeding two years old. PLAN 4. Withdrawing shareholders receive the dues paid in and a fixed por- tion of the profits. Under this plan withdrawing shareholders receive the dues paid in on the shares upon which withdrawal is made and a fixed portion, varying in different associations, of the profits apportioned to said shares. Illustration : The maturing value of a share is §200 and the dues per month $1. A member whose shares are two years old has paid in on each share in dues $24, and the profits apportioned each share are $2 ; 50 per cent, of such profits can be withdrawn : therefore, if the member withdraws at the end of said two years he will receive on each share the dues paid in, $24. plus 50 per cent, of the S3 profits, or $1, which makes the total amount that may be withdrawn on each share, $25. The portion of the profits allowed on withdrawal ranges in different associations from 5 to 95 per cent. 042 APPENDIX II. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. One association allows, in addition to the dues paid in, a fixed amount on each share upon which withdrawal is made instead of a fixed portion of the profits apportioned. 2. In one case the fixed portion allowed is not a fixed portion of all the profits apportioned, but a fixed portion 1 of those remaining after deducting the profits of the first year. 3. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Six months ; one year. 4. No profit is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows: One month; two months; three months ; six months ; nine months ; one year ; eighteen months ; two years ; three years ; five years. 5. No profit is allowed and but 95 per cent, of the dues paid in can be withdrawn if withdrawal is made upon shares less than one year old. 6. A fixed portion of the profits apportioned can be withdrawn, pro- vided such portion does not exceed 7 per cent, per annum interest upon the dues paid in. 7. Among the associations reported as operating under this plan and its modifications the following regulations regarding withdrawal fees are found : (1) Withdrawal fee of 5 cents, 10 cents, or 50 cents per share is charged. (2) Withdrawal fee of 25 cents per share is charged for each year the shares upon which withdrawal is made have been in existence. (3) Withdrawal fee of 25 cents per share is charged, but not more than $5 per transaction. (4) Withdrawal fee of 50 cents per share is charged and, in addition, 8 per cent of the dues paid in, if the shares upon which withdrawal is made are not over one year old ; but if said shares are over one year old, then 50 cents per share and 2 per cent, of the dues paid in is charged. (5) Withdrawal fee of £1 per transaction is charged. PI. AX 5. Withdrawing shareholders receive the dues paid in and a graduated portion of the profits or a graduated amount. Under this plan withdrawing shareholders receive the dues paid in on tlie shares upon which withdrawal is made, with a portion of the profits apportioned to such shares, such portion being graduated according to the age of t he shares. ( )r, instead of a graduated portion of the profits, withdrawing shareholders receive, in addition to dues. an amount which increases periodically according to the age of the sha res, regardless of profits. [llustration L : A member desires to withdraw a1 t lie end of the third year a fter having paid $36 in dues. The scheme of t he associal ion pro- vides thai a member withdrawing during the first twenty-four months shall receive, in addition to the 'lues paid in, 75 per cent, of t lie profits apportioned to his shares ; after twenty -four months, 80 percent. ; after thirty months, 85 per cent. ; after thirty-six months, 90 percent.; and after forty-two months, 95 per cent. The profits earned by a share at the end of the third year are $4.06, of which the withdrawing member would receive 90 per cent., or $3.65, which, added to t he dues, gives the share a \\ il hdra wal value of $39.65. [llustration II.: An association paying the withdrawing shareholder iduated amounl per share instead of a graduated portion of the profits, allows t lie fol low i 1 1 •_•; rates : If the wit hdra wal takes place dnr- the in ■ .1 year, no profits are allowed; during the second year, 50 PREMIUM PLANS. 643 cents ; during the third year, $1 ; during the fourth year. $3 ; during the first six months of the fifth year, $5 ; during t lie second six months of the fifth year, $6.50 ; during the first six months of the sixth year, $8; during the second six months of the sixth year, $10 : during the first six months of the seventh year, $12 ; during the second six moid lis of the seventh year, $14 ; during the first six months of the eighth year, $16; during the second six months of the eighth year, $18 ; and after the eighth year. $30. A member withdrawing from this association at the end of the fifth year, after having paid $60 in dues, would receive $8 in addition to his dues, or a total of $68. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. No withdrawal is allowed to be made upon shares less than one year old. 2. No profit is allowed if withdrawal is made upon shares winch have not been in existence for a certain specified time, which varies in different associations, as follows : Six months ; nine months ; one year ; two years ; four years ; eight years. 3. In some cases the profits allowed must not exceed a fixed per cent, of the profits apportioned, which varies in different associations, as follows : 50 per cent.; 80 per cent. 4. Among the associations reported as operating under tins plan and its modifications the following regulations regarding withdrawal fees are found : (1) Withdrawal fee of 10 cents per share is charged. ( 2) Withdrawal fee of 10 cents per share is charged, but not less than 50 cents per transaction. (3) Withdrawal fee of $1 per transaction is charged. (5) If withdrawal is made upon shares less than one year old only 90 per cent, of the dues paid in is returned to the shareholder. PLA1V 6. Withdrawing shareholders receive the dues paid in with a fixed rate of interest thereon, and, in addition, a fixed or a graduated portion of the profits. Under this plan withdrawing shareholders receive the dues paid in on the shares on which withdrawal is made, with interest thereon, at rates varying, in different associations, from 3 per cent, to 8 per cent, per annum, and, in addition thereto, a fixed portion of the profits appor- tioned to the shares in excess of the interest allowed, or a portion of such profits graduated in accordance with the age of the shares. Illustration : In an association in which the dues are $1 per share per month the profits at the end of four years amount to, say. $10 per share ; a shareholder then withdrawing would receive on eacli share the dues paid in by him, $48, with interest thereon for the average time of investment, amounting, at 6 per cent, per annum, to $5.76, and in addition thereto, a fixed portion of the profits in excess of $5.76, of twenty per cent, thereof, amounting to one-fifth of $4.24, or 85 cents, making a total of $54.61 ; if instead of a fixed a graduated por- tion of the profits is allowed in addition to the interest, one-tenth of the profits in excess of interest being allowed for each full year the share has been in force, the withdrawing shareholder would be entitled to receive at the end of four years the dues paid in, sis, plus the interest thereon, $5.76, plus 40 per cent, of the profits in excess of said interest, amounting to two-fifths of $4.24, or $1.70, making a total of $55.46. Some associations, instead of allowing a fixed or a graduated por- tion of the profits in addition to interest, allow a fixed or a graduated amount per share, regardless of the profits ; for instance, withdrawing members may be paid $1 per share, in addition to interest, on all shares one year old or over ; or, the additional amount may be increased from 044 APPENDIX II. year to year, as the shares increase in age. In a few cases the addi- tional portion of profits or the additional amounts are not allowed unless the shares upon which withdrawal is made are two and, in one instance, three years old at the time of withdrawal ; and occasionally only the dues paid in are returned to withdrawing members if their shares are less than three months, six mouths, or one year old. A few associations, permitting withdrawals under the plan above described, pay the full " book value," or, as it is sometimes designated, the " present value " of the shares upon which withdrawal is made, con- sisting of the dues paid in, together with all profits apportioned thereto, after such shares are eight years old. None of the associations in which withdrawals are made in accord- ance with the plan described are reported as charging withdrawal fees. PLAN 7. Withdrawing shareholders receive the dues paid in, with a fixed rate of interest thereon during a fixed period and a fixed or a graduated portion of the profits thereafter. Under this plan withdrawing shareholders receive the dues paid in on the shares on which withdrawal is made and, if withdrawal is made within a fixed period from the date of issue of the shares, interest thereon, both the rate of interest and the length of the period varying in different associations ; if withdrawal is made after the expiration of said period, shareholders receive instead of interest either a fixed por- tion of the profits apportioned to the shares or a portion of such profits graduated according to the age of the shares. Illustration : In an association in which the dues are $1 per share per month interest at the rate of 6 per cent, per annum on the dues paid in is allowed the withdrawing shareholder if withdrawn, is made on shares less than four years old, and thereafter, in lieu of said interest, a fixed portion of 50 per cent, of the profits apportioned is allowed. If a shareholder withdraws when his shares are three years old he will receive on each share $36, dues paid in. with interest at 6 per cent, per annum thereon, amounting for the average time of investment to $3.24, making the total amount he will withdraw on each share $36 plus $3.24, or $39.24. If said shareholder withdraws when his shares are five years old, the profits earned by each share being $15, he will receive on each .share $60, dues paid in on same, together with 50 per cent, of the $15, or $7.50, making the total amount he will withdraw on each share $60 plus $7.50, or |67.50. If instead of a fixed a graduated portion of the profits is allowed after a fixed period, which is, say, 50 per cent, of the profits when share is four years old, 60 per cent, when five years old, 70 per cent, when six years old, etc., then, at the end of the five years, he will receive on each share $00, dues paid in on same, plus 60 per cent, of $15, or $9, making the total amounl he will withdraw $60 plus $9, or $69. Among the associations reported as operating under this plan the following modifications and regulations are found : I. \ portion of the profits apportioned to the shares, arbitrarily fixed bythe board of directors, is given after the expiration of the fixed period during which interest is paid, instead of a fixed or graduated P' irl ion of the profits. I!hi tratimi : If. in I he case illustrated above, the board of directors Bhou i shareholder, withdrawing when his shares were five years old, an arbitrary allowance of two-thirds of the profits appor- tioned he would receiveon each share $60, dues paid in, plus two-thirds 15, or $10, making the amounl withdrawn on said share $60 plus 0, Some associations, in which an arbitrary allowance is given, provide that SUCh allowance shall not he less than 51) percent. of the profits apportioned and sumo that it shall not be less than 75 • hi . of i he same. PREMIUM PLANS. 645 2. All the profits apportioned are given after the expiration of the fixed period during which interest is paid, instead of a fixed or gradu- ated portion of said profits. Illustration : If, in the case illustrated above, all the profits are given after the fixed period a shareholder withdrawing when his shares are five years old will receive on each share $60, dues paid in, plus $15, all the profits apportioned, making the amount he will withdraw on said share $75. 3. Some of the associations allowing a fixed rate of interest for a fixed period and all profits thereafter give, in addition to the fixed rate of interest during part of the fixed period, an arbitrary amount. The particular cases reported are as follows : (1) Fixed rate of interest allowed where shares on which with- drawal is made are less than six years old, with an arbitrary amount additional from the fourth to the sixth year, inclusive, and all profits thereafter. (2) Fixed rate of interest allowed when shares on which withdrawal is made are less than seven years old, with an arbitrary amount addi- tional from the fourth to the seventh year, inclusive, and all profits thereafter. 4. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Six months ; one year ; two years. 5. No interest or profit is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Two months ; three months ; six months ; one year ; a time arbitrarily fixed by the board of directors. 6. The fixed period during which a fixed rate of interest is siven in case of withdrawal varies in different associations as follows : One year ; two years ; twenty-six months ; three years ; four years ; five years ; six years ; seven years ; eight years ; ten years. 7. Among the associations reported as operating under this plan and its modifications the following regulations regarding withdrawal fees are found : (1) Withdrawal fee of 10 cents, 20 cents, 25 cents, 50 cents, or $1 per share is charged. (2) Withdrawal fee of 10 cents per share is charged for each month the shares upon which withdrawal is made have been in existence. (3) Withdrawal fee of 50 cents per share is charged if the shares upon which withdrawal is made are less than one year old. (4) Withdrawal fee of 50 cents per share is charged, but not less than $1 nor more than $2.50 per transaction. (5) Withdrawal fee of $1 per share is charged if the shares upon which withdrawal is made are six years old. (6) Withdrawal fee of $2 per share is charged if the shares upon which withdrawal is made are eight years old. (7) Withdrawal fee of $6 per share is charged if the shares upon which withdrawal is made are seven years old. (8) If the shares upon which withdrawal is made are in the sixth year of their existence a withdrawal fee of $5 per share is charged, if in their seventh year a fee of $4 per share, if in their eighth year a fee of $3 per share, if in their ninth year a fee of $2 per share, and if in their tenth year a fee of $1 per share. No withdrawal fee is charged prior to the sixtli year nor after the tenth year of the share's existence. (9) During the first year of the existence of the shares upon which withdrawal is made a fee of 25 cents per share is charged, during the second year a fee of 50 cents per share, from the third to the seventh years inclusive no fee is charged, during the eighth year a fee of $8 per share, and after the eighth year a fee of $6 per share. 42 6-16 APPENDIX II. PLA\ 8. Withdrawing shareholders receive the dues paid in with a graduated rate of interest thereon during a fixed period, and either a fixed or a graduated portion of the profits thereafter. Under this plan withdrawing shareholders receive the dues paid in on the shares on which withdrawal is made and, if withdrawal is made within a fixed period (varying in different associations) from the date of issue of the shares, interest thereon at various increasing rates per cent, per annum graduated according to the age of the shares ; if with- drawal is made after the expiration of said period shareholders receive instead of interest either a fixed portion of the profits apportioned to the shares or a portion of such profits graduated according to the age of the shares. Illustration : An association in which the dues are $1 per month per share provides for paying its withdrawing members, during the first six months their shares are in force, only the amount of dues that has been paid in ; during the second six months, in addition to the dues, 5 per cent, interest per annum thereon for the average time of investment ; during the second year, 5-i- per cent. ; during the third year, 6 per cent. ; during the first six months of the fourth year, 6^ per cent. ;• during the last six months of the fourth year. 7 per cent. ; during the first six months of the fifth year, 7-J per cent. ; during the last six months of the fifth year, 8 per cent. ; after the fifth year, at any time prior to maturity, 85 per cent, of the profits apportioned to the shares. If a member with- draws when his shares are fifty months old he receives, per share, the dues paid thereon, $50. and 7+ per cent, per annum interest thereon for the average time of investment, amounting to $7.81, making a total of $57.81. Should he withdraw at the end of the sixth year, and the profits at that time amount to $'20 per share, he would receive the dues paid in, $72, and, in addition thereto, 85 per cent, of $00, or $17, making a total of $89. If, after the fourth year, a graduated portion instead of a fixed por- tion of the profits is allowed, 65 per cent, of the profits being allowed during the fifth year. 70 per cent, during the sixth year, 75 per cent, during the seventh year, 80 per cent, during the eighth year, 85 per cent, during the ninth year, and CO per cent, after the expiration of the ninth year, at any time prior to maturity, a withdrawing shareholder would receive upon withdrawal made after having paid in dues for six years the amount of such dues, $72, and 75 per cent., of the profits, $15, making a total of $87 per share. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. If withdrawal is made alter the expiration of the fixed period during which a graduated rate of interest is allowed, withdrawing shareholders receive such port ion of i lie profits as i he managers of the •iat ion may from time to time determine. I.'. It withdrawal is made after the expiration of the fixed period during which a graduate, | rate of interest is allowed, withdrawing shareholders receive all the profits which have been apportioned to tin ir -!ia res instead of a fixed or a graduated portion thereof. :;. No wit hdrawal is allowed to be made upon shares which have not i in existence for a certain specified time, which varies in different associal ions. ■I. No interest orprofit is allowed if withdrawal is made upon shares Which have not lieen in existence for a certain specified time, which varies in different associations as follows: Six months; one year; eig ht' en muni hs ; I wo years. 5. Withdrawing shareholders receive the dues paid in with a gradu- ated rate of inter esl thereon until dues and profits amount to one-half mat ii rin'.'; value of a share, and eif her a fixed or a graduated portion of f hi pr< fil t hereafter. PREMIUM PLANS. 647 6. The fixed period during which a graduated rate of interest is given in case of withdrawal varies in different associations as follows: Three years ; four years ; four and one-half years ; five years ; six years ; seven years ; eight years ; nine years. 7. Among the associations reported as operating under this plan and its modifications the following regulations regarding withdrawal fees are found : ( 1 ) Withdrawal fee of 25 cents per share is charged. (2) Withdrawal fee of 10 cents per share is charged for each month the shares upon which withdrawal is made have been in existence. (3) Withdrawal fee of 10 cents per share is charged if the shares upon which withdrawal is made are less than six months old. (4) Withdrawal fee of 35 cents per share is charged if the shares upon which withdrawal is made are less than one year old, 10 cents per share if between one and two years old. (5) Withdrawal fee of 10 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than one year old. (6) Withdrawal fee of $5 per share is charged if the shares upon which withdrawal is made are nine years old. PLAJJ 9. Withdrawing shareholders receive the dues paid in with a graduated portion of the profits during a fixed period, and all the profits there- after. Under this plan withdrawing shareholders receive the dues paid in on the shares on which withdrawal is made and, if withdrawal is made within a fixed period (varying in different associations) from the date of issue of the shares, a portion of the profits apportioned to the shares graduated according to the age of the shares ; if withdrawal is made after the expiration of said period, shareholders receive all the profits apportioned to the shares instead of a portion. Illustration : The by-laws of an association provide that shareholders withdrawing at the end of the first fifteen months from the date of issue of their shares shall receive all dues paid by them together with 16J per cent, of the profits apportioned to their shares ; after two years, 334, per cent. ; after three years, 50 per cent. ; after four years, 66f per cent. ; after five years, 83^ per cert. ; after six years, all profits appor- tioned. A shareholder in the above association desires to withdraw after having paid dues for three years at si per share per month. The profits apportioned to his shares equal $8.80 per share, of which, according to the foregoing scheme, he receives 50 per cent., or $4.40. This amount added to $36, the amount of dues paid by him. gives a withdrawal value of $40.40 per share at the end of the third year. But if the shareholder retains his membership until the expiration of the sixth year the withdrawal value of a share will be an amount equal to the total dues paid in plus all the profits apportioned thereto. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. Instead of all profits the shareholder withdrawing at the expira- tion of a fixed period receives, in addition to his dues, such rate of interest or specific amount as the board of directors may from time to time determine. 2. Instead of a graduated portion of the profits the shareholder with- drawing during a fixed period receives, in additiou to lus dues, a fixed portion of the profits. 3. Withdrawing shareholders receive the dues paid in with a fixed portion of the profits during a fixed period, and a graduated portion of the profits thereafter. 4. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies indifferent associations as follows : Six months ; one year. 648 APPENDIX II. 5. No profit is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in differ- ent associations as follows : One month ; three months ; six months ; nine months ; one year ; two years ; three years ; four years ; five years. 6. The fixed period during which a graduated portion of the profits is given in case of withdrawal varies in different associations as fol- lows : One and one-half years ; two years ; two and one-half years ; five years ; six years ; seven years ; eight years ; nine years ; ten years ; eleven years ; twelve years. 7. If withdrawal is made after the expiration of the fixed period dur- ing which a graduated portion of the profits is allowed, a deduction of 5 per cent, is made on all profits apportioned to the shares. 8. Some associations charge a withdrawal fee of 15 cents per share ; others of 25 cents per share, regardless of the age of the shares upon which withdrawals are made. PLAX 10. Withdrawing shareholders receive the due° paid in and an arbitrary allowance of profits. Under this plan withdrawing shareholders receive the dues paid in on the shares on which withdrawal is made with such rate of interest, portion of the profits, or specific amount as the management of the association may from time to time determine. Illustration : In an association requiring monthly payment of dues at the rate of .$1 per share the board of directors decides, at the end of the sixth year, that the earnings have been sufficient to justify the payment to withdrawing shareholders of 6 per cent, interest per annum on the dues paid in for the average time of investment. A member then with- drawing would be paid his dues, $72, and 6 per cent, interest thereon, $12.96, making a total o* $S4.96. If, instead of interest, a part of the apportioned profits is allowed and at the end of the sixth year the board of directors decides to allow 75 per cent, thereof , the entire profits amounting to $20 per share, the withdrawing shareholder would receive $87 per share, and if, instead of either interest or a part of profits, it should be decided to pay a specific amount, as, for instance, $10 per share, he would receive $s2. Anion-' the associations reported as operating under this plan the following modifications and regulations are found : 1. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows: Six months ; one year: two years. 2. No interest or profil is allowed if withdrawal is made upon shares which have aot I a in existence for a certain specified time, which varies in different associations as follows: One month, sixty days ; two months; three months; six months ; nine months; one year ; eighteen months ; t wo years ; three years : four years. 3. The allowance in addition to dues must not be less than interest at a certain 6xed rate per cent, per annum thereon, which varies in differenl associations as follows: 3 ; 4 ; 1 ' : 5 : (J : 8. I. The allowance in addh ion to dues must not be more than interest at a certain fixed rate per cent, per annum thereon, which varies in differenl associat ions as follows : 4 ; 6 ; 8 : 12. 5. The allowance in addition to dues must not be less than a certain fixed portion of the apportioned profits, which varies in dil ■ renl asso- ciations as fallows : 50 per cent.: 60 per cent.: 7(1 per cent.; ?5 per cent. 6. The allowance in addition to due; must not be more than a certain fixed portion of the apportioned profits, which varies in different asso- ciations as follows : 7'."> per cent.; 90 per cent. lition to dues musl not he less than -U per cent. pei annum thei on, i withdrawal is made during the first two years PREMIUM PLANS. 649 of the existence of the shares ; after two years such allowance must not be less than 75 per cent, of the apportioned profits. 8. The allowance in addition to dues must be within certain fixed limits, varying in different associations as follows : Not less than 3 nor more than '» per cent, per annum, or not less than 3 nor more than 8 per cent, per annum on the dues paid in ; not less than 70 nor more than 90 per cent, of the apportioned profits. 9. Withdrawal is not allowed on more than ten shares at one time, nor on more than five shares during the three months succeeding such withdrawal by the same shareholder. 1C. If withdrawal is made during the first three months of the exist- ence of the shares, the dues only are returned ; during the next three months, the dues paid in with 4 per cent, interest per annum thereon ; after six months the allowance is arbitrary. 11. All the apportioned profits, in addition to dues, are paid to with- drawing shareholders after their shares are five years or six years old. 12. Among the associations reported as operating under tins plan and its modifications the following i-egulations regarding withdrawal fees are found : (1) Withdrawal fee of 5 cents, 25 cents, 50 cents, or $1 per share is charged. (2) Withdrawal fee of $1 per share is charged if the shares upon which withdrawal is made are less than one year old. (3) Withdrawal fee of 5 per cent, of the dues paid in is charged. (4) Withdrawal fee of 5 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than six months old. (5) Withdrawal fee of 5 per cent, or 10 per cent, of the dues paid in is charged if the shares upon which withdrawal is made are less than one year old. (6) Withdrawal fee of all profits apportioned if the shares upon which withdrawal is made are less than one year old. PLAN 11. Withdrawing shareholders receive the dues paid in and all the profits. Under this plan withdrawing shareholders receive the dues paid in on the shares upon which withdrawal is made and, in addition, all the profits earned by or credited to such shares. In some cases interest is allowed on the dues paid in since the date of the last apportionment of profits at rates varying in the different associations as follows : 3 per cent. ; 4 per cent. ; 6 per cent. ; 10 per cent. Illustration : In an association in which the dues are $1 per month per share and the profits are apportioned semi-annually all the profits credited are allowed on withdrawal. A shareholder withdraws when his shares are four years old ; he has paid in on each share during said four years $48 in dues, and the profits apportioned to each share are $8 ; said shareholder will therefore receive, on each share upon which with- drawal is made. $48 plus $8, or $56. In case interest is allowed on the dues paid in since the last distributing period, suppose the rate of such interest to be (5 per cent, per annum, and the shares upon which with- drawal is made to be four years and three months old : the dues paid in on each share are $51, and the profits shown as credited at the end of four years, date of last apportionment, are $8. The shareholder will then receive on each share upon which withdrawal is made 851 . dues paid in thereon ; $8, profits last apportioned, and 6 percent, interest on s:! paid in as dues since last apportionment, which, for one and one-half months, the average time of investment, would be 2 cents, making a total of $59.02. Among the associations reported as operating under this plan the following modifications and regulations are found : 1. In some associations all the profits credited are allowed only in 650 APPENDIX II. case they do not exceed interest on the dues paid in at a certain fixed rate which varies in the different associations as follows : 6 per cent. ; 8 per cent. 2. In one association the profits paid on withdrawal must amount to at least 6 per cent, interest on the dues paid in whether the profits earned or credited amount to so much or not. 3. No withdrawal is allowed to be made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : Three months ; six months ; one year ; two years : three years. 4. No interest or profit is allowed if withdrawal is made upon shares which have not been in existence for a certain specified time, which varies in different associations as follows : One week ; two weeks ; one month ; three months ; thirteen weeks ; four months ; twenty weeks ; six months; thirty weeks ; eight months; nine months; one year; fifteen months ; eighteen months ; two years ; three years ; thirty-nine months ; four years ; five years. 5. In one association withdrawal is not allowed upon more than ten shares at one time, nor upon more than five shares at one time during the six months succeeding such withdrawal by the same shareholder. 6. Among the associations reported as operating under this plan and its modifications the following regulations regarding withdrawal fees are found : (1) Withdrawal fee of 5 cents, 8 cents, 10 cents, 15 cents, 25 cents, 30 cents, 50 cents, $1, or $1.50 per share is charged. (2) Withdrawal fee of 5 cents per share is charged if the shares upon which withdrawal is made are less than six months old. (3) Withdrawal fee of 5 cents per share is charged for each week the shares upon which withdrawal is made have been in existence. (4) Withdrawal fee of 5 cents per share is charged for each week the shares upon which withdrawal is made have been in existence, if less than one year old. (5) Withdrawal fee of 5 cents per share is charged for each month the shaves upon which withdrawal is made have been in existence. (6) Withdrawal fee of 5 cents per share is charged for each six months the shares upon which withdrawal is made have been in exist- ence. (7) Withdrawal fee of 5 cents per share is charged for each month the shares upon which withdrawal is made have been in existence, if less than one year old ; if one year but less than two years old, 4 cents per share for each month of existence ; if two but less than three years old, 3 cents per share for each month of existence, and if three years old or over, 2 cents per share for each month of existence. Withdrawal fee of 10 cents per share is charged, but not more than $5 per 1 rani ad ion. (9) Withdrawal fee of 20 cents per share is charged, but not less than si per l ransaction. (10) Withdrawal fee of 50 cents per share is charged, but not less than SI nor more than $3 per transaction. (11) Withdraw;. I fee of $1 per share is charged, if the shares upon i wit hdrawal is made are less than one year old. With Irawal fee of $1 per share is charged, but only if the appor- : i profits amount to $1 ; if not, the apportioned profits only are a u it lulia wal fee. Withdrawal fee of 1.0 cents, 25 cents, 50 cents, or $1 per trans- i charged. Withdrawal fee of a fixed portion of the dues pa id in is charged, which varies in different associations as follows: 6 percent.; 10 per cent. ; 25 per cent. ; 8 per cent, if t he shares upon which wit In Ira wal is mad< tone yearold, and r. per cent if said shares are one year bnl I two years old ; 5percent. if the shares upon which withdrawal i made are less than one year old ; H» per cent, if the PREMIUM PLANS. 651 shares upon which withdrawal is made are less than six months old ; 10 percent, if the shares upon which withdrawal is made are less than one year old ; the first payment of dues ; one week's dues ; dues paid during first three months of shares' existence. (15) Withdrawal fee of a portion of the dues paid in, graduated according to the age of the shares upon which withdrawal is made if less than one year old. (16) Withdrawal fee of a fixed part of the apportioned profits which varies in different associations as follows : 2 per cent, of said profits if the shares upon which withdrawal is made are less than one year old ; 5 per cent, of said profits; 10 per cent, of said profits ; 40 per cent, of the last declared dividend ; one-half of the last declared dividend ; one- half of the last six months' profits ; the last declared dividend ; profits of the last three months ; profits of the last six months ; profits of the last two years ; 10 per cent, of the last two dividends ; profits of the first ten weeks ; profits of the first thirteen weeks; profits of the first six months ; ten weeks' profits and 10 cents per share additional. (17) Withdrawal fee of a fixed portion of the book or present value (dues paid in plus the apportioned profits) of the shares upon which withdrawal is made, which varies in the different associations as follows: 2 per cent. ; 5 percent. ; 10 percent. ; 5 per cent, if the shares upon which withdrawal is made are less than one year old; 5 per cent, plus the profits made by the dues paid in upon the shares npon which with- drawal is made during the first year of their existence ; 8 per cent, if the shares upon which withdrawal is made are less than two years old ; 6 per cent, if two but less than three years old ; 5 per cent, if three but less than four years, and 4 per cent, if four years old or over ; 10 per cent, ami, in addition, whatever the shareholder may bid for the privilege of withdrawing. (18) Withdrawal fee of such an amount as the shareholder may bid for the privilege of withdrawing. (1!)) Withdrawal fee of an amount equal to the average premium paid on the loans made to members of the association previous to the date of withdrawal. (20) Withdrawal fee of an amount equal to the average premium paid on the loans made to members of the association during the month in which the withdrawal is made. (21) Withdrawal fee of 25 per cent, of the profits is charged unless 5 per cent, of the difference between the book or present value (dues paid in plus the apportioned profits) and the maturing value is less than 25 per cent, of the profits, in which case 5 per cent, of said difference is charged as the withdrawal fee. (22) Withdrawal fee of an amount graduated according to the age of the shares upon which withdrawal is made. (23) One-fifth of the profits resulting from fines and premiums. PLAN 12. Withdrawing shareholders receive the dues paid in, with such propor- tion of the profits as the present value of their shares is of the maturing value. Illustration : In an association requiring payment of dues at the rate of SI per share per month the apportioned profits at the end of the third year amount to $14 per share, which, added to the dues paid in, $36, makes the present value of a share $50 ; the maturing value is $'200. and the present value is to the maturing value as 1 is to 4, or it is one-fourth thereof; therefore, a shareholder then withdrawing would lie entitled to receive one-fourth of the pi-ofits, $3.50, in addition to his dues, making a total withdrawal value of $39.50 per share. If withdrawal is made upon shares before any profits have been apportioned thereto their holder receives the dues paid in. No withdrawal fees are reported as being charged in connection with this plan. APPENDIX III The following by-laws, belonging to a very successful In- diana building association, may be used as an outline for those desiring to form building associations. It will be observed that these by-laws provide for an " Expe7tse Fund.'''' lit many associations this feature is omitted. This particular feature has been the source of much contention and considerable scan- dal ; for the reason that it has qforded grasping and unscr •/> vp- ulous officers an opportunity to secure remtmeration beyond the value of their services. We omit the instrument of organi- zation; for the reason that that instrument is peculiar to each particular state. BY-LAWS OF A PERMANENT ASSOCIATION. ARTICLE I. — Name, Location, Object, Capital. Section 1. — The name of this Association shall be Sec. 2. — The home office of this Association shall be in the city of , and all contracts made with this Association shall be deemed to have been made at such home office, [and any suit against this Association shall be brought in the courts of .] Sec. 3. — The object of this Association shall be to conduct the busi- ness of a Building, Loan Fund, Savings and Investment Company, [subject to the statutes of Indiana pertaining to such corporations.] Sec. 4.— The capital stock of this Association shall be $1,000,000; but the capital stock may be increased by action of the Board of Directors when deemed advisable or necessary. ARTICLE II. — Management. Section 1. — The management of the affairs of this Association shall be vested in a Board of eleven Directors, who shall exercise the general corporate powers of the Association, and shall be elected and continue in office as provided in the following sections of this article. Sec. 2. — The Directors named in the articles of incorporation shall, as nearly as practicable, be divided equally into three classes, one of which shall serve until the annual stockholders' meeting in 1896-'7-'8 and 1899, respectively, or until their successors are duly elected and qualified. Sec. 3. — The election of Directors subsequent to the provisions of 654 APPENDIX III. Section 2 of this article shall be by ballot, at the annual stockholders' meetings, and the term of service shall be four years. If a vacancy occur iu the board, it may be filled for the unexpired term, by the Directors, at any regular or special meeting. The Board of Directors, by a three-fourths vote, may remove any of its members for mal- feasance in office, after due hearing, at a regular meeting of the board. Sec. 4. — Regular meetings of the Board of Directors shall be held on the second Tuesday of each month. Special meetings may be called at any time by the President and Secretary, by written notice given to each member of the board. Sec. 5. — The Board of Directors shall have general supervision over the business affairs of the Association, and the duties and compensa- tion of officers ; and shall declare all dividends. Sec. 6. — A majority of the Board of Directors shall constitute a quorum. ARTICLE III.— Franchise of Stock. Section 1. — Each share of stock in good standing, not in arrears for any sum to the Association, shall be entitled to one vote on all ques- tions brought before any regular or special meeting of stockholders ; but no stockholder shall be permitted to vote upon any question affect- ing the claims of the Association against him or her. Sec. '2. — Shares may be voted by proxy; but the proxy authority shall be filed with the Secretary of the Association at least five days before the meeting at which it is to be used : and no clerk or travelling agent of the Association shall be permitted to vote by proxy authority. Sec. 3. — The owners of a majority of the stock of the Association, or their proxies, present at any stockholders' meeting shall constitute a quorum. Sec. 4. — Regular meetings of stockholders shall be held at the Home Office of the Association on the third Tuesday of January, of each year. At least fifteen days prior thereto, notice of such meeting shall be given by publication in some newspaper of general circulation in the State of Indiana. ARTICLE IV.— Officers. Section 1. — The officers of this Association shall be a President, Vice-President, Secretary, Treasurer, and Attorney ; but in case of necessity, the Board of Directors may make further appointments. Sec. 2. — The officers of the Association shall be selected from among the Directors, the first officers to serve until the first Directors' meet- ing following the annual stockholders' meeting in 189G, and then, and annually thereafter, their successors shall be elected by ballot of the Directors. Each officer shall continue in the discharge of his duties mil 1 1 Ins successor shall have been duly elected and qualified. Sic. :;. — In case of a vacancy occurring in any office, the Board of Directors may fill sucli vacancy lor t lie unexpired term, from among their number, at any meeting of the hoard. SEC. I. The officers of the Association shall execute such bonds for the faithful performance of their duties as the Board of Directors shall, from i inie lot iiue. require. Sec. 5. The Presidenl shall acl as t be executive head of the Associa- tion, and shall preside al all meetings of stockholders and Directors; ill ci rtificates of stock and all wan-ants drawn on the Treasurer by order of the Board of Directors or Executive Committee, and per- form such other duties as the Hoard of Directors may, from time to i ime, - pecify. Sec. 6. In the case of the death, disability, or absence of the Presi- dent , his dui ies shall devolve ii i ion t he Vice President ; and in case of his concurrent death, disability, or absence, the Board of] Erectors may appoint a President pro tempore to discharge the duties of the office. i . The Treasurer of the Association shall daily receive from the BY-LAWS. 655 Secretary all moneys paid to him in the business of the Association, giving his receipt therefor, and shall pay the same ou1 only (iii orders signed by the President and Secretary. He shall render a monthlj ac- count of his transactions to the Board of Directors at their regular meeting, and perform all other duties that usually pertain to his office in similar organizations. In event of his absence or disability the Executive ( lommittee shall appoint a 'treasurer / tempore. Sec. 8. — The Secretary shall attend all meetings of the stockholders, Board of Directors, and Executive Committee, and beep complete and accurate records of their proceedings. He shall receive' and receipt for all moneys paid to the Association and daily paj the same to the Treasurer, taking- his receipt therefor; he shall keep accurate records of accounts between the Association and each stockholder, as veil as all other necessary accounts, and draw all orders on the Treasurer. He shall have charge of the office business of the Association: attend to all correspondence and notifications; have recorded ail legal instru- ments for record belonging to the Association ; sign all certificates of stock and other instruments as required in the usual course of business or designated by the Board of Directors. He shall, at the monthly meeting of the Board of Directors, make a complete written statement of all financial transactions during the preceding month, and shall present for approval the complete minutes of all meetings of the Board, or any committees, standing unapproved. the same, if ratified, to receive the signature of the President. He shall keep insured all interests the As- sociation may have in any property, liable to loss or damage by fire, and protect the interests of the Association in all tax sales, or for- feitures, under direction of the Board. He shall have charge of the agency system of the Association, and, with the approval of the Ex- ecutive Committee, shall appoint such agents as shall be by him deemed for the best interests of the Association, and shall compensate them from the general fund of the Association. He shall have the power to remove such agents for cause, at any time. He shall have in his charge the corporate seal and ail books of the Association, ex- cept those in the special custody of other officers. He shall be the custodian of all securities of the Association, subject, however, to the provisions of Article XVI.. Section 8, of these By-Laws. He shall, in conjunction with the President, attend to the employment of the office service of the Association, subject to the approval of the Board of Directors, and shall perform such other duties as usually devolve upon the Secretary of a similar organization. He may, under con- tract, be deemed an employe of the Association, for such period as may he specified in such contract. SEC. 9. — The Attorney shall examine all title papers and otherwise investigate the title to property offered to the Association as security for loans, and report the result of such investigation in writing. He shall prepare all legal instruments required in the usual course of business, by the Association. It shall not be a part of his duty to attempt to quiet defective titles. His compensation may be determined by contract with the Association. ARTICLE V.— Committees. Section 1. — The President, with the concurrence of the Board of Di- rectors, shall appoint, from among the Directors, annually, an Executive Committee of five members, three of whom shall constitute a quorum for business: and such other special or standing committees as may. from time to time, be deemed necessary. Sec. 2. — The Executive Committee shall examine into and pass upon the sufficiency of all securities offered on loans, and shall, in writing. indorse their action upon each application for loan ; except collateral loans upon the stock of this Association, which shall not require the action of this committee. It shall fix all salaries of officers and em- G56 - APPENDIX III. ployes, and shall also perform such other duties as may be assigned to it by the Board of Directors, and shall present a complete and detailed report of its actions for approval at the next ensuing regular meeting of the Board of Directors. The President, Secretary and Treasurer .shall be ex officio members of the Executive Committee. ARTICLE VI.— Members. Section 1. — Any person owning one or more shares of the capital stock of this Association shall be considered a member thereof, entitled to all its privileges, and obligated to be governed by the rules and pro- visions of its Charter and By-Laws. Sec. 2. — Each stockholder shall receive a certificate of stock for the number of shares held by him, which certificate shall set for the fact of his membership ; the amount of monthly instalments ; the date said instalments are to be paid ; the penalty for non-payment and the guar- anteed extreme number of instalments upon such stock, all being subject to the Charter and By-Laws of the Association. Sec. 3. — Time, punctuality and strict performance on the part of each shareholder shall be of the essence of all contracts between him and the Association, and the waiver by the Association of any default or failure on the part of a shareholder to make any payment or perform any duty incumbent upon him, shall not be taken as a precedent or estop the Association from availing itself of any other default or failure on the part of such shareholder. Sec. 4. — In case of change of postofnce address of a member, notice thereof shall at once be given the Secretary, and such change be recorded on the books of the Association. ARTICLE VII.— Stock Issue. Section 1. — The stock of this Association shall be issued in shares of §100 each, in five classes, to be known respectively as " A," " B," " C," «'D"and 4> E." Sec. 2. — Classes A, B and C shall paid for by monthly instalments of $1.00, $0.80 and $0.50 respectively, and the stockholder's liability for such instalments shall be limited to sixty-three, seventy-two and ninety-six instalments respectively. But if shares in either class shall mature before the extreme number of instalments has been paid, then .such maturity shall annul the liability for any further instalments. Sec. 2. — All instalments on stock in Classes A, B and C shall be due and payable at tin- Heme Officeof the Association on the first and delin- quent after the twenty-fifth of each month, beginning with the month in which the certificate of stock is dated ; and each share of stock shall be subject to a lien for the payment of unpaid instalments and other charges incurred t hereon. Sec. 1. New shares in any class may be issued in lieu of shares withdrawn, cancelled or matured. Sec. 5. Instalments on stock may be paid in advance, and if the ame be for a period of six months and less than one year, a discount of six percent, per annum shall be allowed lor Hie average time of such advance payment ; if for a period of one year or more, the discount hall be seven per cent. Sec. 6. Fines shall be assessed against delinquent stockholders at the rate of ten cents per share per month on each delinquent instal- ment, and the same rale on delinquent interest and premium. Si.< j. ; . The Association shall dispose of unpledged shares remaining dcii. H 1 1 lent for six consecutive months, l>y crediting to the Association all fines and charges, and returning all balances to the owner of such : hares. . 3. A membership fee of $1.00 shall he charged for each share BY-LAWS. 657 of stock issued in Classes A, B, C and 1), and the same shall be paid to the agent taking the application for stock ai the time the same is made, and such fee shall entitle the. member to carry the number of shares on which the same is paid, during life. Sec. 9. — Stock shall be transferable only by written instrument, signed by the vendor ; and such transfer must be recorded on the I looks of the Association in order to he valid. Transfers shall in no manner exempt stock or stockholders from Liabilities created prior to s u transfer; and shares pledged ascollateral security cannot be transferre unless the mortgaged property is transferred to, and all obligati assumed by, the purchaser of such shares, or the obligations lirst dis- charged. No transfer shall be recognized except as above provided. A transfer fee of twenty-five cents per share, no fee to exceed §2.00, must be paid at the time of recording the transfer. Sec. 10. — Class D stock shall be issued upon payment of $1.00 per share membership fee, and a further sum of §50 per share, which amount shall be in full prepayment of all instalments or charges upon such shares. Sec. 11. — Holders of Class D stock shall have the privilege of with- drawing partial dividends semi-annually, from the dividend declared, at a rate not to exceed nine per cent, per annum on the amount deposited. Such dividends shall be payable on the first day of January and July of each year. Sec. 12. — Class E stock shall be issued on payment of $100 per share, which amount shall be in full of all charges of whatever kind against such shares. Dividends shall accrue at the rate of not to exceed eight per cent, per annum, payable in equal semi-annual instalments on the first day of January and July of each year, such dividends to accrue for the actual time the money is in the hands of the Association and to be in lieu of any and all other share in the profits of the Association. Such stock shall not be issued to an amount in excess of one-third of the mortgage securities of the Association, and each certificate of such stock shall be indorsed with the certificate of the depository of the Association that it holds such mortgage securities in three times the amount of the total issue of such stock. Sec. 13. — Certificates of Class E stock may be retired by action of the Board of Directors after one year from their date by giving sixty days' written notice to their recorded holders, and on such retirement shall receive their par value, together with all accrued dividends remaining unpaid ; but such retirement shall be in the numerical order of issue of such certificates only. Sec. 14. — In no month shall any Class E stock be issued when the loan fund income from other sources is equal to or greater than the amount of approved applications for loans on hand. ARTICLE VIIL— Maturity of Stock. Section 1. — Stock issued in Classes A, BandC shall mature as soon as the total loan fund portion of monthly instalments, added to the appor- tioned profits, shall equal the face value of such shares. Sec. 2. — Shares of Class D stock shall participate in the profits of the Association arising from interest and premium, and shall mature as soon as such profits, less withdrawn dividends and the general fund deduction from the same, as provided in Article X., section 2. added to the original deposit of $50 per share, shall equal the lace value of such shares. Sec. 3. — Shares of Class E stock shall mature at any time after one year from their date. Sec. 4. — Matured shares in any class shall become due and payable to the recorded owners of such shares within sixty days from their maturity. G58 APPENDIX III. ARTICLE IX.— Withdrawal of Stock. Section* 1. — The Loan Fund portion of monthly instalments on stock issued in Classes A, B and C may be withdrawn at any time in full, on demand, with full credited earnings. If the funds of the Association are pledged on approved applications for loans, the right is reserved to require sixty days' written notice before paying withdrawing share- holders ; and in no month shall more than one-half the loan fund receipts of the Association be applicable to the payment; of withdraw- ing shareholders of any class without the consent of the Board of Directors. All shares must be in good standing at the time of with- drawal. Sec. 2. — Shares of stock in Class D may be withdrawn at any time after one year from their date on sixty days' written notice to the Asso- ciation, and on such withdrawal shall receive the full deposit of $50 per share, and in addition thereto all accrued earnings at not to exceed nine per cent, per annum on the amount deposited for the full time of the deposit, less any and all dividends that have been paid under the provisions of Article VII., section 11. Sec. 3. — Shares of stock in Class E may be withdrawn at any time after one year from their date, upon sixty days' written notice to the Association, and shall receive the full deposit of $100 per share, and in addition thereto, all accrued and unpaid dividends at the rate of not to exceed eight per cent, per annum for the time of such deposit. ARTICLE X.— Funds. Section 1. — The funds of this Association shall be known as the Loan Fund, the General Fund and the Guaranty Fund. Sec. 2. — All fees shall be placed in the General Fund, together with ten cents per month on each share of stock in Classes A, B and C, which may be taken from the monthly instalments, or an equivalent amount may be taken from the earnings of the Association, as the Directors may decide from time to time by vote; ten cents per share per month to be deducted from the gross earnings of shares in ClassesD and E at the time of apportionment of semi-annual dividends, and $2.00 per share of the amounts deposited on shares in Class E. Sec. :'. — In the Loan Fund shall be placed all receipts of the Associa- tion other than as provided in Section 2 of this Article. ARTICLE XL— Uses of Funds. Se< Hon 1. — The receipts of the Loan Fund shall be available for the following purposes: Paymenl of withdrawals to withdrawing share- holders; loans to members on approved securities; borrowed money interesl thereon, it' any; dividends to shareholders ; discount on advance payments; paymenl of matured shares. Sec. 2. — The receipts of the General Fund shall be applicable to the paymenl of all expenses of the Association. Any surplus remaining after such expenses have been paid shall be placed in a third fund to be known as t he < luaranty Lund. SEC. 3. \ny losses to l he Loan Fund from depreciation of securities, or otherwise, shall be chargeable to "and paid from the Guaranty Fund. Sec. I. All moneys in the Guaranty Lund shall, as promptly as practicable, be placed in the Loan Lund to be loaned to members. All profits accruing on such Guaranty Fund moneys shall be credited to the profit accounl of t he Loan Fund. ARTICLE XII. Dividends. ctiom l. On the firsl daj of January and July of each year the lall pay such dividends as have accrued and are due and toch i in-, I in ( 'lasses I ) and L. sha II a pport ion and credit on the book of the Association all dividends earned and unpaid on BY-LAWS. 659 stock issued in Classes A, B, C and D, and shall issue to the share- holders certificates for such credited dividends. Sec. 2. — Apportioned dividends shall begin to earn dividends the same as cash payments, from and after the date of their credit. SEC. 3. — Loan Fund instalments on Classes A, B and C shall begin to earn dividends from and after the first of the month following that in which they are due and payable. ARTICLE XIII.— Reduction of Shares. Section 1. — On payment of a fee of $ 1.00, certificates issued in Classes A, B or C may be surrendered and new certificates for a less number of shares, bearing the same date, be issued, and the full amount of in- stalments paid upon the old certificate be applied upon the new : in the case of pledged shares, no reduction shall be to a less amount than the face of the obligation to the Association. ARTICLE XIV.— Power to Borrow Money. Section 1. — This Association, by its Board of Directors, may borrow money on the credit of the Loan Fund and its securities tor the purpose of supplying loans to shareholders, but at no time shall any money be borrowed when the receipts of the Loan Fund from other sources are sufficient to meet the approved demand for loaiis, and repayment of such borrowed money shall be made as soon as the receipts of the Loan Fund, from other sources, shall exceed the amount of approved appli- cations for loans on hand. ARTICLE XV.— Loans on Stock. Section 1. — Loans may be made upon the stock of this Association in amounts not to exceed the Loan Fund value of such stock ; but no loan shall be made in any sum less than §10.00. Sec. 2. — Stock loans shall be secured by promissory note, and the assignment of the stock pledged as collateral security, to the Associa- tion, and shall be at the same rates of interest and premium as are other loans of the Association. ARTICLE XVI.— Loans on Real Estate. Section 1. — Loans on real estate shall in no case exceed the face value of stock pledged as collaterial security for the same, and shall in every case be evidenced by bond or promissory note and secured by a non-negotiable first mortgage on real estate appraised at least double the amount of the loan. Sec. 2. — All notes shall bear interest at the rate of six per cent, per annum, and premium at the rate of six per cent, per annum, both pay- able in advance, monthly, at the same time as instalments on stock (not later than the 25th day of each month); and in case any pledged shares become delinquent as to any payment of instalments, interest or premium for a period of three months, or if taxes, insurance or any lien thereon be not paid within thirty days from the time the same shall become delinquent, then the whole sum of the note to the Association and the mortgage securing the same, shall immediately be- come due and payable, and the Association may forthwith proceed to collect all amounts due the Association, with costs, charges and at- torneys' fees, and to foreclose such mortgage in such manner as may be deemed advisable by the Board of Directors. Sec. 3. — Any stockholder desiring a loan shall make application therefor on the regular printed forms of the Association, and shall furnish a complete abstract of title to the property offered as security, together with an appraisal report of such property from at least two disinterested parties. If approved by the Executive Committee, such loan shall be filed in the regular order in which the application therefor 660 APPENDIX III. was received ; but no application shall be considered from any share- holder who is in arrears to the Association. Sec. 4. — Loans for building purposes may be advanced in instal- ments as the building progresses ; but in all such cases a bond against mechanics' and other liens shall be bled with the Association. Sec. 5. — At the completion of any loan the abstract of title to the mortgaged property shall be completed, showing the mortgage of this Association to be the first lien upon the property, and such abstract shall then be returned to the Association. Sec. 6. — All buildings on property mortgaged to the Association shall be kept fully insured for the benefit of the Association at the owner's expense, and all policies shall be renewed and delivered to the Asso- ciation at least ten days before their expiration. If such insurance or renewal be not obtained by the owner, or his agent, it shall be done by the Association, and the expense thereof shall be charged as a lien against the account of such stockholder, and be subject to the pro- visions of Section 2 of this Article. Sec. 7. — Each abstract of title to property offered as security for a loan shall be accompanied to the Home Office by a fee of §5.00 to cover cost of examination of same. A fee of §1.00 shall be paid in each case for the preparation of the papers necessary for closing the loan. Any fees not applied to the purpose for which paid shall be returned to the applicant. Borrowers shall meet incidental expenses connected with loans, such as the preparation and completion of abstract, expense of appraisement, recording of mortgage, etc. Sec. 8. — All notes, bonds, mortgages, insurance policies or securities received by this Association in the course of its business may be de- posited in trust with one or more responsible banks or trust companies for the benefit of members, as provided in Article XIV., Section 1, and Article VII., Section 12. Sec. 9. — Upon the maturity of shares pledged as security for a loan, the face of such shares shall be payable to the shareholder less his in- debtedness to the Association ; and the certificate of stock shall be sur- rendered to the Association and cancelled, and the Association shall release its claims upon said shareholder and its liens upon his property. SEC. 10. — Loans not delinquent for instalments, interest, premium or other payments, may be repaid at any time in amounts of one share or any multiple thereof, stopping interest and premium liability on the amount so repaid. ARTICLE XVII.— Miscellaneous. Section 1. — In case of large accumulation of funds unapplied for by shareholders and not applicable to the retirement of stock in Class E, .shares of stock in Class D may be retired upon sixty days' written not ice to their recorded owners, at their then book value, and any further surplus may be applied to pay off money transferred from the Guaranty Fund. Sec. 2.— Any officer or director may resign by filing written notice of his desire so to do with the Secretary; and such resignation shall [feci from and alter its acceptance by the Board of Directors. Sir. 3. Should the Board of Directors deem ii advisable, in any particular ease, to suspend the By-Laws, the majority in each case by no1 less than a two-thirds vote of the entire board, and such vote shall be placed on record by ayes and Sec. I. -Local boards of this Association may be organized, whose functions ball be to aid the Borne Office in the prosecution of the iciation's business in their local itj ; examine into and report, upon loan ecuril Ies, and in all ways advance i he best interests of t he A.sso- on. The officers of a Local Loan I may comprise a, President, Vice- Pn identj Secretary, Treasurer, Appraisers, and such other Directors FORMS. 601 as may seem for the best interests of the local work, and these officers may, on the organization of such board, be appointed by the Special Agents of the Association to serve for one year, or until their success- ors are elected and qualified. The Local Treasurer shall, as agent of tht 1 local members, receive all payments due the Association, and re- mit the same to the Home Office. Sec. 5. — Under no circumstances is any agent authorized to make, alter or waive contracts or forms, or to change terms or conditions of same, or to borrow money or contract bills or debts in the name of or on the credit of this Association, or to bind the association in any manner, without specific authority in writing or by telegraph, from the proper officers of the Association at the Home Office. Agents shall collect the full membership fees on all stock solicited by them, and report the same promptly to the Home Office. Sec. 6. — These By-Laws may be amended or repealed by a two- thirds vote of the Board of Directors at a regular or special meeting called for that purpose. FORMS. BO\D-\01V-]VE«OTIABLE. [On foregoing By-Laws.] No $.. Know all Men by these Presents, That of County, in the State of Indiana held and firmly bound unto The Building and Loan Association of , in the sum of Dollars, which well and truly to be paid bind heirs, executors, and administrators, firmly by these presents. Sealed, signed and dated this day of 189. . The Conditions of this Obligation are Such : Whereas, the above bounden obligor. . ha. . subscribed for share. . of stock of the face value of $100.00 each in said Association, for which share., of stock . .he. . received from said Association the sum of Dollars as a loan, which shares of stock are hereby transferred as col- lateral security for the payment of this bond, with agreement on part, that . .he. . will continue to pay monthly dues on the said share. . of stock at the rate of $ per month on each share as provided by Art. VII., Sec. 2, of the By-Laws of said Associa- tion, together with a premium of six (6) per cent, per annum on each share of stock, and interest on said loan at the rate of six it',) per cent. per annum, all to be due and payable on the first, and delinquent after the twenty-fifth day of each month, until such shares mature, as pro- vided by the By-Laws of said Association : also pay all lines and assess- ments on such shares as provided for in said By-Laws : all such pay- ments of money hereunder to be made at the office of the Association in the city of ... Now, If the above bounden obligor. . shall well and truly keep and perform said bond in every part, then the above obligation shall be void and of no effect : but if default be made in any part thereof, then the above obligor . . shall forfeit all the premiums, tines, assessments and in- terest so paid into said Association, and pay back said loan less all such dues credited thereon. All payments of money hereby secured shall be made without relief from valuation or appraisement laws [and with ten per cent, attorney's fees]. [Seal.] [Seal.] 43 662 APPENDIX III. MORTGAGE-lVO^-BfEGOTIABLE. [On foregoing By-Laws.] This Indenture Witnesseth, That of Count v. State of Indiana, mortgage. . and warrant. . to The — Building and Loan Association of the following real estate, situate in County, State of , and described as follows, to-wit : This mortgage is executed as security for the performance of the stipulations and agreements of a certain bond of even date herewith, executed by said to said Association in the sum of Dollars, which is a just and full loan ; Conditioned, that said shall continue to pay monthly dues upon. .. share. . of the capital stock of said Association, at the rate of $ per month on each share of stock, as provided in Article 7, Section 2, of the By-Laws of said Association, and six (6) percent, premium per annum on each share of stock, and interest on said loan at the rate of six (6) per cent, per annum, all due and payable on the first and delinquent after the twenty-fifth day of each month, until such share. . matui'e, as provided in said By-Laws ; also pay all fines and assessments on said shares as provided in said By-Laws ; and pay all money herein provided for at the office of the Association in the city of And it is Further Agreed, If said obligor. . shall well and truly keep and perform said bond in every part, then said bond shall be void and of no effect : but if default be made in any part thereof, the above obligor. . shall forfeit all premiums, fines, assessments, and interest so paid said Association, and repay said loan, less all dues credited thereon. The mortgagor. . further agree. . to keep such mortgaged premises in good repair, pay all taxes and assessments thereon as the same become due, and keep the improvements thereon insured to the satisfaction of the Board of Directors of said Association in the sum of $ for the benefit of said Association, and transfer and deliver such insurance to --aid Association, to be held as collateral security until the loan is fully paid. The mortgagor, .further agree. .. That upon default in any of the con- ditions of this mortgage or of said bond, said bond shall, without notice (notice being hereby expressly waived), at the option of said Board of Directors, be and become due and collectible, either by suit upon said bond or by foreclosure of this mortgage ; and upon such de- fault it is agreed that the mortgagee shall have possession of said premises during the year of redemption, and a receiver may be ap- pointed to take possession thereof, which receivership shall continue from date of such d< ■fault until said premises shall he redeemed accord- ing to law. or until such \ ear expires. // is Further Agreed, That all payments herein mentioned shall be made without relief from valuation and appraisement laws [and when so required by the Association, in the gold coin of the United 8tat< This mortgage shall be binding upon the heirs, executors, adminis- ,i of said mortgagor., and upon the successors of the ■ - i ; 1 1 ion. In wit aeSS whereof, said mortgagor. . . h. . .hereunto set hand . . ....and H-al....this day of A. D., 189.. [Seal. | [Seal.] FORMS. 663 State of , | QC County, P h< Before me, a Notary Public; in and for said county and State, this day of , A. D. , 189. . , personally came and each acknowledged the execution of the annexed mortgage. Witness my hand and official seal. Notary Public. [Notary Public will please see that all names and dates are correctly inserted.] MORTGAGE-GENERAL FORM. This Indenture Witnesseth, That of Marion County, in the State of Indiana, in consideration of the sum of dollars, to in hand paid, the receipt whereof is hereby acknowl- edged, mortgage and warrant to the — Savings and Loan Association of County and State of , the following described real estate, situate in County, and in said State, to wit : and the rents, issues and profits thereof. This mortgage is made to secure the performance of the agreements and stipulations of a certain bond of even date herewith, executed by to said Association, in the penalty of dollars, conditioned for the payment . on or before the. ... day of , of a loan of dollai's, together with dues on share. . of stock at cents, and premium thereon at cents per share per week, together with inter- est at five per cent. (~)°! ) per annum, payable each month : all said sums being payable in advance at the office of said Association in the city of , and such fines, assessments or other charges, as therein and in the By-Laws of said Association specified. And the mortgagor. . further agree. . that if any instalments of in- terest, premium or weekly dues are not paid when due. as stipulated in said bond, will pay to said Association on said share. . of stock, during the continuance of said default, fines as fol- lows : On monthly instalments of interest, twenty-five cents; on weekly instalments of premium, five cents ; on weekly dues, five cents ; which sums are part of the debts hereby secured. The mortgagor. . further agree. . that said Association shall have the right to keep the buildings now standing, or hereafter to be erected on said real estate, insured during the existence of the mortgage, against loss by fire, in an insurance company to be approved by said Associa- tion, to an amount not less than dollars, payable to said Association as its interest may appear ; and the mortgagor., further agree., that ..he., will pay all taxes, assessments, insurance, liens, or charges of whatever nature, which may accrue on said real estate, before the same shall become delinquent; and if at any time lie shall fail to pay taxes, assessments, insurance, liens or charges as aforesaid, said Association may pay the same, and the moneys advanced for such purposes shall be deemed apart of the debt hereby secured, and shall be a lien upon the shares of stock assigned to said Association as security therefor. And it is further agreed that upon default in any of the conditions of this mortgage or of the said bond, as respects the payment of said principal sum, interest, premiums, dues, fines, taxes or insurance money, or in any other respect, and the continuation of such default for the period of three months, the principal sum, interest, and all other moneys secured by this mortgage, shall, at the election of said Associa- 664 APPENDIX III. tion (notice of such election being hereby expressly waived) , be and become immediately due and collectible, either by a suit on said bond or by the foreclosure of this mortgage ; and upon such default occur- ring" the said Association shall have the right to take possession of said real estate as mortgagee, or to have a receiver appointed, for the pur- pose of applying the rents and profits thereof to the payment of the mortgage debt, interest, premiums, dues, fines, taxes, insurance and other charges, which possession or receivership shall continue until said real estate is redeemed or the expiration of said redemption year. The failure by the mortgagee to exercise its option to declare the said bond and this mortgage due, upon the occurrence of any sucli default, shall not prevent the future exercise thereof as to the same or any subsequent default. And it is further agreed that upon the happening of any such de- fault, and the election of said Association to consider the loan due and payable, said shares of stock shall be cancelled. And the mortgagors agree to perform all the stipulations of this mortgage, and of said bond, the terms of which are hereby made part of this contract, and to pay all moneys payable under the terms there- of, without relief from valuation or appraisement laws, with ten per cent, attorney's fees. In witness whereof, said mortgagors ha. . hereunto set hand. . and seal. . . this day of 189.. [Seal.] [Seal.J [Seal.J State op , County, ss. : Be it remembered, that on this day of A. D. 189. . , before the undersigned, , a Notary Public in and for the County and State aforesaid, duly commissioned and qualified, personally came who are personally known to me to be the same persons who executed the foregoing instrument of writing as grantors, and such persons duly and severally acknowledged the execution of the same. In witness whereof, I have hereunto set my hand and affixed my of- ficial seal the day and year last written. Notary Public. APPENDIX IV. GENERAL LEGISLATION RELATING ESPECIALLY TO BUILDING ANI> LOAN ASSOCIATIONS. The laws of the various states and territories, as reproduced in this appendix, are only such general laws as relate espe- cially to, or govern the organization and conduct of building and loan and similar associations, the general laws concern- ing corporations being <>n>i tied • but it is to be borne in mind tin it such general laivs, when not in conflict with the statutes here pxd>lished, have the same bearing upon building and loan associations as upon other corporations,' and they should, therefore, be consulted in rase information concerning the laws governing corporations generally is desired. ALABAMA. CODE OF 1886.— Volume I. Section' 455. — Building and loan associations doing business in this state are not required to return, as part of their taxable property, notes and mortgages made and executed to them by their stockholders or members for purchases, loans, or advances on stock made at the distribution of the funds thereof, if the stockholders or members obtaining such purchases, loans, or advances pan- tile taxes levied and assessed on the whole value of the property so mort- gaged ; otherwise, such associations must return for taxation the amount of their capital held by the stockholders or members on such purchases, loans, or advances, and also the average amount of money held by them during the year preceding that for which their assessment returns are made. Sec. 1553. — Three or more persons, associating as a building and loan as- sociation, may become a body politic and corporate in the mode, and with the powers and capacity in this chapter expressed; and such corporation may continue for twenty vears. Sec. 1554. — Such persons must file in the office of the judge of probate of the count • in which it is proposed the association shall have its principal place of business, a declaration in writing, signed by each of them, stating — [. The name and style under which it is proposed to incorporate such as- sociation. 2. The amount of the capital stock, and the number of shares into which it is divided. 3. The names and residences of the associates or subscribers to the declara- tion, and the principal place of business of the corporation. 4. The purposes of the corporation and the nature of its business, and such other matters as they may deem desirable. Sec. 1555. — The judge of probate must record such declaration, and must issue to the subscribers, their associates and successors a certificate of incor- GG5 QQQ APPENDIX IV. poration, under the seal of his office, stating therein the filing and record of such declaration, the name and style of such corporation, the location or prin- cipal place of business thereof, and that the subscribers, their associates and successors are a body politic and corporate ; and thereafter such corporation must be deemed duly organized. Sec. 1556. — Such corporation has power — 1. To have -accession by its corporate name for the period expressed in the declaration, not exceeding twenty years. 2. To sue and be sued ; and, if deemed necessary, to have a common seal, and the same at pleasure to alter or change. 3. To hold, purchase, dispose of, and convey such real or personal property as may be necessary for the uses and business of the corporation. 4. To appoint and remove, at pleasure, such officers and agents as the busi- ness of the corporation may require, prescribing their duties and fixing their compensation ; and to make all needful rules and regulations and by-laws for the transaction of its business, and the management and control of its affairs. 5. To levy monthly contributions from the shareholders, not to exceed one dollar per share in any one month. 6. To compel payment, and compliance with all lawful orders by fines and forfeitures. 7. To acquire real estate, to erect buildings, and the same to let to any share- holder of the corporation, or to sell to such shareholder on such terms" as may be fixed by its by-laws. 8. 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. 9. When funds are on hand, to lend the same to any shareholder of the cor- poration, on such security, and on such terms and conditions as may be pre- scribed by the by-laws ; but the security shall be a mortgage on real estate sufficient to protect the association. 10. When deemed advisable, or when two or more shareholders desire to borrow fundson 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. 1 1. To prescribe uniform sales 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. 12. 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, in 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. [3. In determining the amount of the capital stock of the association, each share shall be valued at fifty dollars. ACTS OF r888-'8o, p. 31. SECTION i. — The capital stock of building and loan associations, incor- porated under the genera! laws of this state, may be increased to a sum not ig two million dollars by the vote ol the persons holding the larger ■ mt in value of the capital stock at a meeting of the stockholders called for tl , ol which meeting and the purpose for which it is called, thirty days' notice must be given by publication for lour consecutive weeks in 1 er published in the town or city in which the corporation is located, an hi meeting the persons holding the larger amount in value of the stock vote for such increase, the proceedings of the meeting musl be to writing, signed by the president or other head of the corporation, and filed and recorded in the office of the judge of probate of the county in which the corporation has its principal place of business. In determining the amount oi the im n ised 1 ipital : "> k ol all building and loan associations ited prioi to the code Oi [876, each share shall be valued at not less 1 1 v nor more than fifty dollars. ACTS OF [892 '93, p. 065. No building and loan : ation shall pledge, hypothecate or »nd, moil curities which said association may GENERAL LEGISLATION. 6G7 obtain for money loaned or otherwise. But this section shall not apply to building and loan associations heretofore organized under the laws of this state. Sec. 2. — No building and loan association organized under the laws of any other state, territory or foreign government, shall do business in tins stale, unless said association shall deposit and continually thereafter keep deposited in trust for all of its members and creditors, with some responsible trust com- pany or the state treasurer, mortgages or other securities received by it in the usual course of its business amounting in actual value to the sum of fifty thousand (so.oooi dollars ; Provided, thai any such association as may desire may rile with the state treasurer the certificate of the proper state officer of another state, or the president and treasurer of some responsible trust com- pany or trustee, certifying that it has on deposit securities as herein required. All of the personal obligations of its members taken in the ordinary course of its business and secured by first mortgage on real estate, all dividends, interest and premiums which may accrue on securities held in trust as aforesaid, and all dues or monthly payments which may become payable on stock pledged as security for loans, the mortgage [s] for which are on deposit as herein required, may be collected and retained by the association so depositing such securities or mortgages so long as such association remains solvent and faith- fully performs all of its contracts with its members. Any securities on depi >-it as herein provided may from time to time be withdrawn if others of equal value be substituted therefor, but if such company is at the time of withdraw- ing such securities winding up its business in this slate, then such company need only substitute for such securities so withdrawn other securities equal in value to the amount of such company's liabilities in the state at the time of such withdrawal. Every building and loan association organized in this state or any other state, territory or foreign government, shall pay as a license for doing business in this state the sum of two hundred (200) dollars per annum in lieu of all other licenses and taxation, except as hereinafter provided, into the office of the state auditor, who shall deposit the same in the state treasury, for the use of the state. Sec. 3. — When by the laws of any other state, territory or foreign govern- ment, any taxes, fines, penalties, license fees, deposits of money or securities, or other obligations, requirements or prohibitions, are imposed upon building and loan associations of this state, doing business in such other slate, territi 11 v or foreign government, or upon their agents therein, so long as such laws shall continue in force, the same obligations, requirements and prohibitions of whatever kind shall be imposed upon all building and loan association such other state-, territories or foreign governments doing business in this state, and upon their agents here ; Provided, that this section shall not apply to building and loan associations which have heretofore established branches or agencies in this state. Sec. 4. — Building and loan associations, as used in this act, shall include all corporations, societies or loan and investment companies, or all organizations or associations doing a saving and loan business upon the building and loan plan. Sec. 5. — Any premiums, fines or stock heretofore taken and hereafter taken to represent premiums for loans made by any building and loan association doing business in this state, shall not be treated as interest, nor render such association amenable to the laws relating thereto ; but the said premiums, fines and stock taken to represent premiums, shall be collected as debts ol like amount are now collected by law, and according to the terms and stipula- tions of the agreements or contract between the association and its members, and in case of any building and loan association which does not, under its methods, charge premiums of the borrower, it shall not be deemed usury that the payments shall be required monthly, when the contract on its face charges only 6 per cent, interest. Sec. 6. — Every building and loan association doing business in this slate shall be assessed for and pay taxes upon its office fixtures and furniture, and all real estate acquired in the usual course of its business. Sec. 7. — All the officers at the home office of any building and loan associa- tion governed by this act, and doing business in this state, who handle any of the funds of such associations, shall give sufficient bonds for the faithful per- formance of their duties as the board of directors may require, and no such officer shall be deemed qualified to enter upon the discharge of the duties , f his office until his bond is approved by the hoard of directors. Sec. 8. — This act shall not apply to any building and loan association organ- 668 APPENDIX IV. ized under the laws of this state which confines its loaning and business operations wholly to its county. Sec. 9.— Any building and loan association doing business in this state with- out having first complied with the provisions of this act, shall be lined not less than one hundred (100) dollars, and not more than five hundred (-00) dollars, to be recovered by an action in the name of the state, and on collection paid into the state treasury for the use of the state; Provided, that building and loan associations organized in other states and territories having heretofore transacted business in this state, and not desiring to comply with the provi- sions of this act, shall have the right to wind up their business and fulfil their contracts with citizens of this state through their authorized agents, without being subject to the penalties herein provided. Sec. 10.— All building and loan associations organized in other states and territories and doing business in this state before the passage and approval of this act, shall have until the 1st day of June, 1^93, to comply with the provi- sions of this act ACTS 1896-7, p. S45. Section i. — The name " Building and Loan Association " as used in this act shall include all corporations, societies, organizations or associations doing business in this state, under a building and loan charter or engaged in a building and loan business. Sec. 2.— On or before the first day of March in each year, every building and loan association doing business in this state, and governed by this act, shall hie with the auditor of the state, a detailed report of the affairs and operations for the vear ending the thirtv-first of December, immediately j re- ceding, and such report shall be verified under oath by the president and secretary, or by three directors of the association, and shall contain answers to the following questions : 1. The date when the association was incorporated and the par value of each share of stock. 2. Number of shares sold during the vear. s. Number of shares cancelled or withdrawn during the year. 4. Number of shares in force at the end of the vear. 5. A detailed statement of total receipts and disbursements, showing from whal source received, and to what source applied. I A statement of the assets and liabilities at the end of the year. The following items shall also constitute the assets of a building and loan association. 1. Money actually loaned. 2. Accrued interest and premiums, fines and forfeitures. 3. Furniture and fixtures. 4. Real estate. 5. T.ixes and insurance advanced. 6. Solvent credits. 7. Such other legitimate assets as the association may acquire in the course of the business. S. Cash on hand, as shown by books and official certificate of designated depositories. (,. File a copy of its by-laws and published literature, which shall be free ;ml noi misleading in it-- nature. SEC. 3.— Each association -hall pay to the auditor ol the -late ten dollars on the filing of each report. It an association shall wilfully fail to furnish to a iditor of the state anv report required by tin- act, at the lime so re- ted, 11 -hall, in the dis< retion of the auditor, forfeit the sum ol twenty-five per da foi every day such reporl shall be delayed or withheld, and theaudil f tl nay maintain an action in his name as such aui h 1 enalty, and the same shall be paid into the treasury of the r tin benefit oi the state. 1 henon residenl building and loan associations having not less than undn -: thou and dollars in assets shall, before doing any busines in this state, obtain a lii n the auditor. In- complying with (he following. 01 ition hall file with the auditor a certified copy of the charter ii, and by-laws, showing its mode of business. ... I-,: d report of its actual condition as provided for in section 2 of a iditor twenty-five dollars as a tee lor filing the papers men- ■ 1 ii .ii. GENERAL LEGISLATION. 669 Sec. 5. — Such associations may, by their by-laws, impose fines and penalties upon their members for default or delay in payment, when same arc due, of instalments upon their loans, the interest, premium and charges thereon, and upon its shares of stock of such members, and the same maybe secured and collected by mortgage, in addition to the amounf ol interest, premium or other charges allowed by law, but such lines shall not exceed two percent, per 1111 mill 1 »i Mich arrearages. Sec. 6.— Upon foreclosure or sale under power given in any mortgage of land by a member to such associations it shall credit, as to the dale made, upon the entire debt claimed by the association all payments made upon Mich debt, whether of principal, premiums or interest, and the stock pledged for such loan shall be credited on the said loan at the actual value, and such stock thereby cancelled ; and upon forfeiture of sto '. oi a member borrowing from such association, upon security of his stock only, such loan shall be credited with the actual value ol such stock. Sec. 7. — All shares of stock in said associations, upon which all dues and charges for one year or more have been paid, shall have a definite withdrawal value, which shall be set out in the by-laws of said association and shall not be less than the whole amount paid in upon such share, with not less than eight per cent, per annum thereon for the average time such dues have been paid, less fines and penalties and a proportionate share of expenses and losses sustained. Sec. 8. — The premium to be charged upon any loan must be fixed by t he- by-law, but such premium and the interest on the loan taken together shall not exceed one per cent, per month on the amount actually loaned or advanced. SEC. 9. — No officer, director or agent of any foreign building and loan association, shall in this state solicit subscription of stock to such association, or sell, or knowingly cause to be sold, or issued to a resident of this state, any stock of an association, until the said association has complied with the provi- sions of the preceding sections. Any violation hereof shall be deemed a misdemeanor, and upon conviction shall be punished by a fine of not less than ten dollars nor more than fifty dollars. Sec 10. — Building and loan associations doing business in this state are not required to return as part of their taxable property, notes and mortgages made and executed to them by their stockholders or members, for purchases, 1 or advances on stock made at the distribution of the funds thereof, if the stock- holders or members obtaining such purchases, loans or advances pay the tax levied and assessed on the whole value of the property so mortgaged ; otherwise such associations must return for taxation the amount of their capital held by stockholders or members on such purchases, loans or advances and also the average amount of money held by them during the year preceding that for which their assessment returns are made. Approved February I2th, [897. ARIZONA. ACTS 1897, p. 35. Section i.— Hereafter no building and loan corporation, company or asso- ciation organized under the laws of this or any other state, territory or foreign country shall be permitted to do or transact any kind of building and loan business in this territory, until such corporation, company or association, in addition to other requirements of law, shall have made, executed and de- posited with the territorial treasurer a good and sufficient bond, with two or more sureties, in the sum of fifteen thousand dollars, for the benefit and security of its stockholders residing in this Territory. Sec. 2. — The bond mentioned in section 1 of this act must be in form joint and several, payable to the Territory of Arizona and signed by the president, secretary, Ire isureror managing agent of such corporation, company or asso- ciation, and at least two sureties ; conditioned that in cases wherein judgment has been rendered against such corporation, company or association, and a supersedeas bond on appeal has not been given by the principal, as required by law. or in case the supersedeas bond should for any cause tail or be< insufficient, that the principal, within thirty davs after such failure or rendition of any judgment against it. or them, as the case may be. pay or cause to be paid, all such judgments (not exceeding fifteen thousand dollars) recovered against it, or them, as the case may be, in any court of competent jurisdiction in this territory, or any liability incurred by virtue of any oi its stock. Sec. 3. — Every such bond shall be in force ami binding on the principal and sureties', for the faithful compliance of the principal with the requirements of this act, and for the use and benefit of any and all persons, corporations, 670 APPENDIX IV. companies, and associations, who may have any judgment against the prin- cipal ; and in cases where a supersedeas bond on appeal has not been given, as required by law, and any person, corporation, company or association, who may have any such judgment against the principal recovered on a certificate oi stock and a supersedeas bond has not been given, may, thirty days after the entry of such judgment, bring suit on such bond in his or its name, as the case may be, without an assignment thereof, in any court of competent juris- diction in this territory. Sec. 4.— No bond mentioned in this act shall be void on account of the hi it recovery thereon ; but suits may afterwards be brought on said bond from time to time by any person, corporation, company or association aggrieved, and who come under the provisions of this act, and recover judgment there- on, until the whole penalty of the bond shall be exhausted. Sec. 5 — The sureties on the bond must severally justify before an officer authorized to administer oaths, as follows: That he" is a resident and holder or householder within this territory and is worth the am which he becomes surety, over and above all just debts and liabilities, 111 property situated within "this territory, exclusive of property exempt from execution and forced sale. Sec. 6. — The sureties may become severally liable for portions of not i than one thousand dollars, "making in the aggregate at least two sureties for the whole amount of the bond. Sec. 7.— It shall be the dutv of the territorial treasurer to approve all such bonds and when in his judgment any bond made under the provisions of this act, or the sureties thereon, for any cause becomes insufficient, to require the principal to furnish a new bond. Sec. 8.— Such building and loan corporation, company or association may in lieu of the bond mentioned in section I of this act, deposit with the ritorial treasurer, territorial funding bonds, or some other int valid bonds, of the territory of Arizona, or any of the counties ther of their first mortgages — or give security through any reliable security pany — to the amount of fifteen thousand dollars, to beheld in trust for the benefit of local stockholders of said building and loan corporation, com] any or association. The territorial treasurer must, upon receipt of such securities, forth deposit the same in the territorial treasury, in a package marked with the name of the corporation, company or association from whom received, \. said securities must remain as security for stockholders of tl it ion, association to which they respectively belong; but so long as the corpi nation, company or association remains solvent, he must permit such m, company or association to collect the interests or dividen the securities so d, and may from time to time withdraw any of said securities, on depositing the value thereof in money or other securities of the same kind and value as those mentioned in this act, instead of tl withdrawn. Sec. 9. — If for any cause the securities should at anytime, in the judgment of the territorial 'treasurer, become insufficient, he may require such cor- inyoi association to deposit additional securities to make up 1 ij fifteen thousand dollars. Sec. [O. — Any corporation, company or association mentioned in this act, iness and withdraw the securities so deposited, must furnish il, 1 1.1I treasurer with satisfactory proof that all certificates of '. have been called in and satisfactorily settled and adjusted, and that nits pendir n, and that there are no unsatis- i, nl igainst it or them, as the case may be. 11 \i,\ |udgmen1 creditor who may have any unsatisfied judgment i on a certificate ol tock against such corporation, company or on, ai deas bond on appeal has not been given as required . thin thirty days from the dat< oi aid judgment have execution m sufficienl > to satisfy said judgment. \ , pei on or agent 01 otherwi e who shall solicit investments or in this territ u v f< r or 1 »n a< 1 ounl 1 if any fori ign building and loan • 01 poration, < ompany or association, which has not com lied with the pro i n Lhi act, shall be guilty ol a misdemeanor, ction thereol h > :| bi 1 hed by a fine not exceeding Two Hundred Dolla than Fifty Dollars or by imprisonment in a County [ail no month App 1. the fourth day ol Mai 1 h, V I >., 1897. GENERAL LEGISLATION. 671 ARKANSAS. DIGEST OF 1894. Section 6461. — The shares of stocks of mutual loan and building associa- tions shall be assessed at their cash value, but only the unredeemed shares of SUCh stock, or those not transferred to the association, shall be taxed, and such unredeemed shares shall be listed in the name of the individual owners thereof. Sec. 6462 (as amended by section 17 of act 02, acts of 1887) — . . . . Mutual loan [and] building'. . . companies, corporations or associations, incorporated under the laws of this state, or under the laws ol any other state, and doing business in this state, ... in addition to the other property required by this act to be listed, shall, through their president, secretary, principal accounting officer or agent, annually, during the month of July, make out and deliver to the assessor of the county where said com- pany or corporation is located or doing business a sworn statement of the capital stock, setting forth particularly : 1. The name and the location of the company or association. 2. The amount of capital stock authorized, and the number of shares into which such capital stock is divided. 3. The amount of capital stock paid up, its market value, and, if no market value, then the actual value of the shares of stock. 4. The total amount of all the indebtedness, except indebtedness for current expenses, excluding from such indebtedness the amount paid for the ] ur< hase or improvement of the property. 5. True valuation of all tangible property belonging to such company or corporation ; such schedule shall he made in conformity to such instructions and tonus as may be prescribed by the auditor of public accounts. SEC. 6462. 1 as amended by section :,N of act 92, acts of 1887).— The assessor shall, annually, at least ten days before the thirtieth day of June, deliver to the president, secretary, accounting officer or agent of any such c< nip, my, cor- poration or association located in or doing business in such county a notice in writing to return such schedule by the thirty-first day of July next ensuing. Any president, secretary, principal accounting officer or agent, of any such companies or corporations, upon whom such notice shall have been served, wilfully neglecting or refusing to make such return by the thirty-first day of July next ensuing, after the delivery of said notice, shall be guilty of a mis- demeanor, and, upon conviction, shall be fined in any sum not exceeding cue hundred dollars, or imprisoned not exceeding three months, or both, and the assess,, t - shall, from the best information he can obtain, make out and enter upon the proper assessment roll a list, with the valuation, of all tangible and intangible property belonging to such defaulting company or corporation subject to taxation by the provisions of this act, with fiftyper cent. penalty. CALIFORNIA. DEERING'S CODES AND STATUTES OF 1885. Volume II. — Civil Code. [Note. — Sections 639 to 647 inclusive, following, have been repealed by chapter 174 of the acts of 1891 except so far as the said sections relate to and govern building and loan associations existing prior to the passage ol said chapter.] Section. 639. — 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 organized with or without a capital stock. Sec. 640.— Any such corporation may borrow money for the purpose of carrying out its objects, and may give as security therefor its shares or mort- gage upon its real estate. Sec 641. — Any such corporation may purchase real estate and erect build- ings for its members, and make loans to its members for the 1 1 them in acquiring and improving real estate. Such loan musl in a secured on such real estate. Sec. 642. — Such corporation may insure in some lite insurance company incorporated under the laws of the state, the lives of its members and debtors. 672 APPENDIX IV. In case of the death of a debtor or member so insured, the amount recovered on his policy must be applied to extinguish the indebtedness, including the premium paid, and the residue, if any, must be paid to the legal representa- tives of the decedent. Sec. 643. — Any such corporation may purchase, hold, and convey real estate as follows : 1. The lot and building in which the business of the corporation 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 conveyed to it in trust, to secure money loaned or to secure the purchase price thereof in pursuance of the regular business of the corporation. Sec. 644. — The by-laws 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 lines and forfeitures for default ; the time and manner of election of director-, and other officers, and their terms of office ; the manner in which the real estate may be distrib- uted, allotted, or sold to its members ; 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 arising from subscriptions or payments, and the proportion of the profits such withdrawing members may receive on withdrawal. Sec. 645. — 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, statements of receipts and expenditures, profit and loss, and assets and liabilities, which must be audited and verified by two competent persons (not directors), elected by the general body of shareholders, and be countersigned by the president and secretary. A copy of 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 four weeks, in one or ni' ire newspapers published at the place of the principal business of the corporatii in. Sec. 647. — Any two or more such corporations may unite and become incor- porated in one body, with or without any dissolution or division of the funds h a irpi >ration,< >r either of them ; or any such corporation may transfer its igements, funds, and property to any other such corporation, upon such terms as may be agreed upon by two-thirds of the members of each ol such bodies present at general meetings of the members, convened for the purpose by notice, stating the object of the meeting, sent through the postoffice to every member, and by general notice, appearing daily at least one week, or weekly at least two weeks, in some newspaper published at the place of the principal business of the corporation ; but no such transfer can prejudice any right oi .in-; creditor of either corporation. Si led bv chapter [74, acts of iSoi 1.— Corporations may be formed subjei ! to the provisions of this title, and with all the rights, duties, and ipecified. Such corporations shall be known as mutual build- ing and l iations, and the words "mutual building and loan asso- ciation" shall form part of the name of every such corporation. The articles of incorporation, in setting forth the purposes for which the corporation is formed, shall slate that it is formed to encourage industry, frugality, home ivings among the stockholders ; the accumulation ol savings; of the funds so accumulated, with the profits earnings; and the repa to each itockholder of bis savings and ■ , when they have a< > umulated to a certain sum, or at any time when he shall 1 is pro ided in the by-laws, or when the corporation ime ; and shall also state that it is formed for all the pei ■ ■ 1 in 1 in title. 1 Ided by < hapter 171. a< ts of t8oi).— The capital stock ol sui h cor- fiall be paid in by the stockholders in regular, equal, periodical I timi and in uch amounts as shall be provided in the Such hall be called dues. And al or before a ntheb -laws, each stockholder shall pay to the corporation heldb liim, such an amount of dues as the by-laws, GENERAL LEGISLATION. 673 shall provide ; and the payment of dues shall so continue on each share of stock issued till it reaches its matured value, or is withdrawn, cancelled, or forfeited. The capital stock shall consist of such accumulated dues, together with the earnings and profits oi the corporation, and shall in no case exceed two million dollars, except as to corporations now existing. It shall be divided into shares of matured or par value oi one hundred dollars, or two hundred dollars each, as shall be provided in the articles of incorporation and fixed by the by-laws. Certificates of stock shall be issued to each stockholder on the first payment of dues by him. The shares shall be issued in yearly, half-yearly, or quarterly series, except in corporations now existing, in such amounts iii each series, and at such times, as shall be determined by the board of directors. No share of a prior series shall be issued alter the issuing of shares in a new series. Shares which have not been pledged as a security for the repayments of a loan shall be called free shares. Shares that have been so pledged shall be called pledged shares. All stock matured and sur- renderee! or cancelled in any series shall become the property of the corpora- tion, and may be issued in any subsequent series. Payment of dues on shares of stock in each series shall commence from the time that shares began to be issued in such series. Any such corporation shall have power by its by-laws to impose and collect a fine from each stockholder not exceeding ten per cent, of the defaulted amount, for every neglect or refusal to make his payments of dues, or premium, or interest, when due, and to impose and collect a like fine successively on every regular pay-day during such default. Every such corporation hereafter formed shall also have power to charge an entrance fee upon each share of stock issued, not exceeding ten cents on each share and may also charge a transfer fee not exceeding ten cents on each share, all of which shall be paid into the treasury and accounted for as all other funds of the association; Provided, that building and loan associations heretofore- incorporated may continue to charge and dispose of such entrance and trans- fer fees as are prescribed by the by-laws of such corporation. Payment of dues or interest may be made in advance, but no association shall allow interest on such advance payments at a greater rate than six per cent, per annum, nor for a longer period than one year. Sec. 635 (added by chapter 174, acts of 1891). — The directors may, at their discretion, under the regulations prescribed in their by-laws, retire the free shares of any series of stock, at any time after four years from the date of their issue, by enforcing the withdrawal of the same ; but whenever there shall remain in any series, at the expiration of five years after the date of its issue, an excess above one hundred free shares of the par value of two hundred dol- lars each, or two hundred free shares of the par value of one hundred dollars each, then it shall be the duty of the directors to retire annually twenty-five per centum of such excess existing at said expiration of five years after the date of its issue, so that no more than one hundred free shares shall remain in such series at the expiration of nine years fromthedate of its issue ; Provided, that no more than one-half of the monthly receipts be used for that purpose ; and thereafter the directors may, in their discretion, retire such other free shares as they consider to the best interest of the association to retire ; Pro- vided, that whenever, under the provisions of this section, the withdrawal of shares is to be enforced, the shares to be retired shall be determined by lot, drawn from all free shares in the series, as shall be regulated by the by-laws, and the holders thereof shall be paid the amount actually paid in, and the full amount of earnings at the date of last apportionment of profits. Sec. 636 (added by chapter 174, acts of 1891). — When the stock in any series shall have reached its matured value, payment of dues thereon shall cease, and all of the stockholders in such series who have borrowed from the association shall be entitled to have their securities returned to them, and a satisfaction of the mortgages made by them to the association ; and the holders of free shares of stock in such series shall be paid out of the funds of the association the matured value thereof, with such rate of interest as shall be determined by the by-laws, from the time the board of directors shall declare such share to have matured until paid ; but at no time shall more than one-third of the receipts of the association be applicable to the payment of matured shares, without the consent of the board of directors. The order of the payment of the matured shares shall be determined by the by-laws. Sec. 637 (added by chapter 174, acts of 1801). — The moneys in the hands of the treasurer, and such sums as may be borrowed by the corporation for the purpose, shall be loaned out in open meeting to the member who shall bid the highest premium, or may be loaned at such premium as may be fixed, from 074 APPENDIX IV. time to time, by the board of directors ; and the premium may be deducted from the amount of the loan, or such proportion may be deducted as the by-laws shall provide, and in that case the balance of said premium shall be pavable in such instalments as the by-laws shall determine ; Provided, how- . that where the premium is payable in instalments, the number of instal- ments into which the same is divided shall be uniformly applicable to all loans made by the corporation, and shall be payable at the times and in the manner as provided in the by-laws ; And provided further, that in no case shall the amount loaned exceed the matured value of the shares pledged to secure the loan. Sec. 638 (as amended acts 1897, p. 30). — The rate of interest on all loans may be fixed by the by-laws, but in case the by-laws fail to fix the rate, then it shall be fixed from time to time by the board of directors. For every loan made, a note or obligation secured by a first mortgage or deed of trust upon unencumbered real estate shall be given, accompanied by a transfer and pledge to the association of the shares borrowed upon, as collateral security for the repavment of the loan ; or, in lieu of the mortgage or deed of trust there may be pledged and transferred to the association tor the payment of the loan free shares, the withdrawal value of which, under the by-laws, at the time of such borrowing, shall exceed the amount borrowed and interest thereon for six months. At the discretion of the board of directors, a borrower may repay a loan, and all arrears of interest and fines thereon, at any time, upon the sur- render of the shares pledged for the loan. Sec. 639 (added by chapter 174, acts of 1891).— Whenever any member shall be six months in arrears in the payment of his dues upon 'free shares, the secretary shall give him notice thereof, in writing, and a statement of his arrearage-, by mailing the same to him at the last post office address given by him to the association, and if he shall not pay the same within two months thereafter, the board of directors may, at their option, declare his share for- feited ; and at the time of such forfeiture the withdrawal value thereof shall be determined and stated, and the defaulting member shall be entitled to with- draw the same without interest, upon such notice as shall be required of a withdrawing shareholder. Whenever a borrowing member shall he six months in arrears in the payment of his dues, or interest, or premium, the win ile loan shall become due,"at the option of the board of directors ; and they may proceed to enforce collection upon the securities held by the assc ciation. The withdrawal value, at the time of the commencement of "the action, of all shares pledged as collateral security for the loan, shall be applied to the pay- ment of the loan, and said shares, from that time, shall be deemed surrendered to the association. Six. 640 f added bv chapter 174, acts of 1891).— Any such association may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien, or other incumbrance, or in which it may have an interest; and may sell, convey, lease, or mortgage the same at pleasure to any person or persons. SEC ''41 1 added bv chapter 174, acts of 1891).— Any association organized in pursuance of the provisions of this act may borrow money for the purpose of making loans or paving withdrawals. SEC. 642 (added by chapter 174. acts of [8qi). — Profits and losses shall be apportioned at least annually, and shall be apportioned to all the shares in each series outstanding at the time of such apportionment, according to the : value of such shares as distinguished from their withdrawal value. Sec. 643, (added by chapter 174, acts oi 18911. Any person of Full age and sound mind mav become a member of Hie association, by taking one or more share- ih, rein, and subscribing to the by-laws, and annexing to his signature iddn . A minor mav hold shares in the name ol the parent, guardian, or next friend as trustee. The shares of stock in any such corpora- tion held I ■ on, to the value of one thousand dollars, shall be exempt from exe< ution, Sec. 644 (added by chapter 174, a. ts of [891). — Every association organized under the provi lions oi tin a< t, and every other association doing a like busi- hall annually make a lull report, in' writing, of the affairs and condition ition within thirty days after its annual meeting, to the bank of thi tate. Such reporl shall be verified by the oath of the ;, and a copy of the same shall be delivered to every holder, from the office oi the corporation, who may call for such report iciation shall make any furthei reports which the said commis- lay require, and in such form and as to such matters relating to the GENERAL LEGISLATION. G75 condition and conducting of the business of the association as such commis- sioners may designate; and said bank commissioners may at any tune ex- amine into the affairs of any and every of said associations. Any wilful false swearing in making and verifying said reports shall be deemed perjury Any such association which shall fail to furnish the bank commissioners any such report required, within thirty days after demand, shall forfeit the sum ol ten dollars per day for every day such report shall be delayed or withheld ; which may be recovered in an action brought by the attorney general in the name of the people of this state ; and all moneys SO recovered shall be paid to the treasurer of the slate, who shall pay the same into the " hank commissioners' fund." The state bank commissioners shall annually publish a full report of the condition of all associations formed under the provisions of this title, and every other association doing a like business in this state, in the same manner as they are now required to do in reference to savings banks. Sec. 045 (added by chapter 174, acts of 1891). — No mutual building and loan association, or company, association, or corporation, organized under the laws of any other state or territory, to carry on a business of a like character to that authorized by this title, shall be allowed to do business, or to sell their stock in this state, without first having deposited with the state controller, or secre- tary of state, the sum of fifty thousand dollars in money, or United States or municipal bonds of this state, or in mortgages upon real estate located within this state, as a guarantee fund for the protection and indemnity of residents of the state of California, with whom such companies, associations, or corpora- tions shall do business ; the fund so deposited to be paid by the custodian thereof to the residents of California only, and not then until proof of claim by final judgment has been filed with the custodian of said fund against such foreign company, association, or corporation. Any of the securities so deposited may be withdrawn at any time upon others, herein provided tor. of like amount, being substituted in lieu thereof! Any person or persons who shall be found in this state as agent, or in any other capacity, representing such foreign company, association, or corporation, which has not complied with the provisions of this section, shall be deemed guilty of a misdemeanor, and upon conviction shall be punished by a fine not exceeding one thousand dollars, or by imprisonment in the county jail not exceeding twelve months, or by both such fine and imprisonment. Sec. 646 (added by chapter 174, acts of 1801). — Any building and loan asso- ciation, now existing and heretofore incorporated, desiring to continue its existence under the provisions of this title, may do so if the holders of a major- ity of the stock, at their regular annual meeting, or at a special meeting of the stockholders called for that purpose, shall so elect. The notice of the meeting, whether regular or special, shall state as one of the objects of the meeting, to vote on the question whether the corporation shall continue its existence under the provisions of this title ; and the notice of meeting shall be published as required by section three hundred and one ; and, in addition thereto, a similar notice shall be mailed to each stockholder at his post-office address. Within thirty days after the holders of a majority of the stock at any such meeting have voted to continue the existence of the corporation under the provisions of this title, the secretary of the corporation shall, under oath, make and subscribe, as such secretary, a certificate, in writing, stating the calling of such meeting, the fact that the holders of a majority of'the stock voted to con- tinue the existence of the corporation under this title, which shall be filed in the office of the county clerk in which its original articles of incorporation have been filed, and shall file in the office of the secretary of state a certified copy thereof, according to the provisions of section two hundred and ninety- six; and the secretary of state shall issue his usual certificate, as provided in said section. Thereupon, such corporation shall be subject to all the provi- sions of this title, as though originally incorporated under the provisions hereof, except that no change in its name or amount of capital stock shall be made ; but the name shall be the same as contained in the original articles. Sec. 647 (added by chapter 174, acts of 1891). — All corporations doing the business of building and loan associations in this state shall be subject to the provisions of this title relating to the bank commissioners. Sec. 648 (added by chapter 174, acts of 1891). — The name " building and loan association," as used in this act, shall include all corporations, socie- ties, or organizations, or associations doing a savings and loan or investment business on the building society plan, viz.: loaning its funds to its members or its shareholders, and whether issuing certificates of stock which mature at a time fixed in advance or not. 676 APPENDIX IV. Sec. 648 % (added by chapter 174, acts of 1891). — The provision of an act entitled '"An act imposing a tax on the issue of certificates of stock corpora- tions," approved April first, eighteen hundred and seventy-eight, shall not be deemed and held to be applicable to any certificates issued to and transferred by the members or stockholders of any association organized under or governed by this act. STATUTES OF 1893.— Chapter 188. Sectiox 1. — All building and loan associations heretofore or hereafter incor- porated under the laws of this state, or any other state or territory, or those of any foreign country, and doing business in this state, shall be subject to the examination and supervision of a board of commissioners of loan associations, which board shall consist of two commissioners, each of whom shall be an expert of accounts, and shall be appointed by the governor, within thirty days after the passage of this act, to hold office for the period of four years, and until their successors are appointed and qualified. Sec. 2 (as amended acts, 1895, p. 103).— The commissioners shall each re- ceive a salary of twenty-four hundred dollars per annum and necessary travel- ling expenses, not to exceed for the two commissioners and their secretary the sum of seven hundred dollars per annum. Said commissioners are hereby authorized to appoint a secretary at a salary not to exceed twelve hundred dollars per annum, who shall have power to examine the books and affairs of the associations, the same as the commissioners. All said salaries and travel- ling expenses shall be audited by the state controller, and paid in the same manner as the salaries of other state officers. Sec. 3 (as amended acts, 1895, p. 103). — The commissioners shall have their office in San Francisco, which office shall be kept open for business every day and during such hours as are commonly observed by the banks of that city as banking hours. They shall procure rooms for their office at a monthly rental not to exceed forty dollars. They may also provide fuel, printing, stationery, and other necessary conveniences connected with their office, not to exceed an aggregate cost of four hundred dollars per annum. All expenses author- ized in this section shall be audited and paid in the same manner as the salary of the commissioners. Sec. 4 (as amended acts, 1895, p. 103). — The commissioners, before entering upon the duties of their office, must each execute an official bond in the sum of five thousand dollars, and take the oath of office as prescribed by the political code for state officers in general. The secretary appointed by commissioners shall execute a bond in the sum of two thousand dollars, and take the oath of office as prescribed by said political code. Sec. 5 (as amended acts, 1895, p. 103). — The duties of the commissioners of building and loan associations shall be to furnish all corporations legally au- thorized to transact the business of a building and loan association within this state a license authorizing them to transact the business of a building and loan association for one year from the date of said license ; to receive and place on file in their office the annual reports required to be made by build- ing and loan associations by this act; to supply each association with blank forms and such statements as the commissioners may require ; to be made on or before the first day of October of each year, a tabulated report to the gov- ernor of this slate, showing the condition of all institutions examined by them, with such recommendations as they may deem proper, accompanied : it< ment, verified by oath, of all moneys received and expended by them since their last report. Si (). — The commissioners shall visit, once in every year, and as much oftener as they may deem expedient, every building and loan association doing ness in this state. At such visits they shall have tree access to the vaults, booh , and papers, and shall thoroughly inspect and examine all the affairs of Hun , and in. ike such inquiries as maybe necessary to 1 tain its condition and ability to fulfil all its engagements, and whether it has complied with the provisions of law governing such associations ; they in 1 1 " rmanenl form a mil record of their proceedings, includ- i tatement of tin: condition of each of said corporations, which shall be open to th - ion ol the public during their office hours. imended, acts, [895, p. 10;). — To facilitate the examination of the ified in the foregoing section, every association shall 1 book "i record .written in ink, showing the appraised value of the real 1 tate tj held in 1 onnei tion with ea< h loan, and signed in each case byt: er oi officei or committee of the association making such esti- GENERAL LEGISLATION. G77 mate value. The commissioner shall have power to order a revocation of the security of any building and loan association when they deem it necessary, and may, for that purpose, appoint local appraisers at the expense of such association, the total expense of such appointment nol to exceed two dollars and fifty cents for each property examined and appraised. Each appraiser shall make a sworn report to the commissioner of the appraised value of all property examined. Sec. 8. — Either of the commissioners may summon all trustees, officers, or agents of any such corporation, and such other witnesses as he thinks proper, ii'i relation to the affairs, transactions, and conditions of the corporation, and for that purpose may administer oaths ; and whoever refuses, without justifi- able cause, to appear and testily, when thereto required, or obstructs ;i com- missioner in the discharge of his duty, shall be punished by a true nol exceeding one thousand dollars, or imprisonment not exceeding one year, or by both such fine and imprisonment. Sec. 9. — If the commissioners, upon examination of any corporation under their supervision, find that such corporation lias been' violating I he pro- visions ol law governing such associations, or is conducting its business in an unsafe manner, such as to render its further proceeding hazardous to the public, or to those having funds in its custody, they shall notify the attorney general of such facts, and the attorney general, in his discretion, may apply to the, judge of the superior court of the county in which such tori oration is doing business, to issue an injunction restraining such corporation, in whole or in part, from further proceeding with its business until a hearing can be had. Such judge may, in such application, issue such injunction, and, after a full hearing, may dissolve or modify it, or make it perpetual, and may make such orders and decrees, according to the course of proceedings in equity, to restrain or prohibit the further prosecution of the business of the corporation, as may be needful in the premises ; and may appoint one or more receivers to take possession of its property and effects, subject to such directions as may from time to time be prescribed by the court. Sec 10. — And if either of the commissioners, having knowledge of the insolvent condition, or any violation or law, or unsafe practice of an associa- tion under their supervision, such as renders, in their opinion, the conduct of its business hazardous to its shareholders or depositors, and shall fail to report the same in writing to the attorney general, as required by this act, then such commissioner, on conviction thereof, shall be punished by a line of not less than live thousand dollars nor more than ten thousand dollars, or by imprison- ment in the county jail not less than one year nor more than two years, or by both such fine or imprisonment ; and his office shall be declared vacant by the governor, and a successor appointed to fill his unexpired term. Sec. 11. — When receivers are so appointed, the secretary of the corporation shall make a schedule of all its property, and its secretary, board of invest- ment, and other officers transferring its property to the receivers, shall make oath that said schedule sets forth all the property which the corporation owns, or is entitled to. The secretary shall deliver said schedule to the receivers, and a copy thereof to the commissioners, who may at any time examine, under oath, such secretary, board of investment, or other officers, in order to determine whether or not all the property which the corporation owns, or is entitled to, has been transferred to the receivers. Sec. 12. — The commissioners, or one of them, shall at least once in each year, and as much oftener as they may deem expedient, examine the accounts and doings of all such receivers, and shall carefully examine and report upon all accounts and reports of receivers made to the proper court and referred to the commissioners by the court, and, for the purposes of this section, shall have free access to the books and papers relating to the transactions of such receivers, and may examine them under oath relative to such transactions. Sec. 13. — Upon the certificate, under oath, of any five or more officers, trustees, creditors, shareholders, or depositors of any such corporation, setting forth their interest and the reasons for making such examination, directed to the commissioners, and requesting them to examine such corporation, they shall forthwith make a full investigation of its affairs, and in the manner provided. Sec. 14. — The commissioners, if in their opinion any such corporation, or its officers or trustees, have violated any law in relation to such corporations, shall forthwith report the same, with such remarks as they deem expedient, to the attorney general, who shall forthwith institute a prosecution for such violation, in behalf of the people of the state. 678 APPENDIX IV. Sec. 15 fas amended acts 1895, p. 103). — To meet the expenses provided by this act, every building and loan association, or corporation, or association doing business on the building and loan plan, shall pay, in advance, to the commissioners, its pro rata amount of such expenses, to be determined by an assessment levied upon the shares of each of such associations in force on the thirty-first day of December, eighteen hundred and ninety-two, p rata according to the par value of such shares ; and annually thereafter the said commissioners shall levy, in like manner, and collect in advance, a like assessment on the shares of all such associations in force as per report, herein provided for, to be made to said commissioners of the condition at the close of business, on December thirty-first of each year. Provided, however, that no association shall pay less than ten dollars per annum; and all associations hereafter organized shall each pay to the com- missioners for their license not less than one dollar per month for the term expiring December thirty-first succeeding, dating from the time of application for license. Sec. 16. — The collection of all moneys assessed, as herein provided, for the annual expenses, or forfeitable as fines for failure to make reports as herein specified, and due from any corporation or association coming within the provisions of this act, may be enforced by action instituted in any court of competent jurisdiction, and all moneys collected or received by said commis- sioners under this act shall be deposited with the state treasurer, to the credit of a fund to be known and designated as the " building and loan association inspection fund." Sec. 17 (as amended acts 1895, p. 103). — No association shall transact business in this state without first procuring from the commissioners of building and loan associations a certificate of authority or license to do so. To procure such authority it must file with the said commissioners a certified copy of the articles of incorporation, constitution and by-laws, and all other printed rules and regulations relating to its methods of conducting business, and of all subsequent amendments or changes thereto, and otherwise comply with all requirements of law. No association, after the expiration of the term for which a license has been granted to it by the commissioners of building and loan associations, shall continue to transact the business of a building and loan association without first procuring from said commissioners a renewal of such license, on the terms provided for in this act ; and any corporation violating this provision shall forfeit the sum of ten dollars per day during the continuance of the offence ; and any violation of this section by any officer of such association shall be a misdemeanor. The commissioners areauthorized and empowered to revoke the license of any association under their supervision, the solvency whereof is imperilled by losses or irregularities ; and the commissioners, immediately upon revoking such license, shall report the facts to the- attorney general, who shall thereupon take am h pn iceedings as is pr< ivided by section nine of this act. Sec. [8 as amended acts [893, p. [03). — Everj building and loan associa- tion doing business in this state shall, once in every year, to wit : within thirty days alter the expiration of its annual fiscal term, make a report, in writing, to the 1 ommissioners of building and loan associations, verified by the oath 01 its president and secretary, showing accurately the financial condition of such ition at the close of said term. The report shall be in such form as the commissioners shall prescribe, upon blanks by them furnished for that pur- po e, and shall specify the following particulars, namely : Name of the cor- poration, place where located, authorized capital stock, amount of stock paid in, 1 in- 11, inie of the directors, the amount of capital stock held by each, the amot hareholders, the amount and character of all other liabilities, < .1 h on hand, and the number and value of shares in each and every series of the ation, All money received or disbursed by such duly accounted for. Any association failing to file the_ annual report within the time specified herein shall be subject to a penalty of t( n dollars per day foi each and every d.w such report shall be delayed or withheld. '■'>.— stoi kholders desiring to withdraw from any association, or to sur- render a part or all ol their stuck, shall have power to do so by giving thirty in writing, ol uch intention to withdraw. On the expiration of Ruch notice, the tockholder so withdrawing shall be entitled to receive the full amounl paid in by him or her, together with such proportion of the earh- the by-law may provide, or as may have been fixed by the GENERAL LEGISLATION. G79 board of directors ; Provided, that not more than one-half of the monthly receipts in any one month shall be applied to withdrawals for that month, with- out the consent of the board of directors, and no shareholder shall be per- mitted to withdraw, whose stock is pledged as security to the association for a loan, until such loan is fully paid. Such withdrawals shall be paid in succes- sion, in order that the notices arc given. Sec. 20 (as amended, acts 1895, p. 103). — The name "Building and Loan As- sociate >n," and all reference to the same as "association" or "associations," as used in this act, shall include all corporations, societies or organizations in- investment companies or associations, whether organized in this state or re- presented by agents, doing a savings and loan or investment business, and which are not under the direct supervision of the hank commissioners or the insurance commissioner, and whether issuing certificates of stock which mature at a time fixed in advance or not, and shall also include any association or company which is based on the plan of building and loan associations, and which contains features similar to such associations ; and said commissioners are hereby vested with the power of determining whether such association or associations contain such features as are based on plans similar to those of building and loan associations, and whether they properly come within the provisions of this act. COL.OIIAOO. ACTS iSQ7,p. 121. Section* i. — Any association of not less than three persons hereafter incorpo- rated under the laws of this state, which shall he organized within the state for the purpose of raising a fund by the collection of dues or stated payments its members to be loaned among its members, shall, in the furtherance of such purpose, and after having complied with the requirements of this act, be iu- thorized and empowered to levy, assess and collect from its members such sums of money, by rates or stated dues, fines, interest on loans advanced, and premiums bid by members for the right of precedence in taking loans, as the corporation may provide for in i's constitution or by-laws. Also, to acquire, hold and convey all such real estate and personal propertyasmay legitimately be pledged to it upon said loans, or may otherwise be transferred to it in the due course of its business. Sec. 2. — The words "Loan and Building Association," " Building Associa- tion," or " Building and Loan Association," shall form part of the corpi name of every such corporation. Sec. 3. — Every such association now or hereafter incorporated under the laws of this state complying with the provisions of this act, may issue and sell its shares of stock in one or more successive series, or upon the permanent or Dayton plans in the denomination and to the extent as limited in the articles of incorporation of such associations, either fully or partially paid up in period- ical or other instalments, or upon all, either, or any of these plans and with or without full participation in the earnings of such association, or partially in limited dividend bearing stocks as may be provided by the by-laws of such association, for the purpose of raising a fund to make advances to members upon first mortgage, .or trust deed, liens, upon real estate and upon the shares of stock issued by such association, or upon both such security. Borrowing members of such associations shall be required to carry such periodical assess- ment stock with the association as shall have a par value equal to the loan, and every share issued shall be subject to a lien for any advance made thereon, or other claim against the holder. Every such association may redeem its shares, and repay the funds acquired thereby with such earnings as the same may be entitled according to the terms of the issue thereof whenever the same shall be no longer required for the purposes of the association. Any stockholder wishing to withdraw may do so at such time and on such notice and terms as provided by the by-laws: Provided, that no association, either foreign or domestic, doing business in this state, shall, on such business in paying the withdrawal of any certificate or any number of certificates 1 iriginaliy issued to the same person, deduct an amount to exceed two dollars per share as a withdrawal fee, which shall be further limited so that such fee shall not exceedten dollars in any (one) transaction, irrespective of the number of shares in such certificates included in such transaction, when he or she shall be entitled to receive the amount provided by the by-laws, or determined by the board of directors, less all fines or other charges : Provided, that at no time shall more than one half of the monthly receiptsof the association be applica- ble to the demands of withdrawing shareholders without the consent of the 680 APPENDIX IV. board of directors, and that no shareholder in debt to the association shall he entitled to withdraw or transfer his shares held without the consent of the directors of the association until such debt shall be paid. Sec. 4. — The number, titles, functions and compensation of the officers of any such association, their terms of office, the time of their election, as well as the qualifications of electors, and the votes and manner of voting, and the periodical readings of such corporation, and the manner and terms upon which loans shall be made and repaid, shall be determined by the by-laws. All such by-laws shall be made by the stockholders at their annual meeting, or by the board of directors of such corporation at any regular meeting of the board of directors. Every such corporation, before commencing business under this act, shall file a copy of its by-laws with the clerk and recorder of the county in which the principal business of such corporation is carried on ; and shall likewise so file copies of all subsequent changes and amendments of such by-law T s ; and all such corporations now doing business in this state shall immediately file copies of their by-laws with the clerk and reporter of the proper county ; and also file all subsequent changes and amendments thereto ; Provided, that no such subsequent change or amendment to such by- laws shall in any manner change or effect 1 affect) the terms and conditions of any loan made prior to such change or amendment in said by-laws. Sec. 5. — No officer or director of any association shall negotiate for or re- ceive a loan from such association ; neither shall any loan be granted by such association to other parties upon security in which any officer or director of such association has an interest of any kind, except that any officer may be permit- ted to receive a stock loan to an extent and not to exceed ninety per cent, of the book value of the collateral shares ; Provided, that the foregoing provis- ions of this section shall not apply to domestic associations doing business only in one county of the state. Any association may from time to time, as its by-laws may provide, invest any portion of its funds not immediately re- quired by its members in loans upon real estate or other securities, or invest in bonds, warrants, or other securities, or may loan such surplus to any other association complying with this act. Real estate may be purchased by such association under its own foreclosure proceedings, judgment or lien, or when- ever it may be necessary to protect itself from loss ; and the same shall be ci inverted into money by sale as speedily as may be without detriment to the interests of the association. Any association under the laws of this state may purchase, build, hire, or take upon lease any building for conducting its busi- ness, and may adopt and furnish the same, and may purchase, or hold upon lease, any land for the purpose of erecting thereon a building for conducting the business of the society ; and may sell, exchange or let such building, or any part thereof. Any association incorporated under the laws of this state, and complying with the terms of this act, may, in such manner and to such extent within the limits hereinafter stated as may be provided in its by-laws, negotiate for and receive such longtime, or short time, loans on note or bond, as may be found necessary to advance the purposes of the association ; Pro- vided, that no association' shall borrow money at any time to exceed one- fourth of its accumulated assets ; Provided, further, that no note, bond or oi her form of evidence of such debt shall be secured by the pledge of notes, bonds or other securities held by the association, in such manner as to permit a sale of such collateral, but only to the extent of giving to the pledgee a prior lien for repayment on the proceeds of such collaterals when collected in the n u. il way according to their respective terms, except that this section shall ni il 1"' held to abridge the right of any association to secure any loan obtained by mortgage or trust deed upon its real estate holdings, to the same extent and manner as might be d< >ne by any 1 ither O irporation under the laws of this state. SEC. 6.— Every iuch corporation organized under the laws of the state of < 1 ido may loan its accumulations to members upon such plan of repay- ment as provided by its by-laws. They may < harge, contract for and recover a nium upon su< h a plan as may I"- pi ovided for in the by-laws, or note, or ■ ■I indebtedness taken by such association, all oi which notes 1 hall be in i iable Sec. 7 No premiums, fines or interest on such premium thai may accrue to the said a ociation, acci »rding to the provisions of tins act, shall be deemed ous ; and the ame may be < olle< ted as debts ol ike amount are now by law collected in this ate ; but no fei foi non-payment of dues shall exceed month for the first sixty days, and two per cent, per month I GENERAL LEGISLATION. 681 Sec. 8. — No corporation organized under this act shall cease or expire, from neglect on the part of the corporation, to elect officers at the time mentioned in their charters or by-laws, and all officers elected by such corporations shall hold their office until their successors are duly elected and qualified. Sec. 9. — Any building or loan association incorporated by or under the provisions of this act, or any one heretofore or hereafter incorporated, is hereby authorized and empowered to purchase at any sheriff's or other judi- cial sale, or at any other sale, public or private, any real estate upon which said association may have, or hold, any mortgage, trust dui.-d, judgment, lien, or other incumbrance, or in which saitl 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 or lease at pleasure to any person or persons whatever, and all sales of real estate heretofore made by such association, to any person or persons not members of the association so selling, are hereby confirmed and made valid. Sec to. — The business oi every building and loan association created or incorporated under this act, shall be managed and controlled by a president, a board of directors or trustees, a secretary and treasurer, and such other offi- cers or agents as the by-laws may provide. The directors or trustees shall be elected annually by the stockholders, or members, at the time fixed by the by- laws, and shall hold their office until others are chosen and qualified in their stead; the manner of such choice, and of the choice or appointment of all other agents or officers, shall be prescribed by the by-laws. The number of directors or trustees shall be not less than three nor more than thirteen, one of whom shall be chosen president by the directors or by the members of the corporation, as the by-laws may direct. The stockholders of said corporation may, at a meeting called for that purpose, determine, fix or change the num- ber of directors or trustees — not less than three— that shall thereafter govern its officers ; and a majority of the whole number of such directors or trustees shall be necessary to constitute a quorum. The treasurer shall give bond in such sum and with such surety as shall be required by the by-Taws, for the faithful discharge of his duties ; and he shall keep the moneys of the corpora- tion in a separate bank account to his credit as treasurer ; and if he shall neglect or refuse so to do, he shall be liable to a penalty of fifty dollars for every clay he shall neglect so to do, to be recovered for the benefit of such association, at the suit of any stockholder, and shall be subject to removal from office ; Provided, that such building and loan association may designate as its treasurer some responsible bank or trust company. Sec. 11. — In case of the death, removal or resignation of the president, or any of the directors, secretary, treasurer or other officer of such corporation, the remaining directors may fill the vacancy thus created until the next general election. Sec. 12. — On or before the first day of August and the first day of February in each year, every such building and loan association heretofore or hereafter organized under the laws of this state shall file with the clerk and recorder of the county in which the principal business of such corporation is carried on, a report of its affairs and operations for the six months ending on the 30th day of June and the 31st day of December. Such reports shall be verified, under oath, by the president and secretary, or by three directors of the association, and contain answers to the following questions : First, the amount of authorized capital and the par value of each share of stock ; second, the number of shares sold during the preceding six months ; third, the number of shares cancelled and withdrawn during the preceding six months ; fourth, the number of shares in force at the end of the preceding six months; fifth, a detailed statement of receipts and disbursements, including an itemized statement of the expense of conducting and operatine; said building and loan association during the preceding six months ; sixth, a detailed state- ment of assets and liabilities at the end of the preceding six months, and pay to the clerk and recorder of the proper county a fee of fifty cents, on filing said report. If any officer of such association shall fail to file such report as required by this act, or if any such report shall be delayed or withheld beyond the day when the same should be so filed, such officer of such association shall forfeit and pay the sum of ten dollars for every day such report is withheld or de- layed ; and any such stockholder of such association, or any party in interest, may maintain an action in his name to recover such penalty, and the same shall be paid into the county treasury and applied to the benefit of the school fund. After receiving such report, the clerk and recorder of the proper county shall issue his certificate, stating the compliance with such provisions, 682 APPENDIX IV. and that the corporation is entitled to do business, which such certificate shall be in force for the period of six months next ensuing. Sec. 13. — Every person who shall wilfully or knowingly subscribe or cause to be made any false report, false statement or false entry in any book of any as- sociation organized for the purposes set forth in section one of this act,or exhibit false papers with the intent to deceive any person, or shall make, state or pub- lish any false report or false statement of the financial condition of such as- sociation, shall be deemed guilty of felony and, upon conviction thereof, shall be fined in any sum not exceeding five thousand dollars, and be imprisoned in the state penitentiary not less than one nor more than five years. Sec. 14. — Whenever it shall appear to any party in interest, or to any creditor of any such association heretofore organized, or which may hereafter be organized, that such association is conducting its business in an unsafe or unauthorized manner, or is jeopardizing the interest of its members, or that it is unsafe for such association to transact business, he or they shall com- municate such fact to the attorney general of this state, whose duty it shall then become to investigate the affairs and conditions of such association, and if, upon such investigation he shall be satisfied that such association is con- ducting its business in an unsafe or an unauthorized manner, he shall apply to the district court of the county where such association is located or the appointment of a receiver to take charge of said association, and if such fact or facts be made to appear to such district court, it shall be sufficient to authorize the appointment of such receiver, and the making of such orders, and decrees in such cases as equity may require. Sec. 15. — Every corporation, company or association contemplating doing business in this state and having for a part of its title or name the words " Loan and Building Association," " Building Association," " Building and Loan Association," " Saving and Loan Association," or " Co-operative Bank." " Sav- ing and Investment Company," and every corporation, company or association whose stock is payable by an accumulating fund in regular or stated period- ical instalments ; and every corporation, company or association doing a business in a form and character similar to that authorized to be done by sec. 1 of this act, shall, if organized or incorporated in any state or territory other than the Slate of Colorado, be known in this act, as a foreign building and loan association. Sec. [6. — It shall not be lawful for any foreign building and loan associa- tion, directly or indirectly, to transact any business in this state without first filing in the office of the'secretary of state a statement sworn to by the presi- dent andsecretary of the association, which statement should show the name and locality < >f the association and an itemized account of its actual financial condition, showing assets and liabilities, and receipts and disbursements for the past twelve months, including also therein an itemized statement of its expense account. Said statement shall, further, show the amount and number of shares subscribed, the number cancelled and withdrawn during the past year, the number of shares actually in force at the date of the statement and all such other information touching its affairs as the secretary of the state may require. Such foreign building and loan association shall also tile with the secretary of state a certified copy of the laws of the state, territory or govern- ment under which it is incorporated, relating to or authorizing the incorpora- ii h association, and also of the law of such state, territory or govern- ment pertaining to the regulation, government or control of building and loan iis, both foreign and dome-tic, and of its charter, or articles of in- oration, and of its constitution and by laws and all amendments thereto, and shall, further, appoinl Hi- se< retary of the stale as its at Ion lev. which ap- m< nl hall be in the form < if a resolution of the directors ol board of con- trol 1 ion, and shall be duly certified under the seal oftheas- . by its president and secretary, and which shall authorize its said ary of state, to acknowledge services of process in behali on, con onting that serviced process, mean or final, upon n, shall be taken and held as valid as if served upon the associa- rding to the laws ol this or any other slate, and waiving all claim or ri^lr 1 on ,.1 inli acknowledgment of service. Such foreign , hall pay a fee for filing the papers referred to in this section as follows: Any a lociation having a capital stock of not to exceed one million dollai , shall paj afeeol fifty dollars, and an additional fee ol one fourth of authorized carital stock in excess, if any, of one million dollai , and hall hereaftei pay to the secretary of state a fee of twenty-five dollars upon filir enl annual statement. GENERAL LEGISLATION. 683 Sec. 17.— The statements required of foreign building and loan associations shall be renewed annually in January, in the manner as required by this act, and shall be made at such other time's as the secretary of state may require. When, however, the laws of any other stale, territory or nation, and under which such association maybe incorporated, require any taxes, fines, penalties, licenses, fees, deposits of money or securities, or other obligations or prohibi- tions of any association that might be organized under the laws of this stale and doing business in such other state, territory or nation, or imposes the same upon its agents doing business therein, then, so long as such laws con- tinue in force, the same obligations and prohibitions, ol whatever kind, shall be imposed upon all such foreign building and loan associations of such state, territory or nation doing business in this state and upon their agents here, to the extent that the same maybe in excess of the requirements imposed upon such foreign associations by the provisions of this act. Sec. 18. — Any person doing business or soliciting or attempting to do busi- ness in this state lor any foreign building and loan association which shall not at the time have fully complied with the provisions of this act, shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be fined in any sum not exceeding one thousand dollars, or imprisoned in the county jail not more than thirty days, or both in the discretion of the court. Sec. 19. — Every building and loan association hereafter formed shall be organized under the provisions of this act, and shall adopta constitution which shall substantially give effect to the provisions of this act ; and shall also adopt such bylaws for the government and management of its business as it shall deem proper; provided, that the same shall not be inconsistent with this act, 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 such manner as may be provided by its articles of incorporation. Sec. 20. — An act entitled " An Act concerning Building Associations," ap- proved April 17th 1880, the same being sees. 270- 283 inclusive, Mill's Annotated Statutes, and the provisions of all other acts or parts of acts in so far as the same contravene the provisions of this act be and the same are hereby repealed. Approved May 4th, 1897. CONNECTICUT. PUBLIC ACTS of 1895, p. 580.— Chapter CCXXXVII. Section i. — A corporation for the purpose of accumulating the savings of its members, and loaning the same to its members, shall be known in this act as a building and loan association. Associations organized under the laws of this state shall be known as " domestic " associations, and those organized under the laws of other states or territories as " foreign " associa- tions. Such associations may be organized and conducted under the general laws of Connecticut relating to corporations, except as otherwise provided in this act. Sec. 2. — Such corporations which may hereafter be organized shall have power to issue shares of stock of an ultimate paid-up value of two hundred dollars each, to be accumulated by monthly or weekly instalments aggregat- ing one dollar per share per month, on such terms and conditions as their constitutions and by-laws may provide, but such accumulated capital shall not exceed one million dollars, and no member shall be entitled to vote on more than one share in any such corporation ; to collect from members such fees, dues, fines, interest, and premiums on loans made, as may be provided for in their constitution and by-laws, but such fees, dues, fines, or premiums shall not be deemed usury, although in excess of the legal rate of interest, and such fines for default shall be two cents for each dollar in arrears each month, no fine to be charged on fines, and no fines to be charged for more than six months in succession at one time ; to permit members to withdraw all or part of their stock deposits at such times and upon such terms as the constitution and by-laws may provide ; any member, however, whose stock has matured, shall be entitled to receive interest at the rate of six per centum per annum from the date of maturity until paid ; Provided, that at no time shall more than one-half of the funds in the treasury of a corporation be applicable to the payment of matured stock, without the consent of the directors ; to issue stock in the name of a minor, subject to the control of the parent or guardian of such minor ; to acquire, hold, encumber, and convey such real estate and personal property as may be necessary for the transaction of its business or 684 APPENDIX IV. necessary to enforce or protect its securities ; to borrow money, not exceeding ten per centum of the assets, and issue its evidences of indebtedness therefor, but no money shall be borrowed for a longer term than one year ; to loan a surplus for which there is no demand for loans to members, withdrawing shareholders or matured stock, to any other building or loan association incor- porated under the laws of Connecticut ; to make loans to members on hist mortgage real estate security situated in Connecticut, or on its own stock, on such terms and conditions as may be provided in the constitution and by-laws ; i * cancel such loans and release the securities on such terms as may be provided in the constitution and by-laws ; to accumulate from the earnings a reserve fund, as hereafter provided for, for the payment of contingent losses ; to make such annual or more frequent distribution of the earnings as the constitution and by-laws may provide ; to dissolve the corporation when its con- tinuance shall be deemed by a majority vote of its members to be no longer desirable, subject, however, to the vested rights of members ; to provide by constitution and by-laws adopted by its members, for the proper exercise of the powers herein granted, and the conduct and management of its affairs. Sec. 3. — The treasurer of any such corporation shall deposit its funds in a bank, or banks or trust company, in the name of such corporation ; such funds shall then be withdrawn only by check, signed by the president and treasurer, or such other officers as the board of directors may designate. The treasurer's bank book shall be open to the inspection of any director at any proper time. All officers of such corporations who have charge or possession of money, securities or property, shall give bonds to the satisfaction of the board of directors before entering upon their duties, for the faithful performance of the same, and the safekeeping and proper application of all moneys and property coming into their hands. All such officers of such corporations, on being re-elected to office, shall renew their bonds, and the bonds may be increased, or additional securities required at any time by the board of directors. Directors shall not be eligible as bondsmen and shall be individually liable for any loss to members caused by their neglect to require the execution and filing of the bonds required by the provisions of this section. Sec. 4. — The amount to be set aside to the fund for contingent losses shall be determined by the board of directors, but at least one per centum of the net earnings shall be set aside each year to such fund until it reaches at least five per centum of the dues capital. All losses shall be paid out of such fund until the same is exhausted, and whenever the amount in said fund falls below live per centum of the dues capital as aforesaid, it shall be replenished by appropriations of at least one per centum of the annual net earnings, as here- inbefore provided, until it again reaches said amount. All balance of losses, after the amount in the reserve fund has been exhausted, shall be assessed on the members, at the same time and in the same manner as earnings are appor- tioned. A balance in the treasury of any such corporation or association, for which there is no immediate call or demand, may be invested by the directors in anv of the securities named in section i8ooof the general statutes. Sec. 5. — The directors may, at their discretion, retire the unpledged shares of anv series at anv time after four years from date of their issue, by enforcing the withdrawal of the same ; Provided, that, whenever under the provisions of this section the withdrawal of shares is to be enforced, the shares to be d hall be determined by lot ; and the holders [hereof shall be paid the of their shares, less a proportionate part of any unadjusted los^ ; Provided, also, that sharespledged for share loans shall be treated as unpledged shares. Sec. 6. — The bank commissioners shall perform, in reference to every such a 0( iation or corporation now existing, or hereafter organized under the laws ol (his state, the same duties, and shall have the same powers as are required Ol or given to them in reference to banks, savings banks, and trust com- putes, and shall annually make report lo the governor of such facts and tatements respecting sui h corporations or associations, and in such form as 1 thai the public interest requires. Every officer of such cor- poration or association shall answer truly all the inquiries made, and shall 1 1 1, 1 1.,- all 1 1 turn required by tin- haul; commissioners. Such corporations or ball, Willi the several banks, savings banks and (rust companies of the state, pay theii pro ><'/<' share ol the salaries and expen es of the bank comn to be apporti :d among them by the comptroller, in propor- ■ i . [ate amount ol the accumulated assets of each, as provided ection [832 ol the general lain:- , and in chapter cxc. of the public acts GENERAL LEGISLATION. 685 Sec. 7. — Any domestic building and loan association doing business iin this state, at the time of the passage oi this act, may, by a majority vote of its members present at any meeting legally warned tor the purpose, accept the provisions of this act, except the provisions contained in section 6, which section shall apply to all such associations heretofore or hereafter organized Sec. 8.— This act shall take effect from its passage. Approved, June 26, 1895. PUBLIC ACTS OF 1895, P 535-— Chapter CLXXIV. Section i. — No foreign or non-resident building and loan association shall do business in this slate until it shall have complied with the following provisions and received a license from the bank commissioners, as provided in this act. 1. It shall tile with the bank commissioners a certified co] y of its charter, together with its constitution and by-laws showing its manner of doing business. 2. It shall file a copy of a resolution of its board of directors, appointing the bank commissioners its agents, upon whom writs may he- served, stipulating and agreeing that if any legal process affecting such asso- ciation be served upon the bank commissioners and a copy thereof be mailed, postage paid, by said commissioners to said association, addressed to the home office, then such service and mailing of process shall have the same effect as a personal service on such association in this state. 3. It shall file with the bank commissioners, on or before the first day of March in each year, a state- ment of its business standing and financial condition on the preceding thirty-first day of December, signed and sworn to by its president and secre- tary, or by three directors, before some notary public. 4. It shall pay to the bank commissioners, for the purpose of paying the expenses of filing papers, as heretofore provided, and for compensation for making examinations, annual fees as follows : For the first one hundred thousand dollars or less of assets, a fee of fifty dollars, and for each additional one hundred thousand dollars of assets or major portion thereof, an additional fee of five dollars ; but in no event shall such compensation exceed one hundred dollars per year ; and such association shall also pay the actual expenses of the bank commis- sioners while making such examination. Sec. 2. — It shall be" the duty of the bank commissioners to receive and file the papers herein required, and thoroughly to examine the annual reports submitted by foreign and non-resident building and loan associations. If the bank commissioners become satisfied, after an examination, that an associa- tion desiring to do business in this state is solvent and conducting its business according to law, they shall issue a license to such association for a period of one year ; Provided, that such association has complied with the provisions of this act , but, if it be found insolvent, or [is] being illegally conducted, the commissioners shall refuse to issue the license. Should the bank commis- sioners refuse to grant a license to any association applying therefor that has complied with the provisions of this act, such association may appeal to the superior court for Hartford County, which shall have jurisdiction in the premises. Sec. 3. — The bank commissioners shall make an annual examination of the securities, records, books, and accounts of every foreign or non-resident building and loan association doing business in this state, and file a report of such examination in their office. If it shall appear to the bank commissioners that any such association licensed to do business in this state has violated its charter, or is conducting its business in an unsafe and unauthorized way, they shall, by an order under their hand and official seal, addressed to such associa- tion, direct a discontinuance of such illegal and unsafe practice ; and, when- ever it shall appear to the bank commissioners that it is unsafe and inexpe- dient for such association to continue business in this state, they may apply to any court or judge having jurisdiction for an injunction restraining such association from doing business in this state ; and such court or judge shall have the power, according to the usual course of proceedings in equity, to grant or refuse to grant said injunction ; Provided, such association is given reasonable notice of such proceedings. Sec. 4. — All such foreign or non-resident associations doing business in this state at time of the passage of this act shall comply with its requirements within sixtv days from the date of its passage ; but such associations may con- tinue to do business in this state without a license until the bank commission- ers have made the examination provided for in this act. Sec. 5. — Every person or corporation violating any provision of this act shall be fined not less than one hundred dollars nor more than one thousand dollars 686 APPENDIX IV. Sec. 6.— This act shall take effect from its passage. Approved June i, 1895. PUBLIC ACTS 1897, p. 103— Chapter CLXXVIII. Sec. 1. — The governor shall, every two years after the passage of this act, commencing in 1897, nominate, and, with the advice and consent of the senate, appoint some suitable person who shall not be a director, officer or agent of any building or loan association, to be a commissioner on building and loan associations, who shall, unless sooner removed by the governor for cause, hold his office for two years from the first day of July following his appointment. Vacancies may be' filled by the governor until the next regular session of the general assembly, when they shall be filled by the governor with the advice and consent of the senate. Sec. 2. — It shall be the duty of said commissioner to visit and examine an- nually or oftener every domestic and foreign building and loan association and mortgage investment company transacting business in this state, and the powers and duties of the commissioner in relation to such building and loan associations and mortgage investment companies, foreign or domestic, shall be the same as are now granted and imposed by law to and on the bank commis- sioners ; and the statutes of this state prescribing the duties and powers of the bank commissioners, in relation to building and loan associations and mort- gage investment companies, are hereby amended by inserting the words ^commissioner on building and loan associations " in place of the words " bank commissioner," wherever they occur. Sec 3. — The salary of said commissioner shall be twenty-five hundred dollars annually, and he shall be allowed his expenses, not to exceed five hun- dred dollars annually, in addition thereto. The comptroller shall apportion the salary and expenses of said commissioner among the foreign and domestic building and loan associations and mortgage investment companies doing business in this state, in proportion to the'aggregate amount of the assets of each of the building and loan associations, according to their average, as nearly as can be ascertained, for the year preceding, and in proportion to the aggregate amount of the capital stock and surplus of each mortgage invest- ment company; but the amount assessed against any domestic association or company shall not exceed an amount equalto one-eightieth of one per centum of the said assets, and he shall notify each by mail of the amount apportioned to it, and it shall pay the same to the state within twenty days from the time of mailing such notice; and any institution which shall not pay the same within said time shall forfeit two hundred dollars, together with the amount so appor- tioned, to the state. Sec. 4. — Each foreign association or company shall also pay the actual ex- penses of said commissioner while making such examination. SEC.5. — All acts or parts of acts inconsistent herewith are hereby repealed. Sec. "0.— This act shall take effect from its passage. Approved, May 25, 1897. DELAWARE. REVISED CODE OF 1893. (Page 573.) Section 6 (of chapter 147, volume 17, Laws of Delaware).— Any building or building and loan association created under this act shall, in addition to the other rsnerein granted, have power to sell its accumulated funds to and among at any premium which may be obtained for the same, and when 10I be loaned toany stockholder at par they maybe loaned to any pel on not a stockholder at any rate of interest not exceeding six per cent (Page 583.) Sec. 1 (of chapter 702, volume 10, Laws of Delaware). — The certificate of in- iration of building, or building and loan associations to be created under ntitled "An ad concerning private corporations," passed at Dover, March 14, [883 [chapter [47, volume [7, Laws of Delaware], shall not be re- dto tate an amount of the capital tockto be paid in before commencing in no ; 1 • entage of said stock- shall !><■ ioi 111 "'' 1 '" '"' l ui<1 ni before ,: ii m shall b 11 ed and commence business Ol chaplci 702, voh Ki, Lawsol [ )clawan).— Whenever an v one of the < 01 poratora named in the certificate of incorporation, to be tiled under the GENERAL LEGISLATION. 087 act of which this is a supplement, or any corporator named in any act of incor- poration heretofore or hereafter passed in this state, or any commissioner ap- pointed in any such act of incorporation to take subscriptions for capital sink, shall have died before the organization of such corporation, then, and in such case, the powers vested in such corporators or commissioners shall thereafter be vested in the survivor or survivors of such corporator or commissioner. DISTRICT OF COLUMBIA. UNITED STATES STATUTES AT LARGE. Volume XXVII, Chapter cccxxi. Section i. — Any . . . building association or company . . . ad- vertising for or receiving premiums, deposits or dues for membership, incor- porated under the laws of any other state, territory or foreign government, and transacting business within the District of Columbia, shall publish in at least two daily papers printed in the I hstrict of Columbia semi-annually, during the months of March and September of each year, a full statement, under oath, showing their capital stock and the amount paid in on account of the same, assets, liabilities, debts, deposits, dividends and clues, as well as their current expenses during six months ending January and July preceding. Sec. 2. — Any such company, association or institution failing to publish state- ments as required by the first section of this act shall forfeit its right to do business in said district, and thereupon it shall be the duty of said commis- sioners to revoke its license or permit to do business in said district : . . . FLORIDA. REVISED STATUTES OF 1892. Section 2205.— The capital stock of a building and loan association 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 dollars each, payable in lawful money of the United States, and in such number as the charter mav specify. The capital stock may be issued in series, but no such series shall at any issue exceed in the aggregate five hundred thousand dollars, 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 shall be made exceeding two dollars on each share, and such stock may be paid off and re- tired as the by-laws shall direct. 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 liens ; 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 and stock- holders may determine, and any stockholder wishing to withdraw from the association shall have power to do so by giving thirty days' notice of his in- tention to withdraw, when he may be entitledlo receive the amount paid in by him less all fines and other charges, but after the expiration of one year from the issuing of the series such stockholder shall be entitled.dn addition thereto, to such interest thereon as the by-laws shall prescribe at the time of the issuing of such stock, not exceeding the legal rate of interest. At no time shall more than one-half of the funds in the treasury of the corporation be ap- plicable to the demands of withdrawing stockholders without the consent of the board of directors, and no stockholder shall be entitled to withdraw whose stock is held in pledge for securitv. Upon the death of a stockh< >lder his legal representatives shall be entitled to receive the full amount paid in by him, and such rate of interest thereon as the by-laws of the association shall prescribe at the time of issuing such stock, first deducting all charges that may be due on the stock. No fine shall be charged to a deceased member's account from and after his decease unless the legal representatives of such decedent assume the further payment on the stock. Sec. 2200. — Building and loan associations incorporated under this chapter shall have the powers, and from the date of incorporation, when not other- wise provided herein, shall be governed, managed and controlled as follows : They shall have thepower and franchise of loaning or advancing to the stock- holders thereof the monevs accumulated from time to time, and the power and right to secure the repayment of such money, and the performance of the (388 APPENDIX IV. other conditions upon which the loans are to be made by note or bond, secured by mortgage or other security, as well as the power and right to purchase or erect houses and to convey, lease or mortgage the same at pleasure to their stockholders or others for the benefit of their stockholders in such manner ; also, in case of non-payment of instalments, premiums or interest by any stock- holder for three months, payment of principal, interest and fines, without de- ducting the premiums paid or interest thereon, may be enforced by sale of the shares" at a meeting of the stockholders, and the net proceeds, after deduct- ing all tines and arrearages with a proportionate part of any losses, shall be paid over to him, and thereafter lie shall cease to be a member of the corporation. Sec. 2207.— The officers shall hold stated meetings at which the money in the treasury, if over the amount fixed by charter 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 of priority of loan shall be entitled to receive a loan of not more than the amount fixed by charter or constitution as the full value of a share, for each share of stock held by such stockholder, but a stockholder may borrow such fractional part of the amount fixed by charter as the full value of a share, as the constitution and by-laws may provide. Good and ample security, as prescribed by the by-laws, shall be given by the borrower to secure" the repayment of the loan. In case the borrower shall neglect to offer security, or shall offer security that is not approved by the board of directors by such time as the by-laws may prescribe, he shall be charged with legal interest together with any expenses incurred and the loss of premium, if any, on a sale and the money may be resold at the next stated meeting. In case of non-payment of instalment or interest by borrowing stockholders for the space of three months, payment of principal and interest and all fines prescribed by the constitution and by-laws without deducting the premium paid and interest thereon, may be enforced by proceeding on their securities according to law. Sec. 2208. — Any married woman of full age may hold stock, and as such stock- holder she shall have all the rights and privileges of other members, including the right to borrow money from the association and bid premiums therefor, and shall also have the right and power to secure such loans by transferring her said stock or securities to the association from which the same was borrowed, or by executing a note or bond, secured by mortgage upon her separate real estate, but the husband of such married woman must join in the execution of such note or bond and mortgage to give it validity. Such married woman shall also have the right to sell, assign and transfer her stock by joining her husband in such transfer or withdrawal. The associations may collect loans made to such married woman, including the dues, interests, premiums and fines, as loans made by the association to other members as are now by law collected. Such stock and interest in such stock shall not be liable for the debts of the husband of such married woman. Six. 2209. — Should any stockholder who has given a mortgage to the asso- ciation be desirous of selling the mortgaged property and having the same re- leased from the mortgage, he shall be at liberty to do so, with the consent of the directors, upon first transferring the shares entitled to him in advance to the intended purchaser (if such transfer shall be necessary), and then obtain- ing from him a note or bond, secured by mortgage of the same premises and on the same terms for the amount due to be given to the association, and such mortgagor shall then be liable to pay all the dues and interest respecting the said advani •. and the direct* »rs shall then grant to the original mortgagor a re- from all further liability in respect thereto at his costs or charges, he having paid all the dues and lines that niav be due the association. si 22 10. — Should arrj tockholder desire to have his property discharged 11 I ise and surrender of Other securities before the his stock belongs or the association shall have terminated, he shall be allow 1 upon paving into the hands of the secretary and n of mon as will, at the rate of premium at which said mom ii produce the ame monthly payments of interests as such mg on his advance, bul such sum shall be in no 1 .it- net amount actually received by him. and no release l>e givei nl the mioii.\ paid shall actually be sold and the security ed for the trn hall b approved by the board oi directors. All the - nni ti th the tid redemption of the mortgaged 1 1 hi 1 be paid by the said stockholder or purchaser of the money. Sec. 2211. — Any tockholdei shall be entitled to an immediate release of his GENERAL LEGISLATION. 689 mortgage or other securities, who shall deposit in the hands -of the treasurer the full amount due on his note or bond and mortgage, and he shall also be entitled to a return of the premium advanced on the sale and reinvestmenl ■ I the said money, or Ins stock may rein. tin unincumbered. SEC. 2212. — Any building and loan association may purchase at any sheriff's or other judicial sale, or at any other sale, pub In 01 | rivate, any real estate upon which the association may have or hold any mortgage, judgment, lien 01 other incumbrance, or in winch it may have any interest, ana may sell, convey, lease or mortgage at pleasure the real estate so purchased, or any other that the association may hold or to which it mav be entitled, to any \ erson whatsoever, and all sales of real estate heretofore made by such association, to any persons not members thereof are hereby confirmed and made valid. Sec. 2213. — Building and loan associations shall have full powerto 1 ur chase lands and to sell and convey the same, or pari thereof, to their stockholdei - or others in fee simple. In all cases the lands shall be disposed of within ten years from the date of the incorporation ol such associations respectively. SEC.2214. — Nothing in this chapter shall be held to interfere with or to re- quire any change in the rules, constitution, by-laws or management of any building "and loan association heretofore organized and now existing in the state in accordance with any law therei >t. Sec. 2215. — All building and loan associations which have attempted to incor- porate prior to the thirty-first day of May, 1887, under the provisions of any law, shall be entitled to all the privileges, immunities, franchises and powers conferred by this chapter, upon filing with the secretary of state a certificate of their acceptance of the same in writing under the duly authenticated seal of said association signed by its present officers, which certificate shall be accom- panied by a copy of the constitution and by-laws of such association, and upon such acceptance and approval thereof by the governor he shall issue letters patent to said corporation reciting the same. ACTS OF 1893, p. 80. Section, i. — No building and loan association organized under the laws of any other state, territory or foreign government shall do business in this state unless said association shall deposit, and continually thereafter keep deposited in trust for all its members and creditors, with some responsible trust company, or with the state treasurer of this state, or some state officer of some other state of the United States, mortgages (or other securities) received by it in the usual course of its business, amounting to not less than twenty-five thou- sand dollars ($25,000). All dividends and interest which may accrue on securi- ties held in trust as aforesaid by the trust company or the state officer, as pro- vided in this section, and all dues or monthly payments which may bec< ime pay- able on stock pledged as security for loans, the mortgages for which are on deposit in accordance with the provisions of this act, may be collected and retained by the association depositing such securities or mortgages. Any securities on deposit, as provided herein, may from time to time be withdrawn, if others of equal value are substituted therefor. Sec. 2. — Every building and loan association organized under the laws of any other state, territory or foreign government, shall, before commencing to do business in this state, pay the treasurer of this state twenty-five dollars ($25) as fees for filing the papers mentioned in this section, and file with the treasurer of this state : 1. A duly authenticated copy of its charter or articles of incorporation. 2. The certificate of the proper officer of some state, or the president and treasurer or secretary of some responsible trust company, certifying that it has no deposit securities not less than twenty-five thousand dollars ($25,000), taken in the regular course of business, as mentioned in this act, in trust for all the members and creditors of such building ami loan association. 3. A duly authenticated copy of a resolution adopted by the board of direc- tors of such association, stipulating and agreeing that, if any legal process affecting such association be served on the treasurer of this state and a copy thereof be mailed, postage prepaid, by the party procuring the issuing of the same, or his attorney, to said association, addressed to its home office, then such service on said state treasurer and mailing of such process shall have the same effect as personal service on said association. Sec. 3. — When process against or effecting any foreign building and loan association is served on the state treasurer, the" same shall be by duplicate copies, one of which shall be filed in the office of the said state treasurer, and the other by him immediately mailed, postage prepaid, to the home office of 690 APPENDIX IV. said association. The word " process " in this act shall include any writ, summons, petition or order whereby an action, suit or proceeding shall be commenced, or which shall be issued in or upon any action, suitor proceeding at law or in equity authorized by law in this state. Sec. 4. — The name " building and loan association," as used in this act, shall include all corporations, societies, organizations or associations doing a saving and loan investment business on the building society plan, viz., loaning its funds to its members only, whether issuing certificates of stock which matures at a fixed time or not. Sec. 5. — Xo officer, director or agent of any building and loan association in- corporated under the laws of any state other than this, or of any territory or foreign nation, shall solicit subscriptions to the stock of such association, or sell, issue or knowingly cause to be sold or issued, to any person in this state, any stock of such association, unless said association has fully complied with all the provisions of this act. Any violation hereof shall be deemed a mis- demeanor, and, upon conviction, the offender shall be punished by a fine of not less than one hundred dollars, nor more than five hundred dollars ; or by imprisonment not less than ten days, nor more than six months, or by both such fine and inprisonment, in the discretion of the court. Sec. 6. — Within four months from the close of its fiscal year, every building and loan association doing business in this state governed by this'act, shall, each year, deposit with the treasurer of this state a report of its affairs and operations for the fiscal year immediately preceding ; such report shall be verified under oath by the president and secretary, or by three directors of the association, and shall contain answers to the following questions : 1. The date when association was incorporated, and the par value of each share of stock. 2. The number of shares sold during the year. 3. The number of shares cancelled and withdrawn during the year. 4. The number of shares in force at the end of the year. 5. A statement of the receipts and disbursements of the loan fund during the year. 6. A statement of the assets and liabilities at the end of the year. Each association shall pay to the treasurer of this state twenty-five dollars on filing such report. If any such association shall wilfully fail to furnish to the treasurer of this state any report required by this act at the time so required, it shall, in the dis- cretion of the state treasurer, forfeit the sum of twenty-five dollars ($25) per day lor every day such report shall be delayed or withheld, and the treasurer of the state may maintain an action to recover such penalty, and the same shall be paid into the treasury of the state for the benefit of the state. Skc. 7. — Every association depositing securities with the treasurer of this state, as provided for in this act, shall annually pay to said treasurer of state a fee of twenty-five dollars (S25J. Skc. 8. — No fines, interest or premiums paid on loans made by any building and loan association shall be deemed usurious, and the same may be collected, as debts of like- amount are now collected, by law in this state, and according to the terms and stipulations of the agreement between the association and the borrower. GEORGIA. 2 REVISED CODE, 1895 Section 2388. — All building and loan associations, and other like associa- tions, now organized and doing business in this state, and that may thereafter Organize and do business in this state be, and they are hereby authorized and lowered to lend money to persons not members thereof, nor shareholders therein, at eight per cent, or less, and to aggregate the principal and inter- 1! the date of the loan for the entire period of the loan, and to divide the sum of the principal and the interest for the entire period of the loan into monthly or other instalments and to fake security by mortgage with the waivei ol onortitle, or both, upon and to red estate situated in the or towng and their suburbs in which said building and loan association may be lo< ated. I AM . ontra< 1 made and securities taken in accordance with this hall be valid for the full amount ol principal and interest charged, and shall not be held usurious. Sec. 2390, Nothing in this act shall beheld toapplytoany building and loan iatiorj heretofore incorporated, unless said association shall by vote of a GENERAL LEGISLATION. 691 majority of its stock-holders, adopt the provisions of this act as an amendment to its charter. Sec. 2391. All the provisions of this ait arc hereby made to apply to all saving institutions which pay interest to depositors, and whose deposits are not subject to check. SEC. 2393 (as amended acts iNub, p. 52}.— Every building and loan association heretofore or hereafter incorporated under the laws ol this stale, which 1 business in or outside of this stale, shall deposit and keep on deposit with the treasurer ol this state, or with a legally incorporated and duly organ company, to be selected bv the !>• iard 1 1 dire< tors oi sue h ass< iciation, in 1 for all its members and creditors, seventy-tive per cent, of the amount 1 mortgages (or other securities) received by it in the usual course oi its busi- ness. When such mortgages (or other securities^ are deposited with the trust company or state depository, such company 01 ,tate depo itory shall certify to the treasurer of this slate thai the said securities have been and are deposited with it under this act, and the same shall not be surrendered returned to the said building and lo.m association without the authori sanction of the said treasurer of this state ; Provided, that every such cor] ora- tion heretofore or hereafter organized, whose m or other secunlii deposited do not amount to twenty-five thousand dollars ($25,000^, shall have fifteen months alter organization, as to those not yet organized, and as to those already organized, fifteen months within three months fromth of this act, deposit with said state treasurer or trust company such additional securities as with securities so deposited shall equal in value the sum of twenty- five thousand dollars ($25,000) ; and every such corporation hereafter organized, within fifteen months after commencing to do business, shall deposit with the said state treasurer or trust company, in trust as aforesaid, securities ol the \ of twenty-five thousand dollars ($25,000;. The securities mentioned in this provisoshall consist of bonds or treasury notes of the United States, national or state bank notes, or bonds of this state or any other state of the United States, or of any solvent city, town or county of this state having legal author- ity to issue the same, or first mortgages on real estate, or other legal securities aggregating in value twenty-five thousand dollars $25,000), and such securities may be withdrawn, from time to time, when mortgage securities ol corre- sponding value shall be deposited in lieu and place thereof, as provided in this act, or when other securities of equal character and value are substituted therefor ; and it shall be the duty of the treasurer of this state to examine the affairs of said associations, from time to time, to ascertain whether said asso- ciations have deposited seventy-five per cent, of all their securities and other- wise complied with the requirements of this act ; Provided, that any association which has deposited all of its securities on hand at the time tins act takes effect shall be required to make quarterly deposits only of securities taken by it in the future, that is, at the end of periods of three months there- after. Whenever any association incorporated under the laws of this state is required by the laws of any other state, territory or nation to make a deposit of securities in such state, territory or nation, as a condition of doing business therein, such association may deposit a portion of its securities with the properly authorized officer of such other state, territory or nation ; Provided however, that the amount of securities kept on deposit in this state shall at all times equal seventy-five per cent, of the amount ol the loans made and then outstanding in this state ; And provided farther, that the securities so deposited in this state shall not thereby be reduced below the sum of twenty-live thousand dollars $25,000). Sec. 2394. — All interest and dividends and premiums which may accrue on securities held by said state treasurer or by such trust company, as provided herein, and till dues or monthly payments which may become payable on stock pledged as security for loans, the mortgages for which art- so deposited in accordance with the provisions of this act, may be collected and retained by the association depositing such securities or mortgages. Any mortgage(or other security) which shall have been fully paid to said association or which the borrower desires to pay off and discharge, and any mortgage (or other security) upon which default in the payment due has been made and of which said association shall desire possession for the purpose of collection or fore- closure, and all securities needed by it for deposit in any other state, terri- tory or nation according to the provisions of section l of this act, shall be surrendered by said state treasurer, or on his order, to the association deposit- ing same, upon riling with him the affidavit of the president and secretary thereof, stating the reason or reasons for desiring to withdraw such security 692 APPENDIX IV. or securities, and such securitiy or securities shall not be used for any purpose other than that stated in the affidavit ; Provided, that when said asso- ciation is dissolved, according to the provision of its charter, and ceases to do business, all securities deposited by it shall be returned to it upon furnishing said state treasurer with satisfactory evidence of the fact of its dissolution as aforesaid. Bonds or stocks deposited with said state treasurer, or trust com- pany, as aforesaid, shall, if deemed advisable by the association, be surrender- ed to the association depositing same for the purpose of being converted into cashand loaned on real estate. Sec. 2395. — No building and loan association organized under the laws of any other state, territory, or foreign government shall do business in this state "unless said association shall deposit, and continually thereafter keep de- posited, in trust for all its members and creditors, with some responsible trust company, or with the state treasurer of this or some other state of the United States, seventy-five per cent, of ail its securities ; all the personal obligations of its members taken in the ordinary course of business of such association and secured on first mortgages on real estate ; seventy-rive per cent, of all dividends and interest which may accrue on securities held in trust, as afore- said, by the trust company or the state, as provided for herein ; and all dues or monthly payments, which may become payable on stock pledged as security for loans, the mortgages for which, all on deposit in accordance with the pro- visions of this act, may be collected and retained by the association depos- iting such securities or mortgages. Any securities on deposit, as provided herein, of said building and loan association in this state, if the amount of said securities so deposited is less than all of its securities, may, from time to time, be drawn, if others of equal value are substituted therefor. Every building and loan association, organized under the laws of any state, territory, or for- eign government, shall, before commencing to do business in this state, 1. File with the secretary of this state, a duly authenticated copy of its charter or articles of incorporation. 2. File with the secretary of this state the certificate of the proper state offi- cer of another state or the president or secretary of some responsible trust company certifying that it has on deposit seventy-five per cent, of all the securities, not less than twenty-five thousand dollars of the kind and amount required by the laws of such other state, taken in the regular course of busi- ness, as mentioned in this act, in trust for all the members and creditors of such building and loan association. 3. File with the secretary of this state a duly authenticated copy of a resolu- tion adopted by the board of directors of such association stipulating and agreeing, that if any legal process affecting such association be served on said secretary of state, and a copy thereof be mailed, postage prepaid by the party procuring the issuing of the same, or his attorney, to said association, addressed to its home office, then such service and mailing of such process shall have the same effect as personal service on said association in this state. 4. Pay the secretary of this state fifty dollars ($50) as fees for filing the paper mentioned in this section. Sec. 23c/). — When process against or affecting any foreign building and loan a-- 1 iciatii m is served on the secretary of state, the same shall be by dupli- cate copies, one of which shall be filed in the office of said secretary of state, and the other by him immediately mailed, postage prepaid, to the home office ation. The word " process " in this act shall include any writ, summon , complaint, declaration, or order, whereby an action, suit, or pro- ceeding shall be commenced, or which shall be issued in or upon any action, suit, or proceeding at law, or in equity, authorized by law in this state. Thirty daj ' time shall be allowed to answer in any action, suit, or proceeding. Sec. 2397. When, by the laws of any other state, territory, or nation, any I10 n fees, deposits of money or securities, or other prohibitions, are imposed on building and loan associations ol 1! doing business in such olher state, territory, or nation, or upon their agenl th > lor ch la continue of force, the same obliga- tion 1 or prohibitions oi whatever kind shall be imposed upon all building and loan .1 io( iation ol m h othei tate, territory, or nation, doing business in this nd upon th here. [896, p. 52). — The name " building and loan asso- ciation " a 11 ', 1893.] , Corporations formed lin tel shall be bodies corporate and politii i"! the period for which they are organized ; mav sue and be sued ; may have: nmon ieal, whi< h they may alter and renew at pleasure. GENERAL LEGISLATION. 697 Sec. 5A.— The corporate powers shall be exercised by a board of din of not less than seven in number, all of whom shall be bona fide resident- ol the stale of Illinois The officers shall consistof a president, vjo nt, secretary and treas- urer, to be elected at the annual meeting of the dire< ti Theduties of the officers, their term of office, the time and manner of their election, the manner of filling vacancies, the time ol , eriodical m ings of the officers and shareholders, the manner ol call ings not provided for in this act, and manner of voting, -hail be determined by the by-laws, when not provided in this act, and unle the secretaryand treasurer shall he provided form the by-laws, the directors shall annually fix and determine the same. [As amended by act approved Jun< •<, l807, i' 1 force July 1, [897.] SEC 5B.— Every person appointed or elected to any position requiring the receipt, payment, management or use of money belonging tosuch a shall become bounden with two or more l i ficient -luetics, or in some good and responsible fidelity insurance company, insuchsum as the dire, shall require and approve. Such bonds shall be executed annually and shall be recorded on the secretary's record, and such bond or insura hall be filed with the auditor of public accounts of this state idaysnext after the approval thereof by the board of directors, and 1 1 [01 filing the same shall be one dollar. Such bond shall be sufficient in amount to pro the association from loss by reason of malfeasance in office or failure to faith- fully perform and discharge the duties of his position. No officer or employe who is required to give bond shall be deemed qualified to enter upou the dis- charge of his duties until his bond shall have bei n ap] roved 1 a n aji 1 the board of directors by a written indorsement thereon and filed with the auditor of public accounts as herein required. [As amended by act approved June 16, [897, m force July 1. 1897.] Sec. 5C. — The directors shall have power to borrow money for such tem- porary uses and pur;- ses of the association as the exigencies of the may demand and as are not inconsistent with the objects of the association ; but no monev shall be borrowed for the purpose of making advances. To secure such loans the directors may cause the obligation or obligations of the association to be issued therefor, bearing interest at not to exceed the l< rate. No such loan or loans shall have a longer duration than one year, u< .r shall the aggregate amount of such outstanding indebtedness at any one time exceed five per centum of the assets of the associati ;i. Before any mo shall be borrowed the board of directors shall first, by a majority vote ol all members, pass and record a resolution to that effect. [As amended by act approved June 16, 1897, in force July 1, 1897.] Sec. 5D. — When the directors shall have declared any share- b » have reached maturity, the owners thereof shall be entitled to receive such maturity value, with such interest, not exceeding the legal rate, as the directors may deter- mine, from the time of maturity until paid ; Provided, that at no time shall the aggregate amount of such shares outstanding exceed ten per centum of the assets "of the association. [As amended by act approved June 16, [897, in force July 1, 1807. Sec. 6A.— The capital to be accumulated shall be divided into shares having a maturity value of one hundred dollars each. The share- shall he deem be personal property in the hands of the members, transferable upon the bi of the association in the manner provided in the by-laws. The shares may be issued in such periodical series and at such time or times as the by-laws shall designate ; and the shares in each series may, if the by-laws shall so provide, be subdivided into classes, each class having a different fixed period- ical payment of dues, of not to exceed the sum of two dollars per share ] month. Every share shall be subject to a lien for the payment ol 111: instalments and such other charges as maybe lawfully incurred the provisions of this act, and the by-laws may prescribe the manner of enforc- ing such lien. The payment of such dues shall continue on each share until the same shall have reached maturity value or is withdrawn or retired. All shares which shall have matured, or shall have been withdrawn or retired, may be reissued in any subsequent series. [As amended by act approved June id. 1807, in force [uly 1, 1897.] Sec. 6B. — Any member desiring to withdraw instalment shares from any association doing business in this state shad have power to do so by giving thirty days' notice of such intention to withdraw, when such member sha entitled to receive the full amount of dues paid in on the shares sought to be 698 APPENDIX IV. withdrawn and such interest thereon as fixed in the by-laws, and in addition thereto such proportion of the profits apportioned thereto as the board of directors may, from time to time, by resolution determine, less such charges of the character enumerated in this act as may be due thereon ; Provided, that the amount of such interest or profits paid on withdrawals shall not exceed the actual rate of earnings of the association : Provided, further, that at no time shall more than one-half of the funds in the treasury of the association be applicable to the demands of withdrawing members or the payment of matured shares without the consent of the board of directors: Provided, her, that any member having pledged ins or her shares as security for an advance without other security may withdraw the same and receive the evi- dence of indebtedness given for such advance and such balance in cash, if anv, as may be to the credit of such shares, but such withdrawal shall be sub- ject to the same regulations in all other respects as is in the case of shares not pledged. [As amended by act approved June 16, 1897, in force July I, 1897.] Sec. 6C. — Any member who shall have obtained an advance on his shares and shall have given real estate as security, may, at any time, repay the same. On settlement such member shall be charged with the full amount of such advance, together with any or all arrearages due thereon, or on the shares pledged or appertaining to the security given, and shall, thereupon, be allowed as a credit the withdrawal value of the "shares pledged as security, together with such other credits as may be returnable on account thereof, and the bal- ance shall be received by the 'association in full settlement and discharge of such advance ; Provided, that all settlements made in periods intervening between stated monthly meetings of the directors shall be made as of the date of the stated monthly meeting next succeeding any such settlement. [As amended by act approved June 16, [897, in force July 1, 1897.] Sec. 6D. — The directors may, in their discretion, under rules made by them in conformity with the by-laws, retire the unpledged shares of any series, in the order of "the issue of such series, by enforcing withdrawals of the same, and the owners shall be paid the fnll value of their shares as determined at the last preceding distribution of profits, together with all dues paid since such distribution less any unpaid fines ; Provided, that all shares which have reached matured value, and that may be outstanding, shall be first retired under the provisions of this act. [As amended by act approved June 16, 1897, ■ e July 1. 1897.] SEC. 6E..— Upon the death of a shareholder, his legal, representatives shall be entitled to receive the voluntary withdrawal value of the unpledged shares of the deceased. No fines shall be charged or profits credited to a deceased member's shares from and after his decease, unless his legal representatives assume the future payments of such shares. [As amended by act approved fune i", \><:~, in force July r, 1897.] SEC. 6F. — A membership fee and a transfer fee, neither of which shall exceed twenty-five cents per share, may be charged, and all fees shall be inted for as a part of the receipts of the association. Any association may impose a penalty lor the non-payment of dues, interest and premium at tin- 1 Mm- they shall fall due, which penalties shall in nocase exceed the sum of ten cents per share per month, and it shall not be permissible to either compound or cumulate such penalties. [As amended by act approved fune id, [897, in force July 1. 1S07.] SEC. 7. — Married women may become subscribers to the capital stock 1 I such n, and hold, control and transfer their stock in all respects as females sole, and their stock shall not be subject to the control of, or liable fi r of, their husbands. .Minors may become subscribers to and owners il neli associations by guardian or trustee, and such guardian or tay withdraw the stock of such minor as provided in section six ol cr, that such guardian or trustee shall give bonds to irl in double the amount ol the withdrawal value of such stock, 1 1 uch minor on his or her becoming of age ; but it isherebypro- l that no pei on as owner or legal representative ol the stock of such asso- hall, by himself or by proxy, vote at any election, when the stock- called upon to vote, on more than forty share's of stock. 5 ec. 8 The board 0! directors shall hold such stated meetings, nol less uently than once a month, as may be provided by the by-laws, at which mi ie treasury, ii one hundred dollars, or more, shall be offered ii open meeting, and the stockholders who shall bid the highest I mum, for the preference 01 priority ol loan, shall be entitled to receive a oan oi one hundred dollai \ f oi each shareof stock held by said stockholders ; GENERAL LEGISLATION. 699 the said premium hid may be deducted from the loan in one amount, or may be paid in such proportionate amounts or instalments, and at such times during the existence of the shares of stock borrowed upon, as may be designated the by-laws of the respective associations; Provided, that any such associa- tion may, by its by-laws, dispense with the offering of its money lor bids in open meeting, and in lieu thereof loan its money at a rate of interest and premium fixed by its by-laws and either with or without premium, decid the preference or priority of loans by the i riority of the ap] lications for loans of its stockholders : Ana, provided, that no loan shall be made by said coi ration except to its own members, nor in any sum in excess of the amount of stock held by such members borrowing, bul such stockholders may borrow such fractional part of one hundred dollars as the by-laws may provide. Good and ample real estate security, unincumbered, excepl by prior loan such associations, shall be given by the borrower to secure the payment of the loan ; Provided, however, thai the stock of such association maybe received as security, to the amount of the withdrawal value of such stock. Any mutual building, loan and homestead association, which may have heretofore been incorporated under the laws of the stale of Illinois, may avail itself of all the powers conferred by this act. [As amended by act approved fune 16, [891.] Sec. 9. — In case borrowers shall neglecl to offi 1 security, or shall offer security that is not approved by the board of directors, by such time as the by- laws may prescribe, he or she shall be charged with one month's intei together with any expenses incurred, and the money be resold at the next stated meeting. In case of non-payment of instalments of interest and lines by borrowing stockholders for the space of six months, payment of principal and interest and lines 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. Sec. 10. — A borrower may repay a loan at any lime, and in the event of the repayment thereof before the expiration of the eighth year alter the organiza- tion of the association, or the date of issues of the series of stock in such asso- ciation 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 ; Provided, that where the said premium has been deducted from the loan, but paid in instalments, there shall be no premium refunded; and any mutual building, loan and homestead assi tion which may have heretofore been incorporated under the laws of the state of Illinois, may avail itself of all the powers conferred by this act. [ As amended June 17, 1SS7, in force July 1, [887.] Sec. 11. — Corporations organized under this act being of the nature of co- operative associations, therefore no interest, premiums, tines, nor interest on such premiums that may accrue to said corporations, according to the pi sions of this act, shall be deemed usurious, and the same may be collected as other debts of like amount may be collected by laws in this state, and all money paid to such corporation being at once loaned out and placed into taxable property, and the shares of stock and notes provided for in this act being simply evidence as to where such money has been placed, therefore such stock and notes shall not be subject to taxation. [As amended by act approved June 16, 1891.] Sec 12. — No corporation or association created under this act shall cease or expire from neglect on the part of the corporation to elect officers at the time mentioned in their charter and by-laws, and all officers elected by such cor- poration shall hold their offices until their successors are duly elected. Sec. 13. — Any loan or building association incorporated by or under this act is hereby authorized and empowered to purchase at any sheriff's or other judicial sale, or at any other sale, public or private, anyreal estate upon which such association may have or hold any mortgage, lien or other incumbrance, or in which said association may have an interest, and the real estate so pur- chased, to sell, convey, lease or mortgage at pleasure to any person or per- sons whatsoever. Sec 14. — Any loan or building association incorporated under this act or any prior act, may extend the duration of lime for which such association was organized by a vote of two-thirds of 1 he capital stock of such association at any annual meeting of the stockholders of such associations; thereupon the board of directors shall transmit a copy of the proceedings of such annual meeting, duly attested, to the secretary of stale, who shall issue his certificate as provided in section three of this act. certifying to the extension of tin duration of such association, and the same shall be recorded as provided in 700 APPENDIX IV. 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 as incorporated under, and vested with all of the powers given in this act, the same as if such association had been originally incorporated under it. Sec. 15. — The secretary of every association doing business within this state shall, within sixty days next after the close of each fiscal year of such associa- tion, file with the auditor of public accounts of the state of Illinois, with a fee of two dollars, a detailed statement of the receipts and expenditures of such association for one year next preceding the date of such report, its assets and liabilities, including in such liabilities all sums due for gross premium unearned, the number of shares issued, withdrawn, matured, retired and loaned on, dur- ing the year ; the number of shares in force, number of shares loaned upon, instalments per share, profits per share, and the value per share, in each series at the date of such statement, which statement shall be in such form as shall be prescribed by the auditor. Such statement shall exhibit in full, each, all and every, of the receipts from whatsoever source received, and each, all and ever}', of the expenditures of such association, including all expenses of management. All of such statements shall be sworn to by the secretary be- fore some officer authorized to take acknowledgments of conveyances in this state, and certified to by three members of such association not officers there- of. Such statement, and also any other periodical statement, shall be either mailed to each shareholder or published in some paper regularly issued in the county in which such association is located within sixty days next after the same shall be compiled. Any secretary who shall wilfully neglect or refuse to file such statement, shall be subject to a fine of not less than twenty-five dollars nor more than two hundred dollars for each neglect or refusal to furnish such statement. The same may be recovered in any court having competent jurisdiction in the name of the People of the State of Illinois, on the relation of the said auditor, for the benefit of the county wherein said association is located or in which such secretary may reside : Provided, that when any as- sociation shall at any time, by reason of its insolvency, be unable to pay the full face value of the withdrawals other than matured shares within ninety davs after notice thereof is given, it shall be unlawful for said association to sell any new shares, and the secretary thereof shall forthwith report the same to the auditor of public accounts, and a failure to comply with this provision shall be a misdemeanor on the part of the officer or officers whose duty it is made to sell such shares and collect such money. Such offence shall be pun- ishable by a fine of not less than one hundred dollars nor more than one thou- sand dollars, or imprisonment in the county jail not to exceed sixty days. [As amended by act approved June 16, r8o7, in force July 1. 1897.] SEC. 16.— It shall be the duly of the auditor of public accounts in person, or by one or more persons, to be by him appointed for that purpose, not officers or agents of, or in any manner interested in such association, except as stock- holders, at k-ast once in each year, to examine into the affairs of every such association incorporated in this state or doing business by its agents in this state, and it shall be the duty of the officers or any agents of any such associa- tions to cause their books to be opened for inspection of the auditor or person ersons so by him appointed, and otherwise facilitate such examination so far as it may be in their power to do so, ami for that purpose the auditor or person or persons so appointed by him shall have power to examine under oath, the officers and agents of such associations, relative to the business of 01 iations, and whenever the auditor of public accounts shall deem it P. 1 the be 1 interests of the public so to do he shall publish the result of any investigation in one or more newspapers of general circulation, published in the county in which the principal office of such association is located, and annually, on or before the first day of December of each year, the auditqi of lii accounts shall re] ort in writing to the governor the financial condition ol .1 I ■> ch a ociations doing business in this state. The auditor shall receive, foi nation made by him in person or by deputy, his reasonable 1 ill 1 ■ 1 ii e . and said compensation and expenses shall be examined [As amended by act approved June 19, 17. V Whenever it shall appear to (he auditor of public accounts that the as iets of any asso< iations doing business in this state are impaired to the ; thai uch a ets do not exceed the dues paid in on the shares, with in- tere 1 then on al the rate ol three 1 er centum per annum for the average time inve t' d, or thai il is conducting its business in a fraudulent, illegal or unsafe GENERAL LEGISLATION. 70] manner, he may at once in either case, appoint a custodian for such associa- tion, and shall require of such custodian a good and sufficient bond with sure- ties to be approved by such auditor. [As amended by act approved June 10, l897,in force July i. 1897. j Sec. 17B.— The auditor of public accounts, at the time of the appointment of a custodian for any association as herein provided, shall, within ten days next after having appointed such custodian, convene a special meeting of the si holders for the purpose of considering and acting upon such matters a such special meeting shall seem best. Notice oi such special meeting shall be given in the manner and form provided in section jo of this act for the calling of special meetings of shareholders. At such meeting said auditor shall present a full report of the affairs and condition oi such association, as found by him from his examination thereof, or as made to him by thi dian. [As amended by act approved June 10, [897, in forcejuly r, 18C7.J Sec, 17C. — Such custodian, under the direction of the auditor, shall take possession of the books, records and assess of every description of such \ ■ - ciation, and, pending the further proceedings specified in this act, shall pre- pare, or have prepared, a lull and true exhibit of the affairs, property and condition of such association, including an itemized statement oi all its assets and liabilities ; and shall receive and collect all debts, dues and claims bel< ing to it ; and may, if necessary, by and with the consenl and aj proval of the auditor, pay the immediate and reasonable expenses of his trust, including his own compensation at not to exceed the sum of ten dollars per diem. Such custodian shall receive, and receipt for all monthly payments becoming due after the date of his appointment, and shall keep the same separate and apart from the other moneys and effects of such association. [As amended by act approved June 16, 1897, in force July 1, 1897.] Sec. 17D. If, at the special meeting of the shareholders, to be called as herein provided, the shareholders of such associations shall vote to reorganize said association, then and in that case, the said custodian shall, upon the con- summation of the reorganization thereof, and when the said auditor shall so order and direct, turn over to the new management all the books, ) aj ersand effects of every description in his hands belonging to such association. As amended by act approved June 16, 1897, in force July 1, 1897. J Sec. 17E. If, at the special meeting of the shareholders, to be called and held as herein provided, such shareholders shall vote to go into voluntary liquidation, or to otherwise close up or discontinue the business of such asso- ciation, such custodian shall, when the said auditor shall so order and direct, return to the shareholders all monthly payments received and receipted for by him, and which became due and payable after the date of his appointment; and all books, papers and effects of every description in his hands belonging to such association not so returnable, shall, when the auditor shall so order and direct, be turned over and delivered to the person or persons entitled thereto. [As amended bv act approved June 16, 1897, ni force Julv r, 1897.] Sec. 17F. — If the auditor of public accounts, after having called a meeting of the shareholders as in this act provided, shall find that the association can not be reorganized, or that voluntary liquidation by the shareholders cannot be had or consummated, he shall report the same to the attorney general, whose duty it shall then become to at once applv to the circuit court of the county in which the principal office of such association may be located, or to any of the judges of said court in vacation, in the name of the ( c< pie of this state, on the relation of said auditor, for an injunction restraining such asso- ciation from doing further business, and for the appointment of a receiver of such association, and for the dissolution of such association, which applica- tion mav be made and granted either in term time or in vacation < it said court in the manner now provided for obtaining injunctions, and said cause shall thereupon proceed as other cases in chancery. [As amended by act approved June 16, 1897, hi force July 1, 1897.J Sec 18. — Any such association mav allow reasonable compensation to auditing committees for their services as such, not exceeding the sum of fi ur dollars per diem, nor for more than three days during each quarter year, such committee ti 1 Ci insist of three shareholders, not officers thereof. [As amended bv act approved June 10. i8ot.J Sec. 19. — Any ass< ciation mav reorganize or go into voluntary liquidation by the votes of its shareholders owning at least two-thirds of the shares in I at the time such vote is taken. Whenever such shareholders shall de- reorganize or to go into voluntary liquidation, it shall be the dut\ of the 1 of directors of such association, or of a committee of shareholders appointed 702 APPENDIX IV. for the purpose, to submit the question of such reorganization or voluntary liquidation to a vote of the shareholders at a special meeting of such share- holders to be called and held as herein provided. [As amended by act ap- proved June 16, 1897, in force July 1, 1897.] Sec. 20. — Whenever a meeting of the shareholders is to be called for the puroose aforesaid, it shall be the duty of the board of directors, or of said committee, to convene a special meeting of the shareholders at the principal office of the association at such time as such directors or committee shall fix and determine. Notice of such meeting shall be given to every member of the association by depositing in the postoffice, at least ten clays before the time fixed for such meeting, a notice properly addressed to each shareholders at the last recorded address of such shareholder. The directors or committee shall also cause a notice of such meeting to be certified to the auditor of Public Accounts at the same time that notice is given to the shareholders. [As amended by act approved June 16, 1897, in force July I, 1897.] S:-:c. 2i. — Such directors or committee shall prepare, or have prepared, a full and true exhibit of the affairs, property and condition of such association, in- cluding an itemized statement of its assets and liabilities, which exhibit shall be sworn to by a majority of said directors, or of said committee, before some officer authorized to take acknowledgments of conveyances in this state, such exhibit and report to be printed and a copy thereof mailed along with the notice conveying such special meeting. Such original exhibit, sworn to as herein provided, shall be filed with the auditor of public accounts of this state, along with a notice of such meeting at the same time that they are mailed to the shareholders. [As amended by act approved June 16,1897,111 force July I, I897-] Sec. 22. — At such special meeting all votes taken shall be by ballot, and votes of its shareholders owning at least two-thirds of its shares in force at the time such vote is taken shall be necessary to carry any resolution for the reorganization or liquidation of such association ; and if, at such meeting, said shareholders shall, in the manner herein provided, pass a resolution for the reorganization or liquidation of such association, a copy of such resolution, duly certified by the presiding officer and secretary of such meeting, shall be given to, and shall continue [contain] full instructions, and define the author- ity and compensation of the party or parties to be named therein, to answer and discharge the duties entrusted to them by such resolution ; and a like duly certified copy of such resolution, instructions and authority shall imme- ly be filed with the auditor of public accounts by the party or parties named in such resolution, before they shall enter upon the discharge of their trust. Before the party or parties named in any such resolution shall assume the duties of their trust, they shall become bounden with two or more good and sufficient sureties, or in some good and responsible fidelity insurance company, in such sum as the auditor of public accounts of this state shall require and approve. [As amended by act approved June 16, 1897, in force July 1, 1897.] SEC. 23. — At such special meeting the shareholders, by a majority vote of the shares in force at the time such vote is taken (cast by ballot 1 may declare va< ant the office of the entire board of directors, and of all officers of such association, and may at the same time proceed to the election of a new board of directors, who, in the absence of a special committee being named in the resolution lobe adopted by the shareholders as hereinbefore in section 22 f>rovided, shall have the charge and direction of the reorganization or the lation oi theaffairsof such association. [As amended by act approved June 10, [897, in force |ulv I. [897.] SEC. •) Upon the completion, by the person or persons named in the a million, parsed at such special meeting of shareholders, of the duties cut re ted to them in such resolution, they shall cau$e a complete record ol all proceedings to l><- made, rei iting, therein the adoption of the resolution fo that effect, which Shall also show that all claims, demands and debts for or ociation have been fully settled, the corporate liabilities com- pleted di charged, and the corporate a sets and properly distributed among all the pei on entitled thereto. Said reporl ana record shall be filed in the office of the auditor of publi< accounts, and a notice of such dissolution pub- h hed for three successive weeks in any newspaper published in the county wherein tin- prin< ipal om< e oi in h 1 1 » iation is located, and upon the filing port, and making publication as aforesaid, such association shall be deemed di ol 1 ed, [ As amended by act approved June 16, 1897, in force July 97-] GENERAL LEGISLATION. 703 Sec. 25. — Receivers may also be appointed whenever nine or more share- holders of any association shall file a petition in the circuit cOurl ol the county in which the principal office of such association is located, setting forth the facts relied upon for the appointment of a receiver. Such petition shall be subscribed and sworn to by such petitioners, and shall be accompanied by a good and sufficient bond, conditioned for the payment of all tees, ex] enses and attorney's lees incident to such proceeding or proceedings, in event the allegations setforth in the petition snail not be sustained, the amount of such bond, and the sureties thereof, shall be approved by the court, and the cause shall thereupon proceed as other causes in equity. [As amended by act ap- proved June 16, 1807, in force |ulv 1, 1807.] SEC. 20. — The protilsand losses of associations doing business in this state shall be apportioned at least annually, and as much opener as the by-laws shall provide. [As amended by act approved June [6, 1N17, in force July 1 [807.] Skc. 27. — At each periodical apportionment of profits the directors shall reserve as a guaranty or contingent fund a sum not less than one per centum nor more than five per centum of the net profits accruing since the last prior preceding apportionment, until such fund amounts to live pel - centum of the dues capital, which fund shall at all times thereafter be maintained and held at not less than said five nor more than ten per centum of the dues capital; and said fund shall at all times be available to meet losses in the business of the association from depreciation of its securities or otherwise. [As amended by act approved June 16, 1897, in force July 1, 1897.] ACTS 1893. Section i. — Be it enacted by the people of the state of Illinois, represented in the General Assembly : That foreign building, loan and homestead associate ms doing business in this state shall conduct the same in accordance with the laws of this state governing domestic associations, and no such association shall do any business in this state until it procures from the auditor of public accounts a certificate of authority to do so. To procure such authority, such association shall comply with the following provisions : 1. It shall deposit with the said auditor one hundred thousand (100,000) dol- lars, either in cash or bonds of the United States or of the state of Illinois, or of any county or municipal corporation in the state of Illinois, satisfactory to the said auditor. 2. It shall file with the auditor a certified copy of its charter, constitution and by-laws, and other rules and regulations showing its manner of conduct- ing business, together with a statement such as is required annually from all associations, and certified copies of all subsequent amendment to such by- laws. Sec. 2. — Whenever such association has complied with the provisions of this act, and the auditor is satisfied that such association is doing business ac- cording to the laws of this state and is in sound financial condition, he shall issue his certificate of authority to such association to do business in this state. Annually thereafter, upon the filing of the annual statement herein provided for, if the auditor shall be satisfied as aforesaid, he shall issue a renewal of such certificate of authority. Sec 3. — Such foreign association may collect aud use the interest on any securities so deposited, so long as it fulfills its obligations and complies with the provisions of this act. It may also exchange them for other securities of equal value and satisfactory to the auditor. Sec. 4. — The deposit made with the auditor shall be held as a security for all claims of residents of this state against said association, and shall be liable for all judgments or decrees thereon, and subjected to the payment of the same in the same manner as the property of other non-residents. Should any association cease to do business in this state the auditor may release securities in his discretion, retaining sufficient to satisfy all outstanding liabilities. Sec 5. — Should the auditor find, upon examination, that any foreign asso- ciation does not conduct its business in accordance with the law, or that the affairs of any such association are in an unsound condition, or if such asso- ciation refuses to permit examination to be made, he may cancel the author- ity of such association to do business in this slate, and cause a ni it ice thereof to be sent to the home office of the association, and to be published in at least one newspaper in the city of Snringfield. After the publication of such notice, it shall be unlawful for any agent of said association to receive any further 704 APPENDIX IV. stock deposits from members residing in this state, except payments on stock on which a loan has been taken. Sec. 6. — Foreign building and loan associations shall pay to the auditor the following fees, which shall be paid into the state treasury, to-wit : For filing each application for admission to do business in this state, fifty dollars ($50) for each certificate of authority, and annual renewal of the same twenty-five dol- lar- S25). Sec. 7. — It shall be unlawful for any building and loan association to do business in this state without having first complied with the provisions of this act, or for any person to sell, dispose of or offer to sell or dispose of, any shares of stock of any such association which has not complied with the provisions of this act, and any association violating any of the provisions of this act, or failing to comply with any of its provisions, or any person so selling or offer- ing to sell or dispose of stock in any such association which has not complied with the provisions of this act, shall be fined not less than fifty dollars nor more than one thousand dollars, to be recovered by an action in the name of the state, and on collection to be paid into the state treasury ; Provided, that building and loan associations organized in other states, having heretofore transacted business in this state which shall not have complied with the provi- sions of this act, shall have the right to close up their business and fulfill their contracts heretofore entered into with citizens of this state, through their duly authorized agents, without being subject to the penalties prescribed by this act ; but all contracts made after the passage of this act by such associations not authorized to do business in this state at the time of making such contracts shall be null and void. Approved June 20, 1893. THORNTON'S REVISED STATUTES, 1897, § § 4551, to 4598. Section 4551. — Any number of persons, not fewer than ten, after at least one hundred shares of stock have been subscribed for, may associate themselves together for the purpose of organizing building, loan-fund and savings asso- ciations, and for that purpose they shall make, sign and acknowledge in duplicate before some officer, capable of taking acknowledgments of deeds conveying real estate, a certificate of incorporation in writing which shall state the corporation name adopted by the company, the object of its forma- tion, the amount of its capital stock, the amount of capital stock already sub- scribed for, the number of its 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 shall cause one of said certificates to be filed and recorded in the recorder's office of the county where the business is to he carried on, and shall file the other of said certifi- ates in the office of the secretary of state. SEC. 4552. — When the certificate of incorporation shall have been filed as aforesaid, a certified copy thereof shall be evidence of the contents thereof ; and the persons who shall have signed and acknowledged such certificate, and their successors, shall he a body politic and corporate, and in their corporate name may contract, sue and be sued, and may hold and convey real estate and personal property as hereinafter provided. The business of the associa- tion shall be managed by a board of direcb >rs, who shall be st( ickholdersof the .1 1 1 iation, and whi 1 shall be selected 1>\ Hie stockholders as the by-laws of the iatii hi may provide. Sec. 4553. — The corporation shall have the power and franchise of loaning or advancing to the stockholders thereof, al interest not exceeding the legal id rate al the time, the moneys of the association accumulated from time to liri er and right to senile the repayment of such money and the performance of other conditions upon which the loans are made, by nd and moi tgage, or upon note or bond secured by stock of the as- ition or per on, 1 1 ei ui it v, as well as the power and right to purchase real ime and to sell, convey, lease or mortgage the same, iri , to iti 1 - or others for the benefit of the stockholders, or to loan the moneys of the association to others than its stockholders, at a rate ol int< re 1 nol 1 cceedingthe le ;al contracl rate ol interest, upon good and ample real estate 01 | lal ecurity, foi the benefit of its stockholders, when there i no demand for loans on the part of the stockholdei >. The premiums n by such a 1 on foi tin- preference or priority in procuring loans made to tockholders shall not be deemed ui urious, and in case ol non-payment GENERAL LEGISLATION. 705 of instalments upon stock, or interest or premium by borrowing stockholders, for three months' payment of principal, premium, and interest (without deduct- ing the premium or interest paid) may be enforced by proceedings on their securities according to law. SEC. 4554. — The capital stock of any corporation created by virtue of this act shall at ho time consist in the aggregated more than one million dollars, to be divided into shares of such denomination, not exceeding five hundred dol- lars each, as the by-laws of the association may prescribe ; Provided, That the capital stock may be issued 111 series; but the stock in any such series shall not at any time "exceed in the aggregate one hundred thousand dollars ; the instruments in which the stock is to be paid, the times and place ol payment shall be as the by-laws may provide ; but no periodical payment oi such instal- ment shall be required exceeding fifty cents per week on each one hundred dollars of stock ; the stock may be paid off and retired as the by-laws may pro- vide. Every share of stock shall be subject to a lien for the payment of un- paid instalments and other charges incurred thereon under the provision ol the constitution and by-laws ; and the by-laws may prescribe "'c form and manner of enforcing such lien. In lieu of the shares withdrawn, forfeited, re- tired or expired, new stock may be issued in one or in successive series, and in such amounts as the board of directors conformably to the by-laws may determine ; but at no time shall the outstanding stock in'any series exceed 1 me hundred thousand dollars, nor cf the association exceed one million dollars, or its capital as fixed by the certificate of incorporation. Any stockholder wishing to withdraw from such corporation may do so upon three months notice given to the board of directors, when such withdrawing stockholder shall be entitled to receive the amount paid in upon the stock to be with- drawn, less all fines and other charges thereon : Provided, That when the withdrawal occurs after the expiration of one year from the beginning of the series in which the stock to be withdrawn was issued, he shall receive in ad- dition to the amount paid in, less fines and other charges as aforesaid, at least legal interest on each instalment paid from the date at which the same was payable : Provided, That at no time shall more than one-hall of the funds in the treasury be applicable to demands of withdrawing stockholders, unless the board of directors in its discretion shall order otherwise, and the board may, in its discretion, waive the notice hereinbefore required as to any withdrawal ; no stock shall be withdrawn which is at the time held in pledge for se- curity. The legal representatives of any deceased shall be entitled t< 1 receive the fwll amount paid in bv his decedent with legal interest thereon from the d.i which the same was pavable, after deducting all fines and charges thei No fine shall be charged' to a deceased member's account for any default oc- curring after his death, unless the regal representative of the decedent shall assume the future payments on the stock. Sec. 455s. — The number, function, qualifications, and compensation of the officers of any such corporation, their terms of office, the times of their election, as well as the" qualifications of the electors, and the votes and manner ol voting, and the periodical meetings of such corporation, shall be determined by the by-laws of such association when not provided bv this act. SEC. 4556.— The directors shall hold stated meetings at which the money in the treasury, if over the amount fixed in the constitution or bv the by-laws as the full value of a share, shall be offered for loan in open meeting. The In- laws of the association shall prescribe the manner of awarding loans to its members, the time or times when the premium, if any, shall be paid, the rate of interest to be charged not exceeding the then legal contract rate, and the time when the interest shall be paid, whether monthly or quarterly in advance or semi-annually in advance or at the end of the period, as the by-laws may prescribe ; or such association may provide in its by-laws that the loans shall be made to the members of the association who shall bid the highest miums for the preference or priority in procuring loans (the premium to be payable at onetime or instalments 1, which member so bidding shall be en- titled to receive a loan of not more than the amount fixed bv the constitution and by-laws as the full value of a share for each share of stock held bv him and then and there bid off. The premium shall be bid as of so much per share ; Pro, vided, That a stockholder may borrow such fractional part ol the amount fixed by the constitution and by-laws as the full value of a share as the by-laws may provide. Good and ample real est ite 1 >i | ei - mal security as prescribed by the by-laws of the corporation, shall be given by the borrower, or in his be- half, to secure the repayment of the loan with interest, and also foi the paymenl of the dues, unpaid premiums, if any, fines and charges, that may be assessed 706 APPENDIX IV. upon the stock upon which the loan is made. In case the borrower shall ne- glect to offer security, or shall offer security that is not approved by the board of directors, by such time as the by-laws shall prescribe, he or she shall be charged with legal interest, as prescribed in the by-laws, together with any expense incurred, and the loss, if any, on a resale, and the money may be re- sold at the next stated meeting. In case of non-payment of instalments, or in- terest, or unpaid premiums, if any, by borrowing stockholders, for the space of three months, payments of principal, interest, unpaid premiums if any, fines, without deducting premiums of interest paid, may be enforced by proceedings on their securities according to law. Sec. 4557. — A borrower, who is not arrears for dues, interest, premiums, fines, <>r assessments, may repay his loan at any time, and may at the same tune withdraw from the association, and for that purpose he shall pay to the asso- ciation, or to the officer authorized to receive the same, the full face amount of the principal of his loan, less the amount by him paid to said association as dues on his stock, with interest on such payments from the time they were made, at not less than the same rate per cent, per annum that he has paid to the association as interest upon his loan, and less so much of the premium or discount paid by him on his loan for the priority thereof as shall bear the same proportion to the whole premium 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 payment being made, the stock held by such person upon which his loan was made, shall be surrendered to the association and shall be cancelled ; and thereupon the proper officer of such association shall immediately deliver to such borrower his note, or bond and mortgage, or other evidence of such loan, and shall also enter of record a full satisfaction of such mortgage which entry shall be a complete extinguishment of such mortgage and the debt thereby secured. Sec. 4558. — No premiums, fines, or interest on such premiums that may accrue to said corporation, in addition to interest on any loan made by it, 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, collected in this state. Sec. 4559. — No corporation or association created under this act shall cease or expire from neglect on the part of the corporation to elect directors or officers at the time mentioned in its by-laws, and all directors and officers elected by such corporation shall continue in office until their successors are duly elected. sic. 4560. — Any corporation organized under 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, 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, and any other that such corporation may hold or be entitled to at the passage of this act, it may sell, convey, lease or mortgage at pleasure to any person or persons whatever ; and all sale of real estate heretofore made byanysuch corporation to any person or persons, are hereby confirmed and made valid. 1561. — All such corporations shall have full power to purchase real estate and to sell and convey the same, or any part thereof, lot heir stockholders '.] others in full fee-simple, but the quantity of land purchased by any one of such corporation shall not, in the whole, at any one time, exceed fifty acres ; and in all cases such real estate shall be disposed of within ten years from the the same. 1562. — All such corporations shall have power to charge, in addition to \\\<- amounl - heretofore provided by this act, a sum not exceeding twenty-five month upon each share of Stock, lor the purpose of defraying the 1 1 ol the association, which sum shall be payable with the regular in- stalment ; to make assessments upon the capital stock to cover losses; and also have power to provide in their by laws for the charge and collection • if fines and penalties from delinquent stockholders for non-payment of in- stalment of dues, intere t, premiqms and charges; also, to provide in their by- laws for the forfeiture oi all the rights and immunities in the association of h deliquent members after a default of three months to pay instalments of due intere '. premiums, < harges or inn . and also to provide, in cast' 1 >i a borrower ofmoneyfrom uch a lociation ball fail and neglect to pay his instalments of interest or premiums, t < > 1 .1 period of three months from the nail b< 1 ime due and payable, that such failure and neglect shall GENERAL LEGISLATION. 707 work a forfeiture of all his rights and immunities, and the whole sum loaned to him by such association shall, at its option, become immediately due and payable, and may be collected, together with all lines, instalments of dues, interest and premium, if any, then unpaid. SEC 4503.— Infants may become stockholders in any corporation organized under this act the same as adults, and such infant stockholder shall be subject to the same duties and liabilities as respects their stock as adult members Any receipt, release, acquittance or discharge given to the corporation by an infant stockholder shall be binding upon the infant to the same extent as if such in- fant were of full age. Sec. 4564. — Where, in case of any loan made by any such corporation, the borrower, or any other person furnishing security in behalf of the borrower, shall, as an inducement to the corporation to make the loan, represent to ii in writing that he or she is over the age of twenty-one years, whereas in fact such person so representing is under lawful age and the association is there- by deceived, and the loan is upon such representation made, neither such per- son so representing nor any one in Ins or her behalf shall afterwards be al- lowed as against said corporation to take advantage of the fact that he or she- was not of full age, but such person shall be estopped by such representation. Sec. 4565. — Any such corporation organized prior to the taking ehect of this act, under any pre-existing statute of this tate, may except the provisions of this act by filing in the office of the recorder of the county in which the as- sociation is located, a written acceptance of the provisions of this act, which acceptance shall be signed by the president of such corporation and attested by its secretary, and shall, on behalf of the corporation, be acknowledged by the same officers, before some officer authorized to take .acknowledgments of deeds conveying real estate ; and a duplicate of such written acceptance, ex- ecuted and acknowledged as aforesaid, shall be filed in the office of the secretary of state, and from and after such tiling, such corporation shall have- all the powers hereby granted and shall be subject to the provisions of this act. Sec. 4566. — Any building, loan-fund and saving association organized, or which may hereafter be organized under the laws of this state, may im 1 1 its capital stock to any sum not exceeding two million dollars ($2,000,000) u] on the passage of a resolution for such increase by the stockholders of such cor- poration at any regular meeting of stockholders, or at any special meeting called for that purpose. Upon a certified copy of such resolution, under the hand of the chairman of such stockholders' meeting and of the secretary oi such meeting being filed in the office of the recorder of the county where the corporation is located, and a like copy in the office of the secretary of state, and the payment of fees required by law for such increase, the authority to issue the stock as thus increased shall be deemed complete. Sec. 4567. — All building, loan-fund and savings associations, legally organ- ized or attempted to be organized under any statute of this state, shall not be deemed or held invalid by reason of the failure to have recorded in the re- corder's office of the county wherein such association is located the articles of association before commencing business ; but where the articles of associa- tion shall have been properly filed in the office of the secretary of state before commencing business, it shall be deemed and held to have been a sufficient compliance with the law ; or where either of said acts have been done and not the other, the same shall be taken and held as a substantial and valid com- pliance with the law on the subject of organizing such association ; and when the articles of such association have, since the commencement of business thereof, been recorded in the recorder's office of the county wherein the asso- ciation is located, or the same has been filed in the office of the secretai v < >l state, or where such omitted act shall hereafter be done as directed by law, the same shall be held and taken as a substantial compliance w ith the law or- ganizing building, loan-fund and savings associations ; and all acts of the original directors, and their successors, and of the officers of such association, and all business done, loans made, mortgages taken, moneys collected and dis- bursed in pursuance of the law in such cases, and in compliance with the con- stitution and by-laws of such association, are hereby legalized and made valid, and all members and contracting parties shall be deemed and held to be fully bound by their contracts with such association. Sec. 4S68.— All acts in conflict with the provisions ( ,f this act are repealed ; Provided, however, Thatall rights acquired and all acts performed in pursuance of the provisions of any act so repealed are saved from the effects of such re- peal, and all building, loan-fund and saving associations or corporations, which 708 APPENDIX IV. have commenced proceedings under said acts, or any of them, may proceed according to the provisions of this act. Sec. 4569.— Everv association heretofore or hereafter incorporated under any law of this state providing for the incorporation of building and loan- fund and savings associations, and every association heretofore or hereafter incorporated for the purpose of raising money to be loaned or advanced am mg its members, shall be known in this act as a building and loan asso- ciation. The secretary of state shall charge and collect for the benefit of the state, for filing articles of incorporation of any such association, the sum of five (5) dollars for each fifty thousand dollars of capital stock of fractional part thereof. Sec. 4570. — It shall be unlawful for any building and loan association doing business in the state of Indiana to charge or collect from any of the members thereof, on any stock or shares of stock therein, any money or moneys other than membership tees, loan fees dues.on stocks, premium, interest, and forfeitures. All membership fees, fines, premium and interest shall be credited to the earnings, and all expenses shall be paid out of the earnings of such building and loan association, and no association shall charge or collect a membership fee of more than fifty cents on each share of stock of one hundred dollars issued. Such associations shall have the right to set aside from the profits a reserve fund to provide against contingent losses ; Provided, That the total amount of such fund so set aside shall not at any time exceed five per centum of the assets of such association. Sec. 4571. — It shall be the duty of every such association to furnish within thirty days after the annual statement to the auditor of state an annual written or printed statement of the condition of such association to each of the stock- holders thereof, which said statement shall be delivered personally or mailed to the stockholder. Such statement shall show separately amount of member- ship fees, loan fees, dues, interest, fines and forfeitures together with all moneys received bv it from any source whatever and a full showing of all payments on loans, dividends, salaries and all expenditures of every character, being a full and complete financial statement of such association during the preced- ing vear. The statement shall be sworn to by the secretary, and certified by the directors or a majority thereof. And each association shall annually cause to be credited on the pass-book of each stockholder the amount of earnings due each stockholder except associations doing business on the " terminating " or "serial plan." Sec. 4^72. — For the purpose of this act, paid-up stock shall be such stock as the owner shall have paid the full face value thereof at the time of the sub- scription therefor. Prepaid stock shall be stock upon which the owner shalL paid any specific sum in advance at the time of subscription, leaving the balance necessary to mature the same to be paid bv the dividends to be de- clared thereon by the association, or stock on which more than six months' dues have been paid in advance. All building and loan associations, as such, shall be exempt from taxation. Shares of stock on which loans have not been 111 ide or advanced bv the association, which stock is paid up or prepaid, shall be considered and held as credits of the members, individually, and listed by them, and assessed against them for taxation as oilier property. Sec. 4573. — Any stockholder whose stock is unpledged for a loan, wishing to withdraw fin 1 issociation within one year from time of issuing his upon three months' notice, in writing, given to the bi >ard of re [when] such withdrawing stockholder shall be entitled to receive the full amount of dues paid in iron the sloe!; to be withdrawn, less ii'l pro rata share of losses sustained during such stockholder's terms of pa ior to the time ol notice ol withdrawal. If such withdrawal is year from the time of issuing such stock', such withdrawing 1 be entitled to the amount paid in on dues and all declared on, and such part ol the profits as shall not have been carried to th 01 igent fund, less all fines and forfeitures ; Provided, That not more than one hali oi the funds in the treasury shall be applied to the md ol withdrawing stockholders unless otherwise ordered bv the board iu ha ociation shall have the power to provide for the assess- 1 1 non-paymenl ol due . premium or interest; but such fines eed twenty per centum ol the amounl of the delinquent instal- iii' - and shall be charged only once on such instalment. Such .1 ociation hall have the 1 ower to provide for the forfeiture of stock for the , premiums of [or] interesl for three months. After the fxn< - ■>]!('. other amounts due the association, the remainder, if GENERAL LEGISLATION. 709 any, shall be credited to such stockholder, and he shall he notified ol the amount due him, or,in case he is a borrower, such remainder shall be credited on his loan and the balance of said loan shall be due and payable and may be collected at once mi foreclosure. The bunds, notes or mortgages belonging to any association shall not be negotiable except upon an order of the circuit court or the judge thereof, in vacation, of the county in which the principal office of said association is situated. Sec. 4574. — The capital stock of any association may be fixed originally in any sum, or upon the order of the board oi directors thereof be increased to any amount the directors shall deem advisable. No director shall become a surety on the bond of any secretary or treasurer or any officer of association. Sec. 4575. — Any two or more associations of this state may consolidate into a single corporation by a majority vote of all the stockholders of each ol different associations at a special meeting of each association called for that purpose, of which at least thirty days' notice shall have been given to member, the consolidation to be upon such terms as shall be mutually agreed upon by the directors of such associations, and such terms shall be | forth to each member in the notices of such special meetings. Any member not consenting to such consolidation shall be entitled to receive the withdrawal value of his slock in settlement or to have such value applied in part settlement of his loan if he be a borrower. Sec. 4576.— Any building and loan association organized under the laws of this state, and doing business within the state, may, within one year after the passage of this act, if its board of directors deem it advisable, to go into liquid- ation ; and for the purpose of so doing, may at any regular or called meeting of the board of directors, adopt a resolution declaring that said association intends to go into liquidation and discontinue business as a building and association. A copy of such resolution, duly certified to by the president and secretary of such association, under the seal thereof, shall be transmitted tothe auditor of state, within ten days after the passage thereof, together with a lee of one dollar for the filing of the same in his office ; and thereupon the an of state shall issue his certificate, reciting that such resolution has been in his office, and that such association is in liquidation. Afterthe filing ol such notice it shall not be lawful for such association to issue stock, or to loan or advance its moneys to its members, or any other persons, but all of its in and receipts of said association, in excess of the actual expenses of managing the same, shall be applied to pay off the stock in said association upon w no loans have been made. The board of directors of such association in liquidation, may adopt such rules and make such orders as shall be just and equitable for the sale and disposition of all property held by such association, the assessment of losses, and for the division of the profits of such associa Any such association which may go into liquidation under the provisions of this section, shall not be subject to any of the foregoing sections of this act, but its affairs shall be controlled and regulated by the laws in force before the passage of this act, until its affairs are wound up. Sec. 4577.— It shall be competent and lawful for the borrower from such association to agree, in writing, upon a given rate of premium in addition to the interest to be paid upon each loan, without bidding. All contracts hereto- fore made between any borrower and any such association for the payment of any premiums, with or without any bidding, are hereby legalized. No premiums heretofore contracted for without bidding are to be contracted for under this section shall be deemed usurious. Sec. 4578.— That where a foreign building and loan association doing business within this state has become insolvent, and its affairs are being wound up by a receiver, the failure of such association to have complied with the laws of the slate representing [respecting] its admission to do business therein, shall not affect the right of such receiver to bring any suit necessary to wind up the affairs of such association. Sec 4570.— It shall be unlawful for anv corporation, association or society, organized under the laws of anv state 1 other than the state ol Indiana 1, or -I any government foreign to the government of the United Slates, to conduct or engage in the business of a building, loan fund, savings or investment as- sociation, and of issuing stock or bonds to members, payable in weekly, monthly or yearly instalments or assessments, agreeing to pay thereon dividends or profits, or interest, or to pay off bonds by number consecutively or otherwise, without having first tiled in the office of the auditor statement, under the oath of the president, secretary, and at least three of the 4G 710 APPENDIX IV. directors, showing the name and location of such corporation, association or society, date of incorporation, the names of its officers, the amount of its capital stock, the amount of its capital stock paid in, the amount of the assets of said corporation, association or society, the character of such assets and the fair cash value thereof, together with the fair cash value of all the securities held by such corporation, association or society ; the liabilities of such corpo- ration, association or society, and the character of such liabilities ; the par value and the amount of dues or assessments chargeable on each share of stock issued by such corporation, association or society ; the proportion of such dues or assessments credited to the loan fund, expense fund, or other fund ; when such assessments or dues are payable ; the amount of premium and interest charged on loans made by such corporation, association or society ; the amount of interest paid on debenture, paid up or other stock issued by said corporation, association or society ; and such other information concerning the business of said corporation, association or society as may from time to time be required by said auditor of state. Sec. 45^0. — In addition to the statement required by section one (§ 4579) of this act, said foreign corporation, association or society shall rile with the auditor of the state a copy of its act of incorporation, properly authenticated by the officer of the state in which said foreign corporation, association or society is incorporated, a copy of the by-laws and rules governing it and of each of the several kinds of the certificates issued to its shareholders or stock- holders. Sec. 4581. — Every such foreign corporation, association or society doing busi- ness in this state shall conduct the same in accordance with the laws of this state governing domestic associations. It shall also deposit with the auditor of state one hundred thousand dollars, either in cash or bonds of the United States, or of any state of the United States, or any county or municipal cor- poration in the state of Indiana, satisfactory to the auditor, or in lieu of any such deposit, any such foreign corporation, association or society shall file with the auditor of state a written contract or bond, executed by a responsible surety and guaranty corporation or company to the approval of the auditor of state, by which contract or bond said surety and guaranty corporation or company shall agree that upon notice by mail from said auditor that any such foreign corporation, association or society is indebted to any citizen of the state of Indiana in any sum or sums, which indebtedness it refuses to promptly pay, that it will at once pay such sum or sums to said auditor and continue so to do from time to time, until such payments shall equal one hundred thousand dollars ; and upon failure to make such payment or payments, then such auditor shall at once revoke the license of any such foreign corporation, asso- ciation or society under section 4 of this act, and suit against such surety and guaranty corporation or company shall be brought by the state of Indiana on relation ot the attornev-general of said state, and any judgment recovered against any such surety and guaranty corporation or company shall include one hundred dollars damages and costs of suit, exclusive of such sum or sums of indebtedness in favor of such citizen or citizens, which damages shall be the compensation of said attorney general for recovering such judgments. Sin h surety and guaranty corporation or company shall agree in writing, filed with the auditor, before acceptance by the auditor of its contract or bond, to of process of court by service thereof on the auditor, who shall mail a 1 py thereof to the office oi such corporation or company. And such auditor may, whenever in his judgmenl he thinks any such contract or bond 1 fi office to be insufficient, request any such foreign corporation, .1 .1 ion or • » < ty to file a new bond, satisfactory to such auditor, and upon failui ply with such requirement, said auditor shall revoke the license o ir| oration, associate in or si cii ty, as provided in said section 4, to 1 this state, and such foi ign corporation, association or ill nol beentitle orce by legal proceedings any evidence of indebtedm 1 ;ain I any citizen or citizens of this stale or any mortgage iperty in this slate until such requirement has been so com- plied with. Any such foreign corporation, association or society shall also file with Ihe auditor a written instrumenl properly executed, agreeing that a nons may issue againsl il from any county in the slate, and when served upon the auditor of state shall I upon such foreign corporation, asso- ty. The auditor shall, however, mail a copy of any papers ed upon him, postage prepaid, to the h e office of such foreign corpo- 1 ; ii .11 01 society. 1 pon compliance with the preceding sections of this act by any GENERAL LEGISLATION". 711 such foreign corporation, association or society, and the auditor of state is satisfied that it is doing a lawful and safe business, he may issue to said foreign corporation, association or society a license authorizing il to conducl its busi- ness in this state and to solicit subscriptions from the residents ol thi to its capital stuck. The auditoi ol state shall have the power, at any time, to revoke said license when said foreign corporation, association <>r society fails or refuses to comply with any ol the provisions ol this act, or when any such foreign corporation, association or society shall refuse to permit to be made the examination ol the affairs of such foreign corporation, association or so- ciety herein. :ttei provided for, or when, upon examination, the auditor "I stale shall find that such foreign corporation, association or society is nol con- ducting its business in accordance with the law. or that the affairs o foreign corporation, association or society are in an unsound condition ; Pro- vided, That, upon the revocation of said I i auditor shall i notice thereol to be mailed to the home office of such foreign corporati sociation or society, and to be published in at least one newspaper i ublished in the city of Indianapolis : And provided further, That after the publication of such notice it shall be unlawful for any agent ol such foreign corporation, association or society to receive further stock deposits from members residing in this state, except payments on stock on winch a loan has been made. SEC. 4583. — The deposit made with the auditor shall be held as security for all claims of residents of this state against said foreign corporation, association or society, and shall be liable for all judgments or decrees thereon. Su h foreign corporation, association or society may collect and use the interest on any security so deposited, as required by section three .1 of this act, so long as it fulfils its obligations and complies with the provisions ol this act. It may also exchange them tor other securities of equal value and satisfactory to the auditor. All securities of cash deposited with the auditor shall be im- mediately deposited by him with the treasurer of state, who, with his sure- ties, shall be responsible for the safekeeping thereof. The treasurer shall deliver such securities only upon written order ol the auditor. Sec. 4584. — Kvery agent or person engaged, directly or indirectly, in solii - iting subscriptions to the capital stock of any such foreign corporation, associ- ation or society shall first procure from the auditor ol state a certificate show- ing the appointment of such person as such agent ol said foreign corpora- tion, association or society, to which certificate the auditor ol state shall attach a certified copy of the statement of condition of such foreign corporation, as- sociation, or society. It shall be unlawful for such auditor to issui certificate except upon the tiling in his office of a written appointment under the hand of the president and secretary ol said foreign corporation, as- sociation or society, attested by its corporate seal. Such certificate shall be renewed annually in the month of Julv of each year. Sec. 4585. — The auditor of state shall examine, or cause to be examined, under the provisions of this act, whenever in his judgment it may be neces- sary for the interest of the shareholders or stockho ders of said foreign corpo- ration, association or society residing in this state, ever} detail of the business of any said foreign corporation, association or society transacting business in this state. Said examination shall be made at the expense of the foreign cor- poration, association or society examined, and consent to make such examina- tion shall be tiled before any certificate authorizing such foreign corporation, association or society shall be granted by said auditor ol state Sec. 4586. — Every such foreign corporation, association or si iciety, authorized to transact business in this state, shall on the first day of Julv in each year file a report under the oath of its president or secretary, "and which shall be certified to by at least three directors, showing the gross amount of ments, dues, tines, membership fees and all moneys collected by said fi corporation, association or society from shareholders or stockholders residing in this state during the previous year. Such statement shall also show the amount of money loaned by said foreign corporation, association or society to any of its shareholders or stockholders, residing in this state during the pre- vious year. And such foreign corporation, association or society shall pay to the auditor of state, to be by him paid into the treasury of the state, the sum of three dollars ($3.00) on every one hundred dollars ($100 received by such foreign corporation, association or society from the shareholders or stock- holders residing in this state, less the amount actually loaned to the shareholders or stockholders of such foreign corporation, association or so< iety residing in this state. Sec. 4587. — Every such foreign corporation, association or society shall, in 712 APPENDIX IV. addition to the report required by section eight (8) of this act, on the first day of July of each year file with the auditor of the state a detailed statement, showing separately the amount of membership fees, dues, interest, premium, fines, forfeitures, assessments, expense fund, receipts, and all other moneys re- ceived by it, together with a full showing of amounts paid on loans, withdraw- als; losses, salaries and all other expenses, dividends, interest or any other ex- penditures ; and it shall further show the amount of the assets, of said foreign corporation, association or society, the character of such assets, the fair cash value thereof, together with the nature and fair cash value of all securities of such foreign corporation, association or society; and it shall also show the liabil- ities of such foreign corporation, association or society, and the character of such liabilities ; the par value and the amount of dues or assessments chargeable on each share of stock issued by such foreign corporation, association or societv ; the proportion of such dues or assessments credited to the loan fund, expense fund or other fund ; when such assessments or dues are payable ; the amount of premium and interest charged on loans made by such foreign cor- poration, association or society ; the rate and amount of interest paid on deben- ture, paid up or other stock issued by such foreign corporation, association or society and such other information concerning the business of such foreign cor- poration, association or society as may from time to time be required by the auditor of state. Sec. 4588. — The auditor of state shall charge and collect from such foreign corporation, association or society, for riling the statements and other papers and issuing the certificates required to be filed and issued by this act the same ices as are charged and collected from insurance companies doing business in this State, and are chartered and incorporated under the laws of the state in which such foreign corporation, association or society is incorporated. Sec. 4589. — The auditor of state shall cause to be printed once in the two papers having the largest general circulation published in the city of India- napolis the annual statement of such foreign corporation, association or society required to be filed in his office by section nine (9) of this act. The cost of such publication shall be paid by such foreign corporation, association or societv. Sec' 4590. — Any person or persons, who, either directly or indirectly, shall solicit subscriptions to the capital stock of any such foreign corporation, asso- ciation or society, or act as agent for any such foreign corporation, association or society, without first procuring the certificate required in section six (6) of tin- act, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined in any sum nut exceeding five hundred dollars ($500), to which may be added imprisonment in the county jail not exceeding thirty (30) days. Sic. 4591. — Immediately upon taking effect of this act every corporation, association or society organized under the laws of the state of Indiana, and conducting the business of a building, loan fund, savings or investment asso- ciation, shall tile with the auditor of state a statement of the condition at the close of its last fiscal year, which statement shall contain the same matter required in the statement provided for by section one (l)of this act ; and there- alter Mich corporation, association or societv shall in the month of July of each year file in the office of the auditor of state a statement of its condition at the close of business on the 30th of June preceding. Such statement shall be under the oath of the president and secretary and at least three directors of such corporation, association or society, and such statement shall contain the information prescribed in section nine (9) of this act, and such other matter as may be prescribed by the auditor of stale. And every such corporation, asso- ( iation or society shall file in the office of the auditor of state copies of its by- laws and rules, and copies of each oi the several kinds oi certificates, issued to its shareholders or stockholders. For filing each of such statements and the services pertaining to the examination thereof 1 he auditor of slate shall charge colled from each of said corporations, associations or societies a fee of five dollars ($5). And out of Hie fees so derived he shall pay all additional clerk hire which may be nece itated by the passage of this act, and, except foi in h 1 lerk hire, the disposition of lees paid into ihe office of the auditor of 1 under tin. act hall begoverned by the provisions of section 18 of the fee t] n . ai I -I Man h 0, [891. , ■ li ii appears from any such statement that any such corporation, .1 ociation 01 society, organized under the laws of this slate, is doing an illegal or un afe bu im , the auditor of state may make or cause lobe made 11 |.io, of this act, an examination into Ihe affairs of such cor- poration, a I0< iation 01 society ; or When upon petition of any shareholder or GENERAL LEGISLATION. 713 shareholders, setting forth that such petitioner or petitioners, believe said cor- poration, association or society to be conducting its business contrary to law, or that its affairs are in an unsound condition, or that they believe any oi its statements are not correct, then said auditor of state shall make, or cause to be made, an examination into the affairs of such corporation, association or society ; Provided, Thai any such shareholder or shareholders, before such auditor shall make such examination, shall file with such auditor a bond to his approval, conditioned if such examination shall disclose that such corpora- tion, association or society so examined is doing a lawful busim uch shareholder or shareholders will pay all costs ot such examination as are here- after provided lor in this section. Such examination shall be lull and com- plete, and in making the same the examiner may put any officer "i any such corporation, association or society, or any other person, under oath to answer truthfully any questions that may be asked them ; and all the book . \ apers and records of such corporation, association or society, and all securities I by it, shall be subject to his inspection. Said auditor, or the deputy inspector, shall be entitled to five dollars (§5.00) per day for each day occupied in making such examination, and necessary expenses, to be paid by such corporation, association or society, which sum or sums so paid snail be used by him in 1 ay- ing the salary of the deputy building association inspector, as provided for in section 20 of this act, and before such deputy inspector shall receive any pay for such examination he shall file with the auditor of slate an itemized statement of his expenses, which statement shall be sworn to by such deputy inspector. Sec. 4593. — Should the auditor of state or the inspector appointed by him, find any such corporation, association or society conducting its business, in wdiole or in part, contrary to law, or failing to comply with the law, he shall so notify the board of directors of such corporation, association or society in writing, and if, after thirty days, such illegal practice or failure continue, he shall report the facts to the attorney general, who shall cause proceeding be begun in the proper court to revoke the charter of such corporation, assi »c ia- tion or society. Sec. 4594. — Should the auditor of state, or the inspector appointed by him, find, upon examination, that the affairs of any such corporation, association or society are in an unsound condition, and that the interests of the public demand the dissolution of such corporation, association or society and the winding up of its business, he shall so report to the attorney general, who shall insh the proper proceedings for that purpose. Sec. 4595. — The president and secretary of any such corporation, ass. >< or society failing to make and file the reports required by this act within thirty days after the same are due shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be fined in any sum not exceeding one hundred dollars 1 S 100). Upon failure to file such report.it shall be the duty of the auditor of state to notify the president and secretary of such corporation, as- sociation or society of such failure, and if such report is not filed within thirty days from the date of such notice, then it shall be the duty of the auditor to examine such corporation, association or society, .is provided in section four- teen ( 14) of this act. Sec. 4596. — The refusal of any such corporation, association or soi permit the examination of its affairs authorized by this act shall be sufficient cause for institution of proceedings to wind up its affairs, as \ r< »vided in section sixteen (16) of this act. Sec. 4597. — The auditor of state shall annually compile the reports of such corporations, associations or societies required to be filed in his office, and publish the same in his annual report to the governor and general assem- Sec. 459S. — To enable the auditor of state to fullv carry into effect the pro- visions of this act, there is hereby created in the office oi the auditor of state a building and loan association department, and the auditor of state shall be ex officio building association inspector, and charged with the execution •of the laws of this state relating to building, loan fund, savings or investment associations. He is hereby authorized to employ an additional clerk in his office, to be known as the deputy building association inspector. IOWA. REVISED STATUTES, 1897. Section' 1890. — Corporations organized for the purpose of furnishing money to their members upon sufficient security shall be known as building and loan 714 APPENDIX IV. or savings and loan associations. Domestic local building and loan or sav- ings and loan associations shall include corporations, societies, organizations or associations incorporated under the laws of this state for the purpose of and doing business only within the county in which is situated the town or city named in its articles of incorporation as its principal place of business. Pro- vided, that where the town or city named in its articles of incorporation as the principal place of business is situated in more than one county and the business of the association is restricted to the town or city and to the county within which is located its principal office, said association shall be deemed a domestic local building and loan or savings and loan association within the meaning of this act. Domestic building and loan or savings and loan asso- ciations shall include corporations, societies, organizations or associations in- corporated under the laws of this state for the purposes herein provided, the business of which is not restricted to the county in which is situated the town or city named in its articles of incorporation as its principal place of business. Foreign building and loan or savings and loan associations shall include cor- porations, societies, organizations or associations incorporated under the laws of another state, territory, country, or nation for the purposes specified herein. Sec. 1891. — Any number of persons not less than five, residents of the state of Iowa, may become incorporated as building and loan or savings and loan associations" under the general incorporation laws of this state, except as otherwise herein provided and upon complying with the provisions of this act. Sec. 1892. — The capital named in the articles of incorporation shall betaken to mean the authorized capital, and the association may commence business when one hundred shares thereof have been subscribed and the other pro- visions of this act in relation thereto have been complied with. Such asso- ciations shall be governed by a board of directors who shall be elected an- nually by the stockholders, and who shall hold their office for not less than one nor more than five years, and if for a longer period than one year it shall be so arranged that the terms of an equal number thereof, as nearly as may be. shall expire each year. Sec. 1893. — The articles of incorporation shall show : 1. The names and residences of the incorporators. 2. The name of the association and its principal place of business. 3. The purpose for which such association is formed. 4 T le terms and plan of becoming and continuing a member. 5. The plan of making loans. 6. The plan of distributing profits. 7. ; Ian 1 »f equalizing losses. 0. The plan and terms of withdrawal of members. 9. Theplan of providing for payment of expenses. 10. The number of shares into which capital stock is to be divided. 11. The classes into which its capital stock is to be divided and the terms forthe same by subscribers, rhe term of corporate existen< e. 13. Tin- manner of electing officers and filling vacancies. 94. — Such articles of incorporation, with the by-laws of the associa- tion, shall be presented to the executive council, and if it tmds that they are in ormity with the law, ii shall attach thereto its certificate of approval, and tpon such articles and by-laws shall be filed in the office of the and, toi- of state, who shall issue a certificate authorizing the association to msiness. Amendments to such articles of incorporation may be i : to time at any regular or special meeting of the sb ickholders, hall in like manner be submitted to the executive council and approved incil shall keep a record of its proceedings with reference to itions. ,:, officers of any domestic building and loan or savings and loan a iociation who sign or indorse checks or handle any funds or securities ition shall give such bonds or fidelity insurance fot the faithful pei 1 on 11.11 ii ol their duties in such sum as the board of directors may require, and n i officei hall be deemed qualified to entet upon the duties ol his 1 bond ' roved by tin- board of directors and by the state 1 lid bond shall be de| ited and filed with the auditor of state. All II 1 or add nal sei urities required by the board of dii tate when it becomes necessary to protect the inten 1 iciation or its members, and no director shall be accepted ich bonds, and no person shall be accepted as surety on the GENERAL LEGISLATION. 715 bonds of more than one officer of said association. The directors shall be in- dividually liable for loss lo the association or its members caused by their failure in require a compliance with the provisions oi this section. Sec. [896. — The officers of any domestic local building and loan or savings and loan association who sign Or indorse checks or handle any funds or securities of said association snail give such bonds or fidelity in 01 the faithful performance of their duties in Mich sum as the board of directors may require, and no such officer shall be deemed qualified to enter u] on the duties of his office until his bond is ap the board of directors and the clerk of the district court of the county of the principal place of business of said association. Said bonds shall be deposited with the said clerk, ami it is here- by made the duty of the said clerk to approve said bonds and to receive the same as herein provided. No person shall be accepted as surety on the bond of more than one officer of said association. All such bonds shall be increased or additional securities required by the board of directors or by the clerk of said district court when it shall be deemed necessary to protect the interests of the association or its members. The directors shall be individually liable for loss to the association or to its members caused by their failure to require a compliance with the provisions of this section. Sec. 1897. — It shall be unlawful for any building and loan or savings and loan association to receive deposits of money without issuing shares of stock for the same, or to transact a banking business. Sec. 1898. — All building and loan or savings and loan associations upon receiving the certificate from the auditor shall have power, subject to the terms and conditions contained in their articles of incorporation and by-laws, to issue stock to members to be paid for in single, stated or monthly payments, but not more than $10,000 of stock computed at par value of any kind shall be issued to one person ; to assess and collect from members such dues, member- ship fees, fines, premiums, and interest on loans as may in the articles of in- corporation and by-laws have been provided, and the same shall not be held to be usurious ; to permit members, other than holders of guaranty stock, to withdraw all or a part of their stock deposits upon such terms and at such times as the articles of incorporation and by-laws may provide ; to acquire, hold, encumber, and convey such real estate and personal pro) erty as may be necessary for the transaction of their business ; to make loans to members on such terms, conditions and securities as the articles of incorporation and by- laws provide ; said loans to be made only on real estate security or on the security of their own shares of stock not to exceed 90 per cent, of the with- drawal value thereof. In case of foreclosure the borrower shall be charged with the full amount of the loan made to him, together with the dues, interest, premium, and tines for which he is delinquent, and he shall be credited with the same value of his pledged shares as if he had voluntarily withdrawn the same. Sec. 1899.— All funds except those necessary to defray the expenses ol the association shall be invested for the benefit of the shareholders. For every loan made a non-negotiable note or bond secured by first mortgage on real estate shall be given, unless the prior mortgage is to the same association ; then a second mortgage may be taken to secure said note, except when such loan is on the withdrawal value of stock only. Said note or bond shall be accompanied by the transfer of the shares of stock of the borrower to the asso- ciation to be held as collateral security. Sec. 1900. — Each member shall have one vote for each Sioo of stock par value owned and held by him at any election, and may vote the same by proxy, but no person shall vote more than 10 per cent, of the outstanding shares at the time of said election. Any one depositing or transferring stock to the association as collateral security shall be deemed the owner of such stock within the meaning of this section. Sec iqoi. — Any guardian, executor, administrator or trustee shall have the right to vote, manage and control the shares held by him in his representative capacity. SEC 1902. — The expenses of every such association shall be paid from the earnings, or from a fixed charge pr< rvided for in the by-laws, and said expenses shall not exceed S8 for the maturing of every $100 of instalment stock, said sum to be equitably distributed over the maturity period ; and $2 per year for every Sioo for full paid or prepaid stock. The net earnings oi such associa- tion shall be apportioned as a dividend, annually, semi-annually, or quarterly to members, in such manner as the articles of incor] oration and by-laws may provide. Membership fees and expenses incurred in making loans shall not be deemed a part of the expenses of the association. 71(3 APPENDIX IV. Sec. 1903. — Dues, fines, premiums and interest, less current expenses, shall accrue to the shareholders, and any net loss shall be deducted before declaring any dividend. Sec. igo_L. — At least once in each year the auditor of state shall, by himself or some competent person appointed by him, make an examination of all domestic and foreign building and loan or savings and loan associations doing business in this state, and may examine under oath any officer, agent or employe of the association or other person, and may compel the production of its books and papers, and for this purpose such examiner shall have the same power as the district court to secure the attendance of witnesses and the production of such hooks and papers, and to punish as for contempt. If the examination is made by the auditor in person he shad receive his actual expenses. If by another, his actual expenses and $5 per day, which in either case shall be paid by the association examined ; provided, the expense charged fi ir such examination to any one association shall not exceed $200 for any one year. A record of such examination shall be kept in the auditor's office showing in detail as to each association all matters connected with the conduct of the business, its financial standing, and everything touching its solvency, plan of business, and integrity. If the report is made by another than the auditor it shall be under oath. Examinations may be made at such other times as the auditor may order. If any such association refuse to submit to such an examination the auditor shall revoke its certificate of authority. Sec. 1905. — When twenty shareholders of any domestic local building and loan or savings and loan association shall in writing request the auditor oi state, he shall have the same authority and shall proceed to make an examina- tion of the affairs of such association in the manner provided in this act for the examination of domestic associations, and the costs and penalties shall be the same Skc. 1006. — The auditor shall, in his biennial report to the governor, state the general conduct and condition of the building and loan or savings and loan associations doing business in the state with such suggestions as he may deem expedient. Such report shall also include the information contained in the statements of the associations arranged in tabulated form, with the names and compensations of the clerks employed by him, the entire income, the source whence derived, and the expense during the year ending on the thirty- first clay of December, in detail. SEC. 1907. — When any building and loan or savings and loan association is conducting its business "illegally or in violation of its articles of incorporation or by-laws, or is practicing deception upon its members or the public, or is pursuing a plan of business that is injurious to the interests of its members, or its affairs are in an unsafe condition, the auditor of state shall notify the directors thereof, and if they shall fail to put its affairs upon a safe basis, he shall advise the attorney-general thereof, who shall take the necessary steps to wind up its affairs in the manner provided by law. Sec. 1908. — If any foreign building and loan or savings and loan association as herein defined, desires to transact business within this state, it shall furnish to the executive council a certified copy of its articles of incorporation, or charter and by-law's, and a certified copy of the state laws under which it is tnized, together with a report for the" year next preceding, verified by its president, vice-president, secretary and at least three directors, which re- port shall show : 1. The amount of its authorized capital slock and the par value of each share. J. The number of shares sold during (lie war. 3. The number of shares cancelled or withdrawn during the year. 4. The number oi hares in force at the end of the >ear. 5. A di itement of all funds received (luring the year and all dis- nents. 6. i ilaries paid each of its officers. 7. A detailed tatemenl of its assets and liabilities at the end of such year and tii'- 11. it hi e therei if. x. Any other matter iol I a< < which the council may require. Upon receipt !i i'-i" .1 1 tin- 1 cil, it il finds therefrom that the association is properly managed, thai il- lin.nni.il condition i ati factory, and thai its business is : upon .1 ife and reliable 1 Ian, shall so certify upon such copy a\h\ mi -lit, and, tin- Mm" l ' M- ' (ill d with the auditor, he shall issue a like certi- fy .it. m in tin- 1 .1 se "i domestic associations. 1 -, I. >iv such foreign building and loan or savings and loan as- GENERAL LEGISLATION. 717 sociation before the state auditor shall issue to it a certificate shall comply with the following provisions : [. It shall deposit with the auditor of state $100,000 either in cash or bunds of the United States or of the state of Iowa, or oi any county or municipal corporation of the state of Iowa, or notes secured by first mortgage on real estate, or a like amount in such other security as shall be satisfactory to said auditor. 2. Such foreign association may collect and use the interest on any se- curities so deposited as long as it fulfills its obligations and complies with the provisions of this act. It may also exchange them for other securities of equal value and satisfactory to said auditor. SEC. [910. — The deposit made with the auditor shall be held as security for all claims of resident shareholders of the state of Iowaagainst said association, and shall be liable for all judgments or decrees thereon and subject to the payment of the same. Sec ion.— Such foreign association shall also file with the auditor of this state a duly authenticated copy of a resolution adopted by the board of di- rectors of such association, stipulating and agreeing that if any legal process of notice affecting such association be served on the said state auditor and a copy thereof be mailed, postage prepaid, by the party procuring and issuing the same, or his attorney, to said association, addressed to its home office, then such service and mailing of such process or notice shall have the same effect as personal service on said association within this state. When proceedings have been commenced against or affecting any foreign building and loan or savings and loan association, as contemplated herein, and notice has been served upon the auditor of the state, the same shall be by duplicate copies, one of which shall be filed in his office and the other mailed by him, postage pre- paid, to the home office of such association. Sec. 1912. — All foreign building and loan or savings and loan associations shall file with the auditor of state within ten days after their adoption a duly certified copy of any amendment oramendments to their articles of incorpora- tion or by-laws that may have been adopted. Sec. 1913. — Foreign building and loan or savings and loan associations shall pay to the auditor of state the following fees, which shall be paid by him in- to the state treasury: For each application to do business in this state, $100 ; for each certificate of authority and each annual renewal thereof. Si 50 ; for filing each annual statement of the assets of the association, as shown by the statement filed, amounts to Sso.oooor less, $3 ; if more than $50,000 and less than $100,000, $5 : if more than $100,000 and less than $250,000. $10; if more than $250,000 and less than .$500,000, $20 ; if more than $500,000 and less than $1,000,000, $30; and if more than $1,000,000, $50. Domestic building and loan or savings and loan associations shall pay to the auditor of state tiie sum of $25 for each certificate of authority and each renewal thereof, and for tiling each annual statement, $10. Domestic local building and loan or savings and loan associations shall pay to the auditor of the state for filing each annual statement the sum of $5. Sec. 1914. — All building and loan or savings and loan associations doing business in this state shall on or before the first day of February of each year file with the auditor of state a detailed report and financial statement of their business for the year ending the thirty-first day of December next preceding, and such report shall be verified by the president and secretary or by three- directors of the association, and such report shall show : 1. The date when the association was incorporated and the par value of each share of stock. 2. The number of shares sold during the year. 3. The numbers of shares cancelled or withdrawn during the year. 4. The number of shares in force at the end of the year. 5. A detailed statement of receipts and disbursements, showing specifically from what source received and in what manner applied. 6. A statement of the assets and liabilities at the cud of the year. 7. The salaries paid to its officers during the year. 8. All foreign building and loan <>r savin. shall, in addition tothe above, report the names of each shareholdi 1 ition residing within the state of Iowa, together with the ; ach andthe number of shares owned by each of said person firstday of January preceding, and the cash value ol each of said -hare- on said date. SEC. 191 5.— If an v association- shall fail 1 r refuse to furnish to the auditor ol state the report above required it shall forfeit the sum ot $25 for every day 718 APPENDIX IV. such reports shall be withheld, and the auditor of state may maintain an action in the name of state to recover such penalty, and the same shall be paid into the treasury of the state. Sec. iqi6. — When by the laws of any other state, territory, country or nation, or bv the decision or rulings of the appropriate and proper officers thereof any greater taxes, fines, penalties, licenses, fees, deposits of money or other se- curities, or other obligations or prohibitions, are demanded of building and loan or savingsand loan associations of this state as a condition to be complied with before doing business in Mich other state, cerriti iry, country, or nation, or their agents therein, than are imposed upon foreign associations doing business in this state, so long as such laws continue in force, the same requirements, obliga- tions, and prohibitions of whatever kind shall be imposed on all building and loan or savings and loan associations of such other stale, territory, country or his doing business in this state and upon their agents. It is hereby made the duty of the auditor of state to enforce the provisions of this section. Sec. iyij. — If a certificate of authority to do business shall have been issued to any association, and it shall violate any of the provisions of this chapter, the auditor of state shall revoke the same. Sec. 1918. — If any officer, director or agent of any building and loan or savings and loan association shall knowingly and wilfully swear falsely to any statement in regard to any matter in this chapter required to be made un- der oath, he shall be guilty of perjury. If any director of any such association shall vi ite to declare a dividend greater than has been earned, or if any officer or director or any agent or employe of any such association shall issue, utter 1 er to utter any warrant, check, order or promise to pay of such associa- , or shall sign, transfer, cancel or surrender any note, bond, draft, mort- :, or other evidence of indebtedness belonging to such association, or shall ind, collect or receive any money from any member or other person in the name of such association without being authorized to do so by the board of directors in pursuance of its lawful power, or if any such officer, director, agent or employe shall embezzle or convert to his own use, or shall use or pledge for his own benefit or purpose, any moneys, securities, credits or other prop- erty belonging to the association, or shall knowingly do or attempt to do any business for such association that has not procured and does not hold the certificate of authority therefor as in this chapter provided, or shall knowingly make or cause to be made any false entries in the books of the association, or shall with the intent to deceive any person making an examination in this tef required to be made, exhibit to the person making the examination any false entry, paper, or statement or shall knowingly do or solicit business for any building and loan or savings and loan association which has not pro- cured the required certificate therefor he shall be lined in any sum not exceed- ing.? 10,000 or imprisoned in the penitentiary not exceeding ten years, or pun- ished by both such fine and imprisonment. SEC. 1919. — All building and loan and savings and loan associations having heretofore transacted business in this state, which shall not have complied with the provisions of this act, within the time herein prescribed, shall have the right to close up their business and fulfill their contracts heretofore en- l into with residents of this state without being subject to the penalties prescribed in this act. [920. — Shares of stock issued by building and loan or savings and loan asso ia ii ns hall be classified as moneys and credits for the purposes of taxation. Approved, April 7. 1896. 1320. — The share of slock of mutual building and loan or savings asso- icclusively engaged in such business, shall be assessed and taxed to th 1 ial holders thereof at their place of residence. When such asso- 1 maintains a reserve, expense or other fund, or its equivalent, the total h land or 1 u in Is shall be subject to taxation at the principal place ol the association, and shall be subject to taxation at the principal 1 ol business oi the association, and shall be assessed against the associa- tion as othei pei onal property, the tax of the same to be paid by the associa- li hall be the duty of the a >o< ation to keep a correct list oi the owners of the stock thereof, with th ffice address and on or before the thirty- lay oi fanuary ol each year, the assessors of till domestic and domestic local ons shall make the same verified statement as other corpora- tions are required I 1 make and furni h the assessors, and in addition thereto 1 I ite Ihe total amounl ol thi h n terve, expense or other fund, or its equivalent, and the actual value of the han i ol ti ick, and furnish the same to GENERAL LEGISLATION. 719 the assessor of the assessment district in which its principal place of busil is located. And on or before the fifteenth day of February of each yearthe secretary or president of such domestic or domestic local associations shall make, by mailing to them, postage prepaid, a verified statement to the county auditors of the name and postofhee address of every stockholder oi said a ciations, residing in their respective counties, together with the number of shares owned by each person, and the actual value of each share of said I on the first day of January preceding. The auditor of state shall, on or before the tenth day of 'February of each year, send to the count v auditor of each county a statement of the name and postoffice address oi each stockholder oi a foreign building and loan or savings association residing in their respective counties, together with the number of shares owned by each person on th< day of January preceding, and the actual value of each share ol slock on said first day of January, which facts shall be as reported to him by such associa- tions under the law governing building and loan or savings and loan assi tions. It shall be the duty of the county auditor to immediately furnish to each assessor in his county the name of each stockholder in any such associa- tion residing in such assessor's district, together with the number of shares held by each person, and the actual value of each share on the first day of January preceding. KANSAS. I. GENERAL STATUTES OF 1897, p. 705. Paragraph 3 (p. 688). — Private corporations may be created by the voluntary associations of hve or more persons for the purposes and in the manner men- tioned in the following sections of this article andamendments thereto. Every member or stockholder in said corporation shall vote in person or hv proxy. Par. 4 (p. 6881 — The purposes for which private corporations maybe formed are: * * * The accumulation and loan of funds, the erection of buildings, and the purchase and sale of real estate for the benefit of its members. * * : Par. 63. — Premiums bid for priority of loan in building and saving or trust associations organized under the corporation laws of this state by the members of such associations, shall not be deemed as usury, or subject to the provisions of sections three (3) and four (4) of an act regulating the interest of moi chapter 51 of General Statutes of 1868, and all such premiums incorporated in the notes given by the members of the associations, and all the tines assessed against its members in accordance with the by-laws of such associations, may be collected by civil action before any court having jurisdiction. Par. 64 — All corporations heretofore incorporated under the laws of the state of Kansas, for the purpose of accumulating and loaning fund- to mem- bers, or that have been so accumulating and loaning funds to members, are hereby recognized and confirmed as legal and valid corporations from the date of their incorporations or the time they commence to accumulate and loan to members ; and all contracts made between them and then members, all loans made at whatsoever premium, discount or interest, and all securities taken for such loans, are hereby declared legal, valid and 1 hiding on all parties concerned or affected thereby, or having notice thereof. Par. 65. — All associations organized under the general corporation 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 exclusively, and may receive money in payment for its shares of stock in such manner and upon such terms as are prescribed by its by-laws ; may receive money on loan or on deposit, and may lend money to its members on the se- curity of United States bonds or bonds of the state of Kansas, the stock of such association, or real estate, which loan shall be repaid in such stated per- iodical instalments as are prescribed in the by-laws, and all contracts belw t e 1 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 1' an, 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. Par. 66. — Whenever, by reason of default inpayment of loans or dues by members of such association, it becomes necessary, according to the by-laws to bring suit or [on] any mortgage for the purpose of collecting such loans or dues, no greater sum shall be recovered than that actually due at the time 1 f judgment, and the amount so due may be ascertained by adding to the sum of arrears the present value of all future instalments discounted at the rates per 720 APPENDIX IV. cent., and according to the times and periods of payments established by the by-law, not inconsistent with section one of this act. And whenever, by the constitution or by-laws of any such association, loan shall be made to its mem- bers by the share, for premiums, the amount for which judgment shall be rendered shall not be greater than the actual amount of money loaned, with interest to time of judgement at twelve per cent, per annum, and all unpaid hues lawfully assessed "against the borrower for non-payment under Mich 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 payment or payments. Par. 67. — Every such corporation, before commencing business under its charter, shall rile a copy of its by-laws with the secretary of state, and shall likewise so rile copies of all subsequent changes of such by-laws ; and all such .i" iciations now doing business shall immediately file copies of their by-laws with the secretary of state, and shall also hie all subsequent changes thereof. A majority of the stockholders present at any organized meeting may adopt,, alter or change the constitution or by-laws, or transact any other business. Par. 68. — Any building or loan association organized under the corpora- tion laws of this state for the purpose of the accumulation and loan of funds, 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 reorganize as a savings bank, and to do business as such. Par. 69. — Before any such association can reorganize under the provisions of this act, there shall be presented to the board of directors of such association a petition signed by two-thirds of the members thereof, praying for such reor- ganization. Whereupon it shall be the duty of such board of directors, with- in thirty days from the ttme of presenting the petition, to file with the secre- tarv of state an additional charter, setting forth that they have reorganized un- der this act, which shall be acknowledged and certified as provided by law for obtaining charters. Par. 70— All fully paid-up permanent shares in such building and loan as- sociation shall be exchanged for paid-up stock to the same amount in such savings bank or reorganized corporation, 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 withdrawal or at maturity, as attached to the same by the constitution and by-laws of such association before its reor- ganization. Par. 71. — All contracts heretofore made with any such building, loan or sav- ings association, may be enforced by action in the name of such new or reor- ganized corporation, and all liens, causes of action, are hereby saved and pre- served to such corporation as fully as ifthis act had not been passed. KENTUCKY. REVISED STATUTES, 1894. SECTION 854. — Any number of persons, not less than nine, may associate for the purpose of forming a corporation to accumulate the savings of its mem- . paid into such corporation in fixed periodical instalments, and lending to its members the funds so accumulated. Six. 855. — Such corporation may be organized in the manner provided in section two, article one, of this chapter, except that the limit of the capital, in nounl of capital, shall be given, and when a copy thereof is filed in the office of the secretary of state, and filed and recorded in the county clerk's offii eol the county where its principal place of business is located, .the incorporatoi - shall thereupon become a body-politic, and be invested, subject to the provisions of this article, with all the powers and privileges, liabilities anli . [ranted to 01 imposed upon corporations generally under the 1 hapter. Sec. 856.— The name assumed by such corporation shall not be so nearly alike thai ol any other similar corporation as in deceive the public, and the words " Building Associ tion " hall f< irm a part of the name. 57. — The par value of the shares shall not exceed live million dollars, and shall be di the ultimate value fixed by the by-laws. 'llr- hare maybe issued in monthly, half-yearly or yearly series, in such amounts and at such times as the members may determine. No person shall hold, in .11 iation having an authorized capital stock of $100,000 or less, hi a: in unit equal to two and a half {2V2) percent, of the whole num- in those having an authorized capital exceeding $100,000, and GENERAL LEGISLATION. 721 not exceeding $500,000, two (2) per cent. ; in those having an. authorized capi- tal of $500,000, and not exceeding $1,000,000, one and a naif per cent., and in those having an authorized capital of $1,000,000, or in excess thereof, one (1) per cent, of The whole number of shares therein; and no shares of a prior series shall be issued alter the issue of a new series, and an association may issue lull paid stock to its members, or issue to its members stock restricted to a less rate of profit than that of its regular slock ; hut certificates of such stock shall state on their face this restricted rate of profit, and no association sha.l create a debt exceeding twenty 1201 per cent, of its paid-up capital. Six. 858. — The number, title, duties and compensation of the officers of the corporation, their term of office, the times ol their election, as well as the qualifications of the electors, and the lime of each periodical meeting of the officers and members, shall be determined by the by-laws; all officers shall continue in office until their successors are duly elected and qualified. Sec. S59. — The officers shall hold stated meetings as prescribed in the by- laws. At such times as may be prescribed bythe by-laws every member shall pay to the corporation, as a contribution to its capital, such sum as dues upon each share of instalment stock held by him as the by-laws may prescribe, until the share reaches the ultimate value fixed by the by-laws, or is withdrawn, cancelled or forfeited. Payment of dues on each series shall commence from its issue. Sec. 860. — A member may withdraw his unpledged shares at any time by giving thirty days' notice of his desire to do so in a book to be provided by the corporation for the purpose, and shall thereupon receive the withdrawing value of his shares at the date of the notice, and this withdrawing value shall be the amount of the dues paid thereon, together with such proportion of the profits as the by-laws may determine, less all fines, expensesand proportionate part of any unadjusted loss ; but at no time shall more than one-half of the funds in the treasury be applicable, without the consent of the directors, to the demands of the withdrawing members. The directors may, in their dis- cretion and pursuant to the by-laws, retire the unpledged shares of any series, and enforce their withdrawal at any time after three years from the date of their issue. The shareholders whose shares are to be so retired shall be de- termined by lot, under such regulations as the directors may prescribe. The withdrawing value of such shares shall be the amount of dues paid thereon, together with the profits apportioned to such share, according to the next preceding adjustment and valuation of shares, less all fines, expenses and proportionate part of any unadjusted loss. Sec. 861. — Whenever there shall remain in any series, at the expiration of five years after the date of its issue, an excess above one hundred unpledged shares, the directors may retire annually twenty-five per centum of such excess existing at said expiration of five years after the date of its issue ; but when the withdrawal of shares is to be enforced, the shares to be retired shall be determined by lot, and the holders thereof shall be paid the full value of their shares, less fines and a proportionate part of an}' unadjusted less ; and shares pledged for share-loans shall be treated as unpledged shares. But this section shall not apply to associations maturing their shares in less than six years. Sec. 862. — When each unpledged share in a given series reaches the value fixed by the by-laws, all payments of dues thereon shall cease and the holder thereof shall be paid out of the funds of the corporation the value fixed by the by-laws, with interest ot the rate of six per cent, a year from the time of such maturity to the time of payment ; but 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 when any series of shares, either pledged or unpledged, reaches maturity between the dates of adjustment of profits, or whenever shares are retired between such dates, the holders of such shares shall, in addition to the value thereof, be entitled to interest at the same rate for all full months from the date of the preceding adjustment. Sec. 863. — The moneys accumulated, after due allowance made for all necessary and proper expenses, and for the withdrawal of shares, shall, at each monthly or weekly meeting, be offered to the members according to their priority of right to a loan as fixed by the by-laws. Each member whose bid is accepted shall be entitled, upon giving proper security and complying with the by-laws, to receive a loan equal to the par value of each share held by him, or such fractional part thereof as the by-laws allow. If a balance of money remains after the monthlv loans, the directors may invest the same in good and safe bonds or real estate securities. Sec 864. — A borrowing member, for each share borrowed upon shall, in addi- 722 APPENDIX IV. Hon to his dues and monthly or weekly premium, pay monthly or weekly in- terest on his loan at the rate of six per cent, per annum, and the interest and pre- mium shall not exceed twelve (12) per cent, per annum, until his shares reach the value fixed by the by-laws, or the loan has been repaid ; and when said ultimate value is reached said loan and shares shall be declared cancelled and satisfied, and the balance, if any, due upon the shares shall be paid to the member. Sec. 865. — For every loan made a note secured by first mortgage on real estate shall be given, accompanied by a transfer and pledge of the shares of the borrower. The shares so pledged shall be held by the corporation as col- lateral security for the performance of the conditions of said note and mortgage. The note and mortgage shall recite the number of shares pledged and the amount of money advanced thereon, and shall be conditioned for the payment at the stated meetings of the corporation, or on some day of each month or week, of the monthly or weekly dues on said shares, and the interest and premium upon the loan, together with all fines upon payments in arrears, until said shares shall reach the value fixed by the by-laws, or said loan is otherwise cancelled and discharged. The shares without other security may, in the discretion of the directors, be pledged as security for loans to an amount not exceeding eighty per cent, of their value as adjusted at the last adjustment and valuation of shares before the time of the loan. If the borrower'neglects to offer security satisfactory to the directors within the time prescribed by the by-laws his right to the loan shall be forfeited, and he may be charged with one month's interest and one month's premium at the rate bid by him, together with all expenses, if any, incurred ; and the money appropriated for such loan may be reloaned at the next or any subsequent meeting. Sec. 866. — A borrower may repay a loan at any time upon application to the corporation, in even shares, whereupon, on settlement of his account, he shall be charged with the full amount of the original loan, together with all instal- ments of interest, dues, premiums and fines in arrears, and shall be given credit for the withdrawing value of his shares pledged and transferred as security, and the balance shall be received by the corporation in full satisfaction of said loan. All settlements made at periods intervening between stated meetings of the directors shall be made as of the date of the stated meeting next succeed- ing such settlement ; and a borrower, desiring to retain his shares and mem- bership, may, at his option, repay his loan without claiming credit for said shares, whereupon said shares shall be transferred to him, and shall be free from any claim by reason of said cancelled loan. Sec. N17— Members who make default in the payment of their monthly or weekly dues, interest or premium, shall be charged a fine not exceeding twenty-five cents per share a month on each share in arrears. No fine shall be charged after the expiration of six months from the first lapse in any such payment, nor upon finesin arrears. Thesharesof a member who continues in arrears more than six months shall, at the option of the directors, if the mem- ber fails to pay the arrears within thirty days after notice, be declared for- feited, and the withdrawing value of the shares at the time of the first default shall he ascertained, and, after deducting all fines and other legal charges, the balance remaining shall be placed to an account to be designated the " For- feited Share Account" to the credit of the defaulting member ; said member, if nol a borrower, shall be entitled, upon thirty days' notice, to receive the bal- ance so transferred without interest from the lime of the transfer, in his order of the (urn, out of the funds appropriated to the payment of withdrawals. All shares so forfeited or transferred shall cease to participate in any profits of the corpoi ation accruing alter the last adjustment and valuation of shares before said default Sec. 868, — If a borrowing member has been in default for six months, the nit lobe credited to his shares under the preceding section shall be ap- plied a, a payment upon the loan, and the balance-, with interest and premium thereon, from the time of the first default, shall be enforced against the secu- rity. 1 lie ihai es, the value of whi< h has been so applied in payment, shall re- to the c orporation, and be held by it free from all interest, claim, or de- ii' part of the borrower or any person claiming under him. Sic. 869. — Theprofits and losses may be distributed annually, semi-annually, or quarterly to the hares then existing, but shall be distributed at least once a each year. Theprofits and losses shall be- distributed to such shares in por- .11 lo their value at that time, and shall lie computed upon a basis of a - hai e luily paid lo ihe date oi distribution. Losses shall be apportioned Immediately after their occurrence. GENERAL LEGISLATION. 723 Sec 870.— Any such corporation may purchase at any sale, public or private, any real estate upon which it may have a mortgage, lien or judgment or in which it may have an interest, and may dispose ofthe same at pleasure, but within five years alter it has acquired title thereto. Sec 871.— It shall be lawful for any minor above the age of fourteen, or a mar- ried woman, to take and hold shares in such corporation, and for such corpora- tion to pay to any minor any money that mav be due him in respect to any Share, and his receipts therefor shall be valid; but no minor shall be eligible to hold any office in such corporation. Sec 872.— It shall be the duty of every corporation formed under this law to print and publish in pamphlet form the whole of this law and its artn I incorporation and by-laws, and any amendments thereto or alteratii »i of, and to sell the same to those who mav wish them ; and it shall also keep in a book, subject to inspection, in'its office, during business hours, a co ol this law, its articles of incorporation, by-laws and any amendments thereto or alterations thereof. SEC. 87}. — All corporations formed under this or any other law, and transact- ing in this stale a business similar to that authorized to be done by this law, shall be under the supervision of the secretary of slate. The president, man- ager or secretary thereof shall, on or before the first day of February in each year, return to said secretary of state a report signed and sworn to by the pres- ident or manager and secretary, and attested by at least two directors, showing the amount of paid-up capital, and amount of all cash receipts and disburse- ments for the vear ending the thirty-first of December next previous th< 1 and such other facts as the secretary of state may require ; and each corpo- ration, officer, agent or manager, failing or refusing to make said report or to furnish any information called for by the secretary of state, under oath and attestationof its officers as required, shall be severally guilty of a misdemeanor, and fined not less than one hundred nor more than one thousand dollars for each offence. And every foreign corporation shall, before it transacts or so- licits anv business in this"slate, obtain from the secretary of state a certificate authorizing it to carry on and solicit business in this state, which certificate the secretary of state' shall grant, upon satisfactory information furnished to him under oath that the corporation is solvent and properly managed ; and if any corporation, bv its agents or officers, solicit or transact any business in this state without first obtaining such certificate, such corporation, and each agent thereof who solicits or transacts for it any business in this state, shall be liable to the penalty provided in this section. Sec. 874.— Whenever the secretary of state shall have reason to believe that any corporation organized under the" laws of this state is violating the provisii ins of this law or the law under which it was created, or is being operated in a manner prejudicial to the interest of the creditors or members of such cor- poration, he shall lay such information before the attorney-general, and such action and proceedings may be taken as are authorized to be taken in cases of insurance companies that are insolvent or are violating the law. Sec 875. — Whenever any foreign corporation shall refuse or fail to pay the taxes assessed against it, or to pay the fees exacted, or to make the required report, or when, in the judgment "of the secretary of state and the attorney- general, its business in this state is conducted in violation of law, or it is in- solvent, it shall be the duty of the secretary of state to cause notice of such fact to be published in some newspaper of general circulation in this state, and such company shall cease to do business in this state ; and if, thereafter, any agent or servant of such companv shall transact or solicit any business for such company in this state, he shall for each offence be fined not less than fifty nor more than one hundred dollars. Sec 876. — Each agent or solicitor, or person who acts as such agent or solic- itor, for any foreign corporation or association doing business in this state sim- ilar to that authorized bv this law, shall, before transacting any business as such agent or solicitor, obtain from the secretary of state license to act as such agent or solicitor, which license shall be in force for one year from its issual, and shall be renewed annually ; and the secretary of state may, with the advice of the attornev-general, decline to issue or renew anv license, if he has reason to believe that the corporation or association for which such person is agent or solicitor as insolvent or is conducting its business in violation of law ; and any person who shall act as agent or solicitor for any corporation without having obtained license so to do shall be fined not less than fifty nor more than one hundred dollars. Sec 877. — For each license issued to an agent, and for each certificate to do 724 APPENDIX IV. business in this state, there shall be paid to the secretary of state twenty-five ($25) dollars. For each annual report there shall be paid to the secretary of state, by the corporation or association making the same, ten ($10) dollars. Sec. 878. — All fees collected by the secretary of state under this article shall be covered by him as soon as collected into the state treasury ; and so much thereof as may be necessary to defray the expenses incurred in the discharge of the duties imposed upon the secretary of state, by virtue of any of the provisions of this act, shall be paid upon the warrant of the auditor to the secretary of state. The secretary of state shall report to each session of the general as- semblv a statement of the amount received from license, fees or penalties under this act, and the amount expended by him, and he shall be allowed for his services under this act the sum of one thousand dollars, to be paid to him in monthly instalments upon the warrant of the auditor. Sec. 4093. — The shares of building associations or building and loan asso- ciations shall be taxed as other individual personal property, and shall be listed with the assessor for that purpose by the owners of said shares, the amount so listed by every owner or shareholder to correspond with the amount paid in and not withdrawn by the said shareholder on the fifteenth of Septem- ber of every year ; Provided, That the borrowing members shall not be re- quired to list their shares, if the amounts borrowed by such members equal or exceed the amount paid in on their respective shares. The shares of in- fants shall be listed by the parents or guardians of such infants. Sec. 4004. — The president or secretary of every such building association, or building and loan association, shall list with the assessor the amount of such surplus funds and undivided profits as his association may have on hand and undistributed on the fifteenth day of September of every year. Approved March 23, 1894. Sec. 4228. — Every foreign building and loan association or company doing business in this state, on or before the first day of July in each year, shall pay into the state treasury two dollars on every one hundred dollars of the year's receipts of such company or association on business done in this state during [the] twelve months next preceding the first day of June of the said year the said amount is required to be paid, and, upon payment, tile a statement there- of with the secretary of state, Sec. 4229. — It shall be the duty of every foreign building and loan associa- tion doing business in this state, or some officer, manager or, general or state agent of the same, to return to the auditor of public accounts, on or before the first day of July of each year, a correct statement, under oath, of all receipts on business done in this state during the twelve months next preceding the first day of July of the same year the statement is required. Sec. 4230. — Any corporation, company or association failing to comply with sections 4227 and 4228 shall be deemed guilty of a misdemeanor, and, on con- viction, be fined fifty dollars for each day the amount therein required is not paid after the same becomes due. LOUISIANA. REVISED LAWS 1897, p. 82. Section i. — The capital stock of all building or homestead associations, so- cieties or companies, such as are now organized and carried on in this state, both those which have been already incorporated and those which may here- after be incorporated under the laws of this state, providing for the organization of corporations for works of public improvement, etc., may be divided into shares and may be payable in instalments a- may be provided in the respective i ions; Provided that no such association shall carry on bu iness in I his state until, at least, the sum of twenty thousand dollars shall cribed to its capital stock, and thai the instalments upon such ill amount to, at least, twenty-live cents a share a month ; And iro- l further, thai every such ;i tociation now carrying on business with a I stock oi le s than twenty thousand dollars shall be permitted to in- ca ital itock to said amount, as provided by existing laws. taryand treasurer ot every such association or the officers h hall each file in the office of the re< order of mortgages, in the iation is domiciled, a bond with good and solvent a 11m to be fixed by re olution, oi 1 he board of directors, no! less than one thousand dollars, such bonds to secure the faithful di the duties ol uch ecretary and of such treasurer ; that the urety or sureties upon such bonds shall not be deemed sufficient, unless GENERAL LEGISLATION. 725 they shall be accepted and approved by the board of directors of such asso- ciations and by the judge, or one of the judges, of the district court of the Earish in which such association maybe domiciled, and that said bonds shall e made in favor of the association to which said officers belong, and shall enure to the benefit as well of such association as of any shareholder •thereof, or person interested therein, who may be damaged or injured, or may suffer any loss by reason of such officers failing to perform the duties incumbent upon them, or performing such duties improperly. Sec. 3. — There shall be held annually a general meeting of the shareholders of every such association, and, at said meeting, the board of directors, through the secretary or other officer whom they may designate, shall make to the shareholders a full and complete statement, detailing and setting forth all the assets and liabilities of such association, and all its transactions during the previous year. Sec. 4.— It shall be lawful for such associations to purchase from any share- holder, or other person, any real estate, improved or unimproved, and to sell the same, either in the same condition or after improving, repairing or build- ing upon the same, to any shareholder or other person*; Provided, that such associations may make sales of property, real and personal, either for cash or on terms of credit ; that such associations shall have power to improve, repair and build upon real estate, and to make all contracts and do all acts and things necessary and proper in connection therewith ; that in case any such associa- tion shall purchase property from any person, and shall afterwards sell the same property to the same person, then such association shall have the ven- dor's lien and privilege upon the property so sold, for the security of the pay- ment of the money due by such person ; that such associations are authorized and empowered to contract and agree with any person to purchase from such person any property, and afterwards to sell the same property to the same person, even though said agreement be made at one and the same time ; and such contract and arrangements shall not be considered or dealt with as a loan, but as a sale to the association, and then a resale by the association, to the person from whom the association acquired it ; and such association to secure a payment of the amount due by such person, shall have all the rights, privileges and securities which are now accorded by law to the vendor of property. Sec. 5. — It shall be lawful and competent for any shareholder of such asso- ciations, when making a contract with such association, to pledge the instal- ments upon his stock in such association already paid in at the time of making such contract, and those to be paid in after the date of such contract, as secu- rity for any debt due by him to said association, and a declaration of such pledge in an authentic act shall create and constitute a full, valid and complete pledge ; and the fact of such pledge shall be stamped on the face of the cer- tificate of the stock so pledged. REVISED LAWS 1897, p. 82. Sec. I. — The terms " public utility and advantage," in the Revised Statutes, section (683) six hundred and eighty-three [providing for the formation of corporations of public utility and advantage], and in all laws amendatory thereof, be held to include in their meaning'ihe objects and purposes of home- stead, or building associations, societies and companies as now established in this state. REVISED LAWS, 1897, p. 82. Section i. — Whenever any stock of any building, homestead or loan associa- tion shall be subscribed for by, or in the name of a female person who at the time be married or may afterwards marry, whether such person be a minor, or of age, or whether any deposit or account of stock shall be made in any such association by, or in the name of a female person who may at the time be married ; whether such person be a minor or of age, such stock or money subscribed or deposited shall be held by said association for the exclusive right and benefit of such married woman ; and the said married woman may and is hereby fully authorized and empowered to withdraw such deposit, or stock, or shares, or transfer the same without the authorization or intervention of her husband ; and that said married woman as regards such withdrawal or transfer, shall be dealt with in all respects as if she were a femme sole and as in no manner under the disabilities which attach to married women : Provided, however, that nothing in this act shall be taken or deemed as au- thorizing every married woman to pledge or borrow upon any such stock, 47 726 APPENDIX IV. shares or deposit, or to buy or sell real estate without the authentication of her husband. REVISED STATUTES, 1897, p. 83. Section i. — Whenever any stock of any building, loan or homestead association, society or company, shall be subscribed for by any minor in person ; or whenever any deposit shall be made in any such association, society or company by a minor in person, such stock or money subscribed or deposited on account of stock, shall be held by such association, society or company for the exclusive right and benefit of such minor ; and that such minor may and is hereby authorized and empowered to withdraw such deposit or stock or shares, or transfer the same, without the authorization or intervention of any parent, tutor or guardian ; and that such minor, as regards any such withdrawal or transfer, shall be considered and dealt with in all respects as if he or she had attained the age of twenty-one (21) years, and as in no manner under the disabilities which attach to minors : Provided, nothing in this act shall be taken or deemed as authorizing any minor to pledge or borrow upon any such stock, shares or deposit or to buy or sell real estate without the authorization now requisite under existing laws. MAIIVE. REVISED STATUTES, 1883, p. 426.— Chapter xlvii. Savings Institution, and Trust and Loan Associations. Section 84. — All savings banks or institutions for savings, and trust and loan associations, lawfully organized, are corporations possessed of the powers and functions of corporations generally, and as such have power : I. To have perpetual succession, each by its corporate name. II. To sue and be sued, complain and defend, in any court of law or equity. III. To make and use a common seal. IV. To make by-laws not inconsistent with the laws of the state or of the United States, for the management of its property and the regulation of its affairs. V. To receive money on deposit, to invest the same, and further to transact the business of a savings bank or trust and loan association, as hereinafter provided. Sec. 85. — Any number of persons not less than thirteen, may associate themselves for the purpose of organizing a savings bank or trust and loan as- sociation, in accordance with this chapter; three-fourths of such number shall reside in the county where the proposed bank or trust and loan associa- tion is to be located, and may till vacancies and add to their number from time to time a-^ they desire, all of whom shall be residents of the state. SEC. 86. — Such persons shall execute a certificate, sworn to before a justice of the peace, in duplicate, one of which shall be deposited with the secretary of state for record, and the other sen! to the bank examiner, in which shall be irth: the name of the bank or trust and loan association ; the names of all the 1 orporators and Hie places where they reside ; their business 0C< 1:' a- tion ; and the place where its business is to be transacted ; together with the . 1- why a bank or trust and loan association is needed in such place Sec. 87.— A notice oi intention to organize such bank or trust and loan iation, signed by all the corporators, shall be published once a week for three weeks in some newspaper published in said county where said bank or tin I aSSOC iatii in IS to be located, if any, otherwise in some newspaper tied in an adjoining county. Sec. 88. — When the examiner receives the certificate, with the published notice, if he finds that the fori [oing provisions have been complied with, it shall be his duty, from the best information at his command, to tain : I. Whether greater convenience of access to a savings bank or trust and loan a ociation, will be afforded to any considerable number of depositors Link or trust and loan association, at die place des- ifii i 1 ' II. Whether the re pon ibility, character and general fitness of the persons named in 1 for the discharge of the duties appertaining to such a tin • an hi h a : " • ommand the confidence ol the community in « hich it 1 ink 01 trusl and loan association. ii the examiner is Satisfied, concerning the several points named GENERAL LEGISLATION. 727 in the preceding section, and that the organization of a savings hank or trust and loan association as proposed in such certificate, will be a public benefit, he shall, within sixty days after the same has been received by him for ex- amination, issue under his hand, a certificate of authorization to the persons named therein, or to a portion of them, together with such other persons as a majority of those named in such certificate of association, in writing, approve ; also a duplicate to the secretary of state ; which certificate, so issued by him, shall authorize the persons named therein to open an office for the deposit of savings, as designated in the certificate of association, subject to the live pre- ceding sections. PUBLIC LAWS, 1889— Chapter 312. Sec. 1. — No savings bank, mortgage, loan, trust or banking company, asso- ciation or institution, incorporated under the laws of this state, or of any other state and doing business in this slate, shall act or do business as administrator or guardian, anything in their charter to the contrary notwithstanding. REVISED STATUTES, 1883— Chapter 47, p. 435. Sec. 132. — Loan and building associations may be organized in the manner provided herein, for the organization of savings banks, and trust and loan as- sociations ; and upon the filing of any certificate of authorization of a loan and building association with the secretary of state, as so provided, the persons therein named, their associates, successors and assigns, shall, thereupon and thereby, be constituted a body corporate and politic, and such body may make and use a common seal, hold, manage and convey real and personal prop- erty, sue and be sued, prosecute and defend suits in law or in equity, have perpetual succession each by its corporate name, and make and ordain by- laws for its government, not repugnant to the constitution and laws. Sec. 133. — The certificate of authorization issued by the bank examiner, shall provide the method of calling the first meeting of the association. Each as- sociation shall pay said examiner five dollars for his services in advance. Sec. 134. — The "capital to be accumulated shall not exceed one million dol- lars, and shall be divided into shares of the ultimate value of two hundred dollars each. The shares may be issued in quarterly, half yearly or yearly series, in such amounts and at such times as the members "may determine. No person shall hold more than twenty-five shares in the capital of any one such association. No shares of a prior series shall be issued after the issue of a new series. Sec 135. — The number, title, duties and compensation of the officers of the association, their terms of office, the time of their election, as well as the qualifications of electors, and time of each periodical meeting of the officers and members shall be determined by the by-laws, but no members shall be entitled to more than one vote. All officers shall continue in office until their successors are duly elected, and no association shall expire from neglect on its part to elect officers at the time prescribed by the by-laws. Sec 136. — The officers shall hold stated monthly meetings. At or before each of these meetings, every member shall pay to the association, as a c< m- tribution to its capital, one dollar, as dues upon "each share held by him, until the share reaches the ultimate value of two hundred dollars, or is withdrawn, cancelled or forfeited. Payment of dues on each series shall commence from its issue. Sec 137. — Shares may be withdrawn after one month's notice of such in- tention, written in a book held and provided bv the association for the pur- pose. Upon such withdrawal, the shareholder's account shall be settled as follows ; from the amount then standing to the credit of the shares to be with- drawn, there shall be deducted all fines, a proportionate part of any unad- justed loss, together with such proportion of the profits previously credited to the shares as the bv-laws may provide, and such shareholders shall be paid the balance ; provided, that at no time shall more than one-half of the funds in the treasury be applicable to the demands of withdrawing members, without the consent of the directors. The directors mav. at (heir discretion, under rules made by them, retire the unpledged shares of any series at any time after four years from the dale of their issue, bv enforcing the withdrawal of the same"; provided that the shareholders whose shares are to he retired shall be determined by lot, and that they shall be paid the full value of their shares, less all fines and a proportionate part of any unadjusted loss. Sec. 138.— When each unpledged share of a given series reaches the value of two hundred dollars, all pa'vments of dues thereon shall cease, and the holder thereof shall be paid out "of the funds of the association, two hundred 728 APPENDIX IV. dollars therefor, with interest at the rate of six per cent, a year, from the time of such maturity to the time of payment ; provided, that at no time shall more than one-halt of the funds in the treasury be applicable to the payment of such matured shares, without the consent of the directors, and that before paying matured shares, all arrears and fines shall be deducted. Every share shall be subject to a lien for the payment of any unpaid dues, fines, interest, premiums and other charges received thereon, which may be enforced in the manner hereinafter provided. Sec. 139 fas amended, acts 1897, p. 363). — The board of directors shall see to the proper investment of the funds of the association as provided in this section. Aitcr due allowance for all necessary and proper expenses, and for the with- drawal of shares, the moneys of the association shall be loaned to the members at a rate of monthly premium to be fixed by the directors, which shall in no case exceed forty cents per share. Any member may, upon giving security satisfactory to the directors, receive a loan of two hundred dollars for each share held by him, or such fractional part of two hundred dollars as the bj'-laws may allow. Any association may provide in its by-laws that instead of the interest and premium, a stated rate of annual interest not to exceed eight per cent, may be charged upon the sum desired, payable in monthly installments. Such rate shall include the whole interest and premium to be paid upon the loan. Any balance remaining unloaned to members may be invested in such securities as are legal tor the investment of deposits in saving banks. No loan shall be made on the gross premium plan. Sec. 140. — Premiums for loans shall consist of a percentage charged on the amount lent in addition to interest, and shall be deemed to be a consideration paid by the borrower for the present use and possession of the future or ulti- mate value of his shares, and shall, together with interest and fines, be received by the association as a profit on the capital invested in the loan, and shall be distributed to the various shares and series of said capital as hereinafter pro- vided. Sec. 141. — A borrowing member, for each share borrowed upon, shall, in ad- dition to his dues and;monthly premium, pay monthly interest on his loan at the rate of six per cent, per annum until his shares reach the ultimate value of two hundred dollars each, or the loan has been repaid ; and when said ultimate value is reached, said shares and loan shall be declared cancelled and satisfied, and the balance, if any, due upon the shares shall be paid to the member. Sec. 142. — For every loan made, a note secured by first mortgage of real estate shall be given, accompanied by a transfer and pledge of the shares of the borrower. The shares so pledged shall be held by the association as col- lateral security for the performance of the conditions of the note and mortgage. Said note and mortgage shall recite the number of shares pledged, and the amount of money advanced thereon, and shall be conditioned for the payment, at the stated meetings of the corporation, of the monthly dues on said shares, and the interest and premium upon the loan, together with all lines on pay- ments in arrear, until said shares reach the ultimate value of two hundred dollars each, or said loan is otherwise cancelled or discharged : provided, that the shares, without other security, may, in the discretion of the directors, be pledged as security for loans, to an amounl not exceeding their value as adjusted at the last adjustment and valuation of shares before the time of the loan. If the borrower neglects to offer security, satisfactory to the directors, ami bin the time precribed by the by-laws, his right to the loan shall be forfeited, and he shall be charged With one month's interest and one mouth's premium al the rate bid by him, together with all expenses, if any, incurred, and the money appropriated for such loan may be re-loaned at the next or any sub- sequent meeting. Sec. 143. — A borrower may repay a loan at any time, upon application to the association, whereupon, on settlemenl ol his account, he shall be charged with the full amounl of the original loan, together with all monthly instalments of interest, premium and lines in arrears, and shall be given credit for the withdrawing value of his shares pledged and transferred as security, and the balance shall be received by the a :so< iation in full satisfaction and discharge d loan ; provided, that all settlements made at periods intervening between d meetings of the directors, shall be made as of the dale of the stated meeting m d ucce< ding such settlemenl : and provided, that a borrower de- to retain his share and membership may, at his option, repay his loan withoul claiming credit form's shares, whereupon said shares shall be re- i to him .nid shall lie free from any claim by reason of said can- loan. GENERAL LEGISLATION. 729 Sec. 144. — Members who make default in the payment, of their monthly dues, interest and premiums, shall be charged a fine not exceeding two per cent. a month on each dollar in arrears. No tines shall be charged alter the expira- tion ol six months from the first lapse in any sueh payment, nor u[ on a line in arrears. The shares of a member who continues in arrears more than six months shall, at option of the directors, if the member fails to pay the arrears within thirty days after notice, be declared forfeited, and the withdrawing value of the shares at the time of the first default shall be ascertained, and alter deducting all tines and other legal charges, the balance remaining shall be transferred to an account to be designated the forfeited share account, to the credit of the defaulting member. Saul member, if not a borrower, shall be entitled, upon thirty days' notice, toreceive the balance so transferred, without interest from the time of the transfer, in the order of his turn, out of the funds appropriated to the payment of withdrawal. All shares so forfeited or transferred shall cease to participate in any profits of the association accruing after the last adjustment and valuation of shares before --aid default. SEC. 145. — If a borrowing member is in arrears for dues, interest, premiums or fines for more than six months, the directors may, at their discretion, de- clare the shares forfeited alter one month's notice, if the arrears continue un- paid. The account of such borrowing member shall then be debited, with the arrears of interest, premiums and fines to date of forfeiture, and the shares shall be credited upon the loan at their withdrawing value. The balance of the account may, and after six months shall be enforced against the security by any legal method, or by proceedings in equity, for sale and foreclosure, jurisdiction therefore being hereby specially given to the supreme and su- perior courts, to be exercised upon bill or petition in a summary manner. The shares, the value whereof has been so applied in payment shall revert to the corporation, and he held by it free from all interest, claim, or demand on the part of the borrower, or any person claiming from or under him. Sec. 146.— Upon the death of a shareholder, his legal representatives shall be entitled to receive the amount of unpledged shares of the deceased, to be ascertained as provided in section one hundred and thirty-seven for withdrawal of shares. No fines shall be charged, or profits credited to a deceased mem- ber's account from and after his decease, unless his legal representatives as- sume the future payments on shares, which they may assume under the same rights and liabilities of the deceased. Moneys received for the shares of a deceased shareholder, or the shares themselves, as the case may be, shall de- scend to the same persons and be distributed in the same manner that money received from a policy of life insurance on the life of a deceased person now does by law. Sec. 147 (as amended acts T897, p. 363").— The general accounts of everv such association shall be kept by double entry. The secretary shall at least once each month make and declare a trial balance which shall be recorded in a book, provided for that purpose, and it shall at all times be open to the in- spection of the directors and shareholders of the association. All moneys received from the member shall be receipted for by persons designated by the directors in a pass book provided by the association for the use of, and to be held by, the member, and said pass bonk 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 respectivelv 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, and the entries therein shall be si > made as to show the name of the payer, the number of the shares, the number or desig- nation of the series, or issues of the particular share or shares so entered, to- gether with the amount of dues, interest, premiums and hues paid thereon, as the case may be. Each payment shall be classified and entered in a column devoted to its kind Said cash book shall be closed on the lasl day of the month in which each stated meeting is held, and shall be an exhibit of the receipt of all moneys paid by shareholders during said month. All payments made by the association for "any purpose whatsoever, shall be by order, check or draft, signed by the president and secretary, and indorsed by the persons in whose favor the same are drawn. The name of the payee, the amount paid, and the purpose, objector thing for which the payment is made, together with its date, shall be entered on the margin of said order, check or draft. The treasurer shall dispose of and secure the safe keening of all moneys, security and property of the corporation, in the manner designated by the by- laws. 730 APPENDIX IV. Sec. 148 (as amended acts 1897, p. 363). — The profits and losses may be dis- tributed 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, in proportion to their value at that time, and shall be computed upon the basis of a single share, fully paid to the date of distribution. Losses shall be apportioned immediately after their occurrence. As each periodical distribution of profits, the directors shall re- serve as a guaranty fund a sum not less than one nor more than ten per cent, of the net profits accruing since the next preceding adjustment, until such fund amounts to five percent, of the dues capital, which fund shall thereafter be maintained and held, and said fund shall be at all times available to meet losses in the business of the association from depreciation in its securities or otherwise. Sec. 149. — Any association ma}' purchase, at any sale public or private, any real estate upon which it may have a mortgage, judgment, lien or other in- cumbrance, or in which it may have an interest, and may sell, convey, lease or mortgage at pleasure, the real estate so purchased, to any person or per- sons whatsoever. All real estate so acquired shall be sold within five years fromt the acquisition of title thereto. Sec 150. — Minors may hold shares by trustees, and the shares of each share- holder, not exceeding two, shall be exempt from attachment and execution. Sec. 151 (as amended acts 1897, p. 363). — The bank examiner shall perform, in reference to all loan and building associations, the same duties and shall have the same powers as are required by him or given to him in reference to savings banks ; and shall, annually, by the fourth day of December, make or report to the governor and council of the general conduct and condition of each of the associations visited by him, noting such suggestions as he deems expe- dient and that the public interest require. The officers of such associations shall answer truly all inquiries made, and shall make all returns required by the bank examiner. Sec. 152 facts 1897, p. 363). — The secretary, treasurer and other persons holding positions of trust in loan and building associations shall give bonds to the corporation for the faithful discharge of the duties of their offices in such sums as the directors decide to be necessary for the safety of the fund and such bonds shall continue to be valid from year to year so long as they are elected and hold said offices, subject to renewal whenever ordered by the bank examiner or directors. The directors may, in lieu of said bond, insure at the expense of its association with some fidelity or guaranty company which shall be satisfactory to the examiner, for the faithful discharge of the duties of the secretary and treasurer and such other clerks as may be employed, in such sums as they may decide to be necessary for the safety of the funds in the custody of the corporation. The examiner shall annually examine the bonds given, as aforesaid, and inquire into and certify to the sufficiency thereof, and when he deems any such bond insufficient he shall order a new bond to be given within a time bv him specified. SEC. [53 acN [897, p. 3031. Directors shall cause all real estate of an insur- able character held bv them absolutely or in mortgage, to be fully insured againsl loss by fire or lighting and the expense of such insurance in case of mortgage shall be added to the amount of the mortgage debt, to be refunded in case of payment or redemption. PUP- LIC LAWS, 1803— C11 VPTER -74, p. 274. Si i TION [.—Every loan and building association doing business in this state shall iemi-annually on the last Saturday oi April and ( >ctober, make a return d and sworn to bv its secretary oi its monthly capital dues paid in by its ■ han holders during the six months preceding each oi said days, exclusive of withdrawal , fines, interest and premiums. Said return shall be made to the oi tate on 01 before the second Mondays of May and November, and tor wilfully making a false return, the secretary forfeits not less than live more than five thousand dollars. The treasurer of such associa- tion hall pay to the treasurer of state a tax on accounl of such dues, of one- ie per cent, a year on the amount so returned. One-half oi aid tax shall be assessed on the amount so returned month ending on the las! Saturday in April and tin- other half on O returned for the six months ending on the last Saturday in ind uch ta hill be paid semi-annually, within ten days after the Jm 1 Mondaj in June and I >e< ember. GENEItAL LEGISLATION. 731 Sec. 3. — All capital dues of such associations are exempt from municipal taxation to the association or to the shareholder, but real estate owned by the association, not held as collateral security, maybe taxed by the town in which in which the same is located. Public Laws, [891— Chapter 123, p 135. The office of secretary and treasurer of loan and building associations may be held by one and the same person, provided any association so provides by its by-laws. TRUST ANO BANKING COMPANIES. Public Laws, 1893— Chapter 293, p, 349. Section, i. — Chapter six of the revised statutes is hereby amended by adding the following: Every corporation organized under the laws of this state for the purpose of doing a loan, trust or banking business and having a capital divided into shares shall be subject to municipal taxation, the same as shares in national banks. The provisions of this act shall not apply to building and loan associations. FOREIGN CORPORATION. Public Laws, 1891. — Chapter 79, Section, i. — Except as is herein after provided no person, association or cor- poration shall carry on the business of accumulating the savings of its members and loaning to them such accumulations in the manner ol loan and building associations within this state, unless incorporated under the laws thereof for such purpose. Sec 2. — The bank examiner may authorize any such association or corpora- tion duly established under the laws of another state to carry on such busi- ness in this state, but said association or corporation shall not transact such business in this state unless it shall first deposit with the state treasurer, the sum of twenty-five thousand dollars and thereafter a sum equal to fifteen per- cent, of the deposits made in such association or corporation by citizens of the state, the amount of percentage of deposits so required to be determined from time to time by the bank examiner ; or in lieu thereof the whole or any part of said sum may consist of any of the securities in which savings banks may invest, as regulated in section one hundred of charter forty-seven, revised statutes, and acts amendatory thereof, at their par value, and the said deposits shall be held in trust by said treasurer for the protection and indemnity of the residents of the state with whom such associations or corporations respec- tively have done or may transact business. Said moneys or property shall be paid out or disposed of only on the order of some" court of competent jurisdiction, made on due notice to the attorney-general of the state, and upon such notice to the creditors and shareholders of such association or corporation the court as shall prescribe. For the purpose of ascertain- ing the business and financial condition of any such association or corpo- ration doing or desiring to do such business, said bank examiner may make examinations of such associations or corporations, at such times and at such places as said bank examiner may desire, the expense of such examinations being paid by the association or corporation examined, and may also require returns to be made in such form and at such times as he may elect. When- ever, upon examination or ortherwise, it is the opinion of the bank examiner that any such association or corporation is transacting business in such man- ner as to be hazardous to the public, or its condition is such as to render further proceedings by it hazardous to the public, said bank examiner shall revoke or suspend the authority given to said association or corporation ; but this section shall not prevent such association, corporation or institution incorporated under laws of another state, from loaning money upon mortgages of real estate located within the state. Sec. 3. — Every such person, association or corporation transacting business in the state at the time of the passage of this act, shall, within sixty days alter such passage, conform to the requirements of this act. Sec. 4. — Whoever violates any provision of the preceding sections, shall be punished by a fine not exceeding one thousand dollars; and any provision thereof may on petition, be enforced by injunction issued by a justice of the supreme judicial court or the superior court. 732 APPENDIX IV. MARYLAND. 2. PUBLIC GENERAL LAWS OF 1888, p. 289. Article 23. Section 14. — Corporations may be formed in this state, under the provisions hereinafter set forth, by any five or more persons, citizens of the United States, and a majority of them citizens of this state, or if unnaturalized, residents of this state, making oath that they bona fide intend to become citizens of the United States without unreasonable delay, who may desire to form a body corporate or politic, for any of the following purposes : * * * For the formation of homestead or building associations, or associations for the loan of money on real or personal property. * * * Provided, that the property owned or acquired by such corporation is located in this state ; Sec. 95. — Any homestead or building association, formed under the provi- sions 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 ; and to regulate the instalments to be paid on each share — pro- vided, the same shall not exceed the sum of one dollar per share per week — and the times at which the same shall be payable. Sec. 96. — Any such corporation shall have power to enforce the payment of all instalments and other dues due to the corporation 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. Sec. 97. — Any person applying for membership, or for stock in any such corporation, after the end of one month from the time of the 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 corporation, in order to place such new member or stockholder on a foot- ing with the original members and others holding stock at the time of such application. SEC. 98 (as amended act 1894, P- 449)- — Such corporation, at any time in ad- vance of the period of time at which it may cease to exist, according to the plan contained in the original article of association, may advance to any mem- ber thereof , for such premium as may be agreed upon, the sum which he would be entitled to receive upon the dissolution of the corporation, or its maturity of the series to which he belongs, when said corporation had more than one scries of stock, for any number of shares therein held, or may pur- chase from any member thereof the share or shares of stock held by him, at such price or sum as, according to the article of association, such member may agree to receive, or instead of receiving the whole amount of said premium from the amount of said advance, the borrower may pay the same in weekly, monthly, or such other instalments as may be agreed upon ; 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 corporation of the unpaid instalments and unpaid premiums, to be paid on the share or shares of stock so sold or redeemed, together with in- terest at the rate of six per cent, per annum on the sum so paid or advanced, at such lime and subject to such lines and penalties for the non-payment thereoi 01 may be prescribed in the articles of the association or in the by- law, and siii h 1 01 | oration shall have power to issue full paid-up shares of stork to the members upon such terms as may be set forth in its by-laws. si 1 . 99 (as amended, act 1804, p. 449). — The payments of the unpaid instal- ments and the premiums on the share or shares SO purchased Or redeemed, with interest on the money paid therefor as aforesaid, and all tines and penal- it red in respect thereof by any member, shall be secured to such C( >r- poration by mortgage on real 01 lea ehold property, or by the hypothecation of stock of such corporation heldby such member, as may be provided in irticles ol association or by-law !; bul in ease of hypothecation of stock, no greatei utn ol money shall at any lime be drawn out by any member than hall have been already paid in by him on all his shares at the time ]'h hypothecation; ami any such mortgage and the mortgage debt lereby, and the shares ol lock oi any such corporation, and of all iii the loan ol money on mortgage of real or leasehold prop- erty, are dei tared to be exempt from taxation, to the extent of the investments GENERAL LEGISLATION. 733 of such corporation in such mortgages, the property so mortgaged to the cor- poration being taxed in the hands of the individual member or mortgagor. SEC. 100.— On the trial of any action or other proceeding at law or in equity, in which the property or interest of any such corporation mav 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. Sec. tot. — Any association of persons which may have been organized or established at any time prior to the adoption of this article, on being made a body corporate, under the provisions ol 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 | poses of such association, and all mortgages, bonds or other instruments, made to such association of persons, or to any person or persons to or i or the use of such association of persons, or any member thereof as such, shall re- main and continue in full force and virtue at law and in equity, in like man- ner as if such incorporated association of persons had originally been a body corporate. Sec. 102. — Any trustee or trustees, person or persons, to whom any such conveyances shall have been made, to and for the use of such incorporated as- sociation, may be required to assign and transfer the same to such corpora- tion, and such conveyances shall be as good and sufficient as if made to such corporation ; and all the liabilities and obligations of, by and between the members of such incorporated association of persons, shall remain of as bind- ing force or effect as if such association had been incorporated from the first. Sec. 103. — The provisions of the eight foregoing sections shall be taken and held to apply to corporations which have been or may hereafter be formed in this state, under the provisions of this article, for the purpose of loaning money on real or personal property or for buying, selling, leasing or otherwise deal- ing in land, and such corporations may by their by-laws provide for the pay- ment of all or any part of their stock in advance, and shall have the power to enforce the payment of all dues, legal interest or premium due to such cor- poration from its members, stockholders or borrowers, by such fines and for- feitures as the directors may from time to time provide in its by-laws ; and it shall and may be lawful for any of the corporations mentioned in this section, at any time, either before or after the shares of its stocks shall have been fully paid up, to redeem or purchase the same at such sum or price as such mem- ber may agree to receive therefor, or to loan to such member the par value of its shares as fixed by its certificate of incorporation for any number of shares then held by such member, for any number of years and upon such premium or bonus as may be agreed upon between the corporation and member or borrower, and either to deduct such premium or bonus in advance or to make the same payable with and as a part of the weekly dues in each and every week during the period of such loan, and in the payment of such sum of money by such corporation, then to receive from such member a transfer of all his or her interest in such share or shares of its stock, and also security by way of mortgage on real or personal property, or by hypothecation of unre- deemed shares of its stock so sold by such member ; and said mortgage or hypothecation shall be conditioned for the repayment by such member or borrower to said corporation of the money loaned or advanced to him in weekly instalments, including dues, legal interest in the money so advanced or loaned, the weekly premium agreed upon for each share, and also all fines, assessments and penalties incurred according to the by-laws in respect there- of ; and all shares of stock so redeemed, advanced or loaned or purchased by such corporation, shall be considered as redeemed shares, and shall be can- celled; and it shall be lawful for such corporation to issue an equal number of new shares in their stead, so that the number of unredeemed shares may always equal and never exceed the number of shares fixed by the certificate of incorporation of such corporations ; and the member or members of such corporations, so redeeming their said share or shares of stock, shall cease to be stockholders, and shall not be entitled to vote at any meeting of such cor- porations, held for the purpose of electing directors or for any other purpose, and shall not be eligible for any of the offices of the corporation. Sec 104A (acts 1898, p. ggi).— And that no corporation incorporated under the laws of this state for any business whatsoever, nor any foreign corporation doing business in this state, shall offer to procure or act as agent for any per- son or persons in procuring or making any loan of money or other valuable thing on the security of any chattels, nor shall make any loan of money or of 784 APPENDIX IV. any other valuable thing on the security of any chattels or otherwise, except in its own proper corporate name and for its own behalf or benefit ; and no such corporation making any such loan, as aforesaid, shall be entitled to charge any borrower of money from it, or shall take from any borrower from it, or other person, any other thingfor or in the name of premium, or of com- pensation for renewing or continuing any such loan, as it may be authorized to lawfully make, other than lawful interest at the rate of six per centum per annum, for the term during which such loan shall be renewed or continued ; and every security taken by any such corporation for any such loan as afore- said, shall express plainly the period of time for which such loan is made, and the entire interest agreed to be paid for said loan for the term of each loan, which entire interest shall in no case nor by any means, be made to exceed the rate of six per centum per annum on the money or other thing loaned for the term of such loan ; and any contract or security for any such loan, or providing for the renewal or continuance of any such loan, made in violation of this section, shall be absolutely null and void. And no person or persons in this state shall assume to deal or act as a corporation, or in any corporate name, or in any other than in hits, her or their own proper name or names, in any of the matters or things prohibited by this section, under a penalty of not less than fifty dollars for every offence, to be recovered by indictment in any court having criminal jurisdiction in the city or county where any such offence may have been committed, and every security taken by any such per- son or persons in any such name of a corporation, or in any other than his, her or their own proper name or names, shall be absolutely null and void ; Provided, this act shall not apply to homestead and building and loan asso- ciations under the laws of this state. MASSACHUSETTS. (P. S., CHAPTER 117, SECTIONS 1, 2, 3, 4.) [As amended by Acts of 1890, Chapter 243, and Acts of 1883, Chapter 98 ] Sf.ction r. — Twenty-five or more persons who associate themselves together by an agreement in writing with the intention of forming a corporation for the purpose of accumulating the savings of its members paid into such corpo- ration in fixed periodical instalments and loaning to its members the funds so accumulated shall, by and with the consent of the board of commissioners of savings banks, become a corporation upon complying with the provisions of the three following sections: SEC. 2. — The agreement shall set forth the fact that the subscribers thereto associated themselves with the intention of forming a corporation ; the name by which the corporation shall be known ; the purpose for which it is formed ; the town or city, which shall be within this commonwealth, in which it is located ; and the limit of capital to be accumulated. Sr.c. 3. — The name shall be one not previously in use by any existing corpo- ration established under the laws of this commonwealth, and shall be changed only by act of the general court. The words " co-operative bank " shall form a part of the name. SEC. 4 — The provisions of sections eighteen, twenty, and twenty-one of chapter one hundred and six shall apply to such corporations, except that, in the certificate signed by the secretary of the commonwealth, the limit of cap- ital to be accumulated, as fixed in the agreement of association, shall be inserted in-lead of the amount of the capital, that the certificate required by -aid section twenty-one to be filed and recorded may be signed and sworn to by the pre- • iding .ind financial officers, and a majority at' least of the officers possessing 11m- po U crs of directors bv whatever name they may be called, and that the fee 1 to be paid for filing and recording tin- certificates required by said section twenty-one, including the issuing of the certificate of organization, shall be live dollars. (P. S., CHAPTER 117, SECTION 5.) Si-.i TION .s\ — The capital to be accumulated shall not exceed one million dol- 1 i' and hall be divided into shares of the ultimate value of (wo hundred dollars each. 'l"ln- han may be issued in quarterly, half-yearly, or yearly series, in inli amounts and at such times the members may determine. No person lull hold more thai twenty-five shares in the capital of any one such corpo- ration. No share Ol .1 prior series shall be issued after the issue of a new scries. (ACTS OF [887, CHAPTER 216, SECTION 1.) The limitation of capital to be accumulated in any co-operative bank now GENERAL LEGISLATION. 735 organized or hereafter formed under the provisions of chapter one hundred and seventeen of the public statutes shall be held to apply to capital actually paid in, and no such bank shall be restrained from issuing shares so long .is the capital actually paid ih on shares is not in excess of one million dol (P.S., CHAPTER 117, SECTION 6.) Section 6. — The number, title, duties and o >mpensation of the officers of the corporation, their terms oi office, the time of their election, as well as the qual- ifications of electors, and time ol each periodical meeting of the officers and members, shall bedetermined by the by-laws, but no member shall be entitled to more than one vote at any election. All officers shall continue in office until their successors are duly elected, and no corporation shall expire from neglect on its part to elect officers at the time prescribed by the by-laws. (ACTS OF 1885, CHAPTER 1:1, SECTION 1.) In any co-operative bank now or thereafter formed under the provisions of chapter one hundred and seventeen of the public statutes, the offices of sec- retary and treasurer may be held by one and the same person. (P. S., CHAPTER 117, SECTION 7.) Section 7. — The officers shall hold stated monthly meetings. At or before these meetings every member shall pay to the corporation, as a contribution to its capital, one dollar as due upon each share held by him until the share reaches the ultimate value of two hundred dollars, <>r is withdrawn, cancelled, or forfeited. Payment of dues on each series shall commence from its issue. (ACTS OF 1887, CHAPTER 216, SECTIONS 2, 3. 1 Section 2. — A member may withdraw his unpledged shares at any time by giving thirty days' notice of his intention so to do, written in a book- held and provided by the corporation for that purpose. Upon such withdrawal the shareholder's account shall be settled as follows: — From the amount then standing to the credit of the shares to be withdrawn there shall be deducted all hues, a proportionate part of any unadjusted loss, together with such pro- portion of the profits previously credited to the shares as the by-laws may provide, and such shareho'ders shall be paid the balance ; Provided, that at no time shall more than one-half of the funds in the treasury be applicable to the demands of withdrawing members without the consent of the directors. The directors may, at their discretion, under rules made by them, retire the un- pledged shares of any series at any time alter tour years from the date of their issue, by enforcing the withdrawal of the same ; but whenever there shall re- main in any series, at the expiration of five years after the date of its issue, an excess above one hundred unpledged shares, then it shall be the duty of the directors to retire annually twenty-five per centum of such excess existing at said expiration of five years after the date of its issue, so that not more than 1 me hundred unpledged shares shall remain in such series at the expiration of nine years from the date of its issue, and thereafter the directors may in their dis- cretion retire such other unpledged shares as they consider the best interests of the bank to require : Provided, that whenever under the provisions of this section the withdrawal of shares is to be enforced the shares to be retired shall be determined by lot, and the holders thereof shall be paid the full value of their shares, less all fines and a proportionate part of any unadjusted loss ; provided also, that shares pledged for share loans shall be treated as unpledged shares. Sec 3. — Shares may be issued in the name of a minor, and if so issued may, at the discretion of the directors, be withdrawn, in manner as provided in section two of this act [chap. 216, acts of 1887], by such minor, the parent or guardian of such minor, and in either case payments made on such withdrawals of shares shall be valid. When a share or snares are held by any one in trust for another, the name and residence of the person for whom such share or shares are held shall be disclosed : and the account shall be kept in the name of such holder as trustee for such person ; and, if no other notice of the exist- ance and terms of such trust has been given in writing to the corporation, in the event of the death of the trustee, such shares may be withdrawn by the person for whom such deposit was made or by his legal representatives. (P. S., CHAPTER 117, SECTION 9.) [As amended by Acts of 1887, Chapter 216, Section 5. and Acts of 1882, Chapter 251.] Section 9 — When each unpledged share of ayiven series reaches the value 736 APPENDIX IV. of two hundred dollars, all payments of dues thereon shall cease, and the holder thereof shall be paid out of the funds of the corporation two hundred dollars thereof, with interest at the rate of six per cent, a year from the time of such maturity to the time of payment : Provided, 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 ; proviaea further, that when any series of shares, either pledged or unpledged, reaches maturity between the dates of adjustment of profits, or whenever shares are retired between such dates, the holders of such shares shall in addition to the value thereof, be entitled to interest at the rate of six per cent, per annum for all full months from the date of the preceding adjustment, and that before paying matured shares all arrears and fines shall be deducted. (P. S., CHAPTER 117, SECTION 10.) [As amended by Acts of 1890, Chapter 78, and Acts of 1896, Chapter 277.] Section 7 10. — The moneys accumulated, after due allowance for all necessary expenses and the cancellation of shares, shall at each stated monthly meeting be offered to the members according to the premiums bid by them for priority of right to a loan. Each member whose bid is accepted shall be entitled upon giving proper security to receive a loan of two hundred dollars for each un- pledged share held by him, or such fractional part of two hundred dollars as the by-laws may allow. If any money so offered for sale remains unsold, the directors may invest the same in any of the securities named in the second clause of section twenty-one of chapter three hundred and seventeen of the acts of the year eighteen hundred and ninety-four, or may loan the same upon first mortgages of real estate situated in this commonwealth, upon the condi- tions imposed upon co-operative banks, or may loan the same upon the shares of the bank in sums not exceeding their value at the adjustment next preced- ing the time of the loan, provided that the loans in either case shall be at the highest rate at the next preceding monthly sale of moneys, and further provided that in either case a note shall be given as required by section thirteen of chapter one hundred and seventeen of the public statutes. (P. S., CHAPTER 117, SECTION n.) Section ir. — Premiums for loans shall consist of a percentage charged on the amount lent in addition to interest, and shall be deemed to be a considera- tion paid by the borrower for the present use and possession of the future or ultimate value of his shares, and shall, together with interest and fines, be received by the corporation as a profit on the capital invested in the loan, and shall be distributed to the various shares and series of said capital as herein- after provided. (P. S., CHAPTER 117, SECTION 12.) Section' 12. — A borrowing member, for each share borrowed upon, shall, in addition to his dues and monthly premium, pay monthly interest on his loan at the rate of six per cent, per annum until his shares reach the ultimate value of two hundred dollars each, or the loan has been repaid; and when said ultimate value is reached, said shares and loan shall be declared cancelled and satisfied, and the balance, if any, due upon the shares shall be paid to the member. (ACTS OF 1882, CHAPTER 251, SECTION 2.) Any corporation organized under said chapter one hundred and seventeen may provide in its by laws thai the hid for loans at its staled monthly meeting shall, instead of a premium, be a rate 1 if annual interest upon the sum desired, Me in monthly instalments. Such bids shall include the whole interest to be paid, and may be at any rate not less than five per centum per annum. (P. S., CHAPTER 117, SECTION 13.) 14, Chapter 342.] Si ' no\- [3, — For every loan made a note shall be given, accompanied by a fer and pledge oi thi han the borrower, ana secured by a mortgage of real < ta I in thi commonwealth, unencumbered by any mortgage or lien other than uch as maybe held by the bank making the loan. The hall be held by the corporation as collateral security for GENERAL LEGISLATION. 737 the performance of the conditions of said note and mortgage. Said note and mortgage shall recite the number of shares pledged and the amount of money advanced thereon, and shall be conditioned for the payment at the stated meetings of the corporation of the monthly dues on said shares, and the interest and premium upon the loan, together with all fines on payments in arrears, until said shares reach the ultimate value of two hundred dollars each, or said loan is otherwise cancelled and discharged ; Proiidc .', that the shares without other security may in the discretion of the directors be pledged as security for loans, to an amount not exceeding their value as adjusted at the last adjustment and valuation of shares before the time of the loan. If the borrower neglects to offer security satisfactory to the directors within the time prescribed by the by-laws, his right to the loan shall be forfeited, and he shall be charged with one month's interest and one month's premium at the rate bid by him, together with all expenses, if any, incurred ; and the money appropriated for such loan maybe re-loaned at" the next or any sub- sequent meeting. (P. S., CHAPTER 117, SECTION 14.) Section 14. — A borrower may repay a loan at any time, upon application to the corporation, whereupon, on settlement of his account, he shall be charged with the full amount of the original loan, together with all monthly instalments of interest, premium and fines in arrears, and shall be given credit for the withdrawing value of his shares pledged and transferred as security ; and the balance shall be received by the corporation in full satisfaction and discharge of said loan : Provided, that all settlements made at periods in- tervening between stated meetings of the directors shall be made as of the date of the stated meetings next succeeding such settlement ; and provided, that a borrower desiring to retain his shares and membership may at his option repay his loan without claiming credit for said shares, whereupon said shares shall be re-transferred to him, and shall be free from any claim by reason of said cancelled loan. (ACTS OF 1887, CHAPTER 216, SECTION 4.) Partial payment of loans on real estate made by any co-operative bank may be received in sums of fity dollars or any multiple thereof ; and for each two hundred dollars so repaid one share of stock shall be released from pledge. (ACTS OF 1894, CHAPTER 342, SECTION 2.) When a member of a co-operative bank purchases money at a lower rate than that paid by him on an existing loan, secured by a mortgage, for the purpose by him declared of reducing the premium of rate of interest upon said loan, no new mortgage shall be required, but an agreement in writing for the reduction of said premium or rate of interest, signed by said borrowing member and the secretary of the bank, with the written appn ival 1 >\ the pres- ident, shall be valid, and shall in no respect impair or affect the existing mortgage contract; and thereafter said borrowing member shall make the monthly payments on said loan in accordance with the terms of said agree- ment, and the sum of money previously so purchased by him may be resold by the bank at the same meeting. The borrower shall be required to give notice to the secretary before the sale, if he intends to rebuy his money. Nothing in this section shall be construed to exempt the re-borrower from 1 aying the interest and premium for the current month on the loan made by him for the substitution of which the new loan is made. (P. S., CHAPTER 117, SECTIONS 15, 16.) [As amended by Acts of 1SS2, Chapter 251, Acts of 1885, Chapter 121, Section 4, and Acts of 1896, Chapter 285.J Section 15. — Members who make default in the payment of their monthly dues, interest and premiums, shall be charged a tine not exceeding two per cent, a month on each dollar 111 arrears. No tine shall be charged after the expiration of six months for the first lapse in any such payment, nor upon a fine in arrears. The shares of a member who continues in arrears more than mx months shall, at the option of the directors, if the member fails to pay the arrears within thirty days after notice, be declared forfeited, and the with- drawing value of the shares at the time of forfeiture shall be ascertained, and, after deducting all fines and other legal charges, the balance remaining shall 738 APPENDIX IV. be transferred to an account to be designated the " Forfeited Share Account," to the credit of the defaulting member. Said member, if not a borrower, shall be entitled, upon thirty days' notice, to receive the balance so transferred without interest from the time of the transfer, in the order of his turn, out of the funds appropriated to the payment of withdrawals. All shares so forfeited or transferred shall cease to participate in any profits of the corporation ac- cruing after the last adjustment and valuation of shares before said for- feiture. Sec. 16. — If a borrowing member is in arrears for dues, interest, premium or fines for more than six months, the directors may, at their discretion, de- clare the shares forfeited, after one month's notice, if the arrears continue un- paid. The account of such borrowing member shall then be debited with the arrears of interest, premium and fines to date of forfeiture, and the shares shall be credited upon the loan at their .withdrawing value. The balance of the account may, and after six months shall, be enforced against the security, and be recovered as secured debts are recovered at law. (ACTS OF 1895, CHAPTER 172, SECTION 1.) No member of a co-operative bank whose shares are withdrawn, forfeited or retired, shall be charged with fines upon such shares in excess of the profits distributed thereto, and if no profits shall have been distributed to such shares no fines shall be charged thereon. Nothing herein contained shall prevent a borrowing member being charged with fines according to existing statutes upon interest and premiums in arrears. (P. S., CHAPTER 117, SECTION 17.) Sec. 17. — The general accounts of every such corporation shall be kept by double entry. All moneys received by the corporation from each member shall be receipted for by the persons designated by the directors, in a pass- book provided by the corporation for the use of, and to be held by, the 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 the 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 fines paid thereon, as the case may be. Each payment shall be classified and en- tered into a column devoted to its kind. Said cash-book shall be closed after the termination of each stated meeting, and shall be an exhibit of the receipts of all moneys paid at said meeting. All payments made by the corporation for any purpose whatsoever shall be by order, check or draft upon the treas- urer, signed by the president and secretary, and indorsed by the persons in whose favor the same are drawn. The name of the payee, the amount paid, and the purpose, object or thing for which the payment is made, together with its date, shall be entefed on the margin of said order, check or draft. The treasurer shall dispose of and secure the safe keeping of all moneys, securities, and property of the corporation, in the manner designated by the by-laws, and the treasurer and secretary shall give such security for the faithful per- loi mance of their respective duties as the by-laws may direct. (P. S., CHAPTER 117, SECTION 18.) Sec. 18. — 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 times of l distribution, in proportion to their value at that time, and shall be com- puted upon the basis of a single share fully paid to the date of distribution. hall be apportioned immediately after their occurrence. (ACTS OF [885, CHAPTER 121, SECTION 2.) Ai nodical distribution of profits the directors shall reserve as a fund 1 im not less than one nor more than five per cent of the net pro! e tlic next preceding adjustment, until such fund amounts GENERAL LEGISLATION. 739 to five per cent, of the dues capital, which fund shall thereafter be maintained and held ; and said fund shall be at all times available to meet losses in the business of the corporation for depreciation of its securities or otherwise. (P. S., CHAPTER 117, SECTION 19.) Sec. 19. — Any such corporation may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien or other incumbrance, or in which it may have an interest ; and may sell, convey, lease or mortgage, at pleasure, the real estate so purchased to any person or persons whatsoever. All real estate so acquired shall be sold within five years from the acquisition of the title thereto. (P. S., CHAPTER 117, SECTION 20.) Sec. 20. — The commissioners of savings banks shall perform, in reference to every such corporation, the same duties, and shall have the same powers, as are required of or given to them in reference to savings banks, and shall annually make report to the general court of such facts and statements re- specting such associations, and in such forms as they deem that the public interest requires. Every officer of such corporation shall answer truly all inquiries made, and shall make all returns required by the commissioners. (ACTS OF 1889, CHAPTER 159, SECTION 2.) (As amended by Acts of 1S95, Chapter 171.) Every co-operative bank shall annually within thirty days after the last business day of October, make a return to the commissioners of savings banks in such form as may be prescribed by them, showing accurately the condition thereof at close of business on said day, which return shall be signed and sworn to by the secretary and treasurer of such corporation. The president and five or more of the directors shall certify and make oath that the report is correct according to their best knowledge and belief. Such returns shall include all sums received and all sums disbursed up to the close of business on said day, except that sums received for dues, interest, premiums and fines on account of the next monthly meeting may be omitted. When a report is defective or appears to be erroneous, the board shall notify the bank to amend the same within fifteen days. Every co-operative bank neglecting to make the return required by this act on or before the time named therein, or to amend such report within fifteen days, when notified by the board so to do, shall forfeit five dollars for each day's neglect. [ACTS OF 1896, CHAP. 361.] Section i. — Whenever, under the provisions of section fourteen of chapter three hundred and seventeen of the acts of the year eighteen hundred and ninety-four, it becomes necessary for the treasurer or other officer or employee of a savings bank or institution for savings to give bond for the faithful dis- charge of "his duties, he may give a bond in which any company organized under the laws of this state, or chartered by any other state or government to transact fidelity insurance or corporate suretyship, and authorized to do business in this commonwealth, may be surety, or may be jointly and severally bound with such treasurer or other officer or employee. Such bond shall be to the satisfaction of the trustees and in a form to be approved by the com- missioners of savings banks, and an attested copy thereof, with a certificate of the custodian that the original is in his possession, shall be filed with the com- missioners of savings banks. Sec. 2. — The provisions of section one shall also apply to bonds of secreta- ries and treasurers of co-operative banks, given under the provisions of sec- tion seventeen of chapter one hundred and seventeen of the public statutes. [ACTS OF 1897, CHAP. 161.] No co-operative bank, nor any person acting in its behalf, shall take or receive a fee, brokerage, commission, gift or other consideration for or on ac- count of a loan made by or on behalf of such corporation, other than appears on the face of the note or contract by which such loan purports to be made ; but nothing herein contained shall applv to any reasonable charges for ser- vices in the examination of property and titles and preparation and recording of conveyances to such corporation as security for its loans. Whoever 740 APPENDIX IV. violates a provision of this section shall be punished by fine of not less than one hundred nor more than one thousand dollars. [ACTS OF 1890, CHAP. 310.] Sectiox 1. — Except as is hereinafter provided, no person, association or corporation shall carry on the business of accumulating the savings of its members and loaning to them such accumulations in the manner of a co- operative bank within this commonwealth, unless incorporated under the laws thereof for such purpose. Sec. 2. — The board of commissioners of savings banks may authorize any such association or corporation duly established under the laws of another state to carry on such business in the commonwealth, but said association or corporation shall not transact such business in this commonwealth unless it shall first deposit with the treasurer of the commonwealth the sum of twenty- five thousand dollars and thereafter a sum equal to fifteen per cent, of the deposits made in such association or corporation by citizens of the common- wealth, the amount of percentage of deposits so required to be determined from time to time by said board of commissioners of savings banks ; or in lieu thereof the whole or any part of said sum may consist of any of the securities named in the first, second and third clauses of section twenty of chapter one hundred and sixteen of the public statutes* and acts amendatory thereof, at their par value, and the said deposit shall be held in trust by said treasurer for the protection and indemnity of the residents of the commonwealth with whom such associations or corporations respectively have done or may trans- act business. Said moneys or property shall be paid out or disposed of only on the order of some court of competent jurisdiction made on due notice to the attorney-general of the commonwealth, and upon such notice to the cred- itors and shareholders of such association or corporation as the court shall prescribe. For the purpose of ascertaining the business and financial condi- tion of any such association or corporation doing or desiring to do such busi ness, said board may make examinations of such associations or corporations at such times and at such places as said board may desire, the expense of such examinations being paid by the association or corporation examined, and may also require returns to be made to them in such form and at such times as they may elect. Whenever, upon examination or otherwise, it is the opinion of said board that any such association or corporation is transacting business in such manner as to be hazardous to the public, or its condition is such as to render further proceedings by it hazardous to the public, said board shall revoke or suspend the authority given to said association or corporation, but this section shall not prevent such a bank or institution, incorporated under the laws of another state, from loaning money upon mortgages of real estate located within the commonwealth. + Si 1 . 3. — Every such person, association or corporation transacting business in the commonwealth at the time of the passage of this act shall, within sixty days after such passage, conform to the requirements of this act. SEC. 4. — Whoever violates any provision of the preceding sections shall be punished by a fine not exceeding one thousand dollars ; and any provision thereof may on petition be enf< >rced In- injunction issued by a justice of the me judicial court or of the superior court. SEC. 5.— This act shall take effect upon its passage. Approved May,2i, 1890. [ACTS OF 1891, CHAP. 403.] When< ver, upon examination or otherwise, it is the opinion of the board of avings banks that any association or corporation established under tin- laws of another state, for the purpose of carrying on the business of accumula of its members and loaning to them such accumula- tions in the mannei of a co-operative bank, and authorized to do business in this commonwealth, is transacting such bu in< ma manner hazardous to il condition is such as to rendei further proceedings byil hazard- lie, said board shall revoke or suspend the authority given to lation "i corporation 11 it has been authorized in do business in the eaith a aforesaid, and if not authorized said board shall notify it thi transaction ol uch busine ; and in either case such association 01 corporation shall thereaftei have no authority to transact such business ■ . t i < 1 and third clauses of section 21, chapter 317, acts 1 , 1 GENERAL LEGISLATION. 741 within the commonwealth. But nothing herein contained shall prevent such association or corporation from loaning money upon mortgages of real estate located within the commonwealth. [Approved June II, 1891.] [ACTS OF 1896, CHAP. 286.] Section i. — Section two of chapter three hundred and ten of the acts of the year eighteen hundred and ninety is hereby repealed ; Provided, however, that any association or corporation which at the passage of this act is duly licensed by the board of commissioners of savings hanks to transact business in this commonwealth, under the provisions of said section, may be allowed to con- tinue business, subject to all the conditions and restrictions of such license and the provisions of said chapter three hundred and ten as existing previous to the passage of this act. Sec. 2. — This act shall take effect upon its passage. [Approved April 14, 1896. MICHIGAN. HOWELL'S ANNOTATED STATUTES OF 1S82. Section 3252. — Any ten or more persons may associate and form a society, under the provisions of this act, for the purpose of receiving, loaning and in- vesting money ; but it shall not be lawful for such society to discount, buy, or sell commercial paper or exchange, to issue any letters of credit, nor to do any business pertaining to banking, except as in the receiving, loaning and invest- ing of money as herein provided. Sec. 3253. — The capital of such society shall consist of the amounts remain- ing therein, of the sums paid in on the shares which may be issued from time to time to the members thereof, and such shares may be of one or more denom- inations, but of amounts not less than twenty-five nor more than one hun- dred dollars each, and may either be paid up at once, or by periodical instal- ments, or by voluntary subscriptions. Sec. 3254. — Such society may receive loans or deposits of money from its members, or from other persons, partnerships or corporations, at interest n it exceding seven per centum per annum, or without interest, and for such lime certain, as may be agreed upon, and may issue its bonds, certificates or other evidences of indebtedness therefor ; Provided, that such society shall not re- ceive any such loans or deposits until such society shall have actually invested fifty thousand dollars of its paid-in permanent stock capital in real estate securities, as provided in sections eight and nine [3259 and 3260] of this act. Sec. 3255. — The total amount of loans or deposits received and not repaid by such society, under the provisions of the last preceding section, shall not at any time exceed two-thirds of the amount for the time being secured to such society by bonds and mortgages or notes and mortgages on real estate, as pro- vided in sections eight and nine [3259 and 3260] of this act ; it being the true intent of this section that at least one-third of the amount invested in the securities as aforesaid shall consist of the capital paid in by the members of such society ; and it is hereby declared that, in case of the insolvency or wind- ing up of such society, the parties making such loans or deposits shall be pre- ferred creditors of such society ; Provided, that if such society shall receive loans and deposits in excess of the limits prescribed in its articles of associa- tion, the directors and officers of such society receiving such loans or deposits on its behalf, shall be personally liable for the amount so received in excess, And provided further, that no part of the capital of such society shall be at any time withdrawn from or repaid by such society so as to affect or impair the amount of the capital required by this section to be invested in real estate securities, as a protection and guarantee for such loans or deposits. Sec. 3256. — It shall be the duty of every society formed under this act, to ex- hibit in some conspicuous place in its principal office, not later than two o'clock p. m., on the first business day of everv month, and to continue the same in such place until the next exhibit shall be made, a statement showing correctly and distinctly the amount outstanding on the bonds and mortgages or notes and mortgages held by such society, and the amount owing for loans and de- posits made to or with such society, and what proportions such outstanding amount bears to such liabilities ; such statement to be made up to the close of the next preceding month, and to be signed by the president and manager, and to be attested by the auditors of such society, and if any of such officers as aforesaid, shall wilfully make or knowingly consent to any false statement 48 742 APPENDIX IV. in such exhibit, he shall by so doing be deemed to have committed a misde- meanor, and shall, upon conviction thereof, be punished as provided in section twenty [3271] of this act. Sec' 3257. — The amount of stock of such society to be held at any time by any person, or by persons jointly, or by partnerships and corporations, shall not exceed the sum of five thousand dollars. Sec. 3258. — The liability of any member of such society shall be limited to douole the amount actually paid" in and remaining with such society, together with the amount of any periodical instalments that may be due and unpaid on any share or shares issued to him, except for labor performed for such society ; and the liability for such labor may be enforced against any member, by action founded on this act, at any time after an execution against such society for such labor shall have been returned unsatisfied, or at any time after winding up or bankruptcy proceedings shall have been commenced by or against such society ; Provided, that if any member shall be compelled by such action to pay any claim for such labor, or any part thereof, he shall have the right to call upon all the members to pay their part of the sum so paid by him as afore- said, and may sue them, jointly or severally, or any number of them, and re- cover in such action the ratable amount due from the member or members so sued. Sec. 3259. — Such society is hereby empowered to lay out and invest its capital, or other moneys intrusted or in anywise belonging to such society, in the hrst place, in paying and discharging all costs, charges and expenses in- curred in the formation and management of such society ; and the remainder of such capital or other moneys, or so much thereof as may from time to time be deemed necessary, may be advanced by way of loan to any person or per- sons, partnerships, or corporations in sums not exceeding two thousand dollars to any one borrower, as aforesaid, and upon security of bonds and mortgages or notes and mortgages, on unincumbered real estate, of at least double the value of such loans, or any part or parts of such capital, or other moneys, may be invested in the stocks or bonds of the United States, or of any of the so- called New England, middle, or northwestern states or in any bonds lawfully issued by any county, city, or school district in this state, and upon such terms and conditions as to such society shall seem satisfactory and expedient. Sec. 3260. — Every borrower from such society of a loan, secured by bond and mortgage or note and mortgage on real estate, in accordance with section eight [3259] of this act, shall have the right to repay such loan, together with interest, by certain periodical instalments, hereinafter called loan repayments, extending over such period nor less than one nor more than ten years as shall be stated in such bond and mortgage or note and mortgage ; Provided, that such interest shall not exceed ten per centum per annum, and shall be cal- culated on the amount or balance of principal from time to time owing ; Pro- vided also, that no such borrower shall be charged with or pay any commis- sion in the way of premium or discount on the amount of loan so made to him on security as aforesaid. Sec. 3201. — In case any borrower of a loan from such society shall desire to redeem hi- property before the expiration of the time limited or mentioned in his bond and mortgage or note and mortgage, for the repayment of such loan, he shall be allowed to do so, at such tune or at the end of such notice as shall 1 in <;r required by such society's by-laws, upon paymenl of any loan, repayments, or other sums of money due and unpaid, together with the amount of the present value of all loan repayments accruing or to become payable, .1 ding i" the terms of such bond and mortgage or note and mortgage, such - lue to !••• found by discounting such 1< an repayments lor the pei iod at which each would be< Ome due, at the same rate of interest as is promised paid for such loan, and nothing in this act shall authorize ■ 1 paymenl in such case of any other money by way of redemption fee or otherwise of such property. 1202. — In ea e any borrower oi a 1< tn from such society shall make It in the payment of any loan repayments or ol any other moneys pay- int to the terms and requirements of his bond and mortgage or note ■ ,i in the performance 01 observance oi any duty or conditions mtained in Mich bond and mortgage or note and mortgage, wnereb; the principal and othei sums ol money secured by such bond and mortgage or note and mi thereu] to become immediately due and ! noi urns to be paid, on a sale or foreclosure, in settlement or di 'hi' h bond and mortgage or note and mortgage, shall be the and un aid loan repayments or other moneys, and the am no 1 attorney fees and ' are secured by such bond and mort- GENERAL LEGISLATION. 74:'. gage or note and mortgage, together with the amount of the present value of all the loan repayments remaining unpaid after the payment of past due loan repayments as above, such present value to be found according to the rule set forth in the last preceding section. Sec. 3203.— When all moneys intended to be secured by any bond and mort- gage, or note and mortgage, given to any society formed under this act have been fully paid or discharged, such society shall indorse upon such mortgage a receipt under the corporate seal of such society, signed by its president and manager in the presence of two witnesses, and to be acknowledged by said president and manager before a notary public, and such receipt shall discharge such mortgage without any reconveyance or resurrender whatever, and such receipt shall be in the following form : The society limited, hereby acknowledge to have received all moneys intended to be secured by the within written mortgage, given by to for the sum of .dated and recorded in the office of the register of deeds in and for the county of , in liber , on page of mortgages. In witness whereof the "corporate seal of such society is hereto affixed this day of , in the year , by order of the board of directors, duly made and recorded. [L. S.] , P rcsulciit, Manager. Sec 3264. — The persons proposing to form a society under the provisions of this act shall make written articles of association, which shall be signed and acknowledged before a notary public, and which shall state, 1. The name by which such society shall be known ; Provided, that the word limited shah be the last word in such name ; 2. The place in this state where its principal office is to be located ; 3. The purpose for which such society is formed ; 4. Whether its capital is fixed, and, if so, at what amount, or whether it is to be of an amount varying from time to time ; 5. The amount [amounts] of its several shares, and how designated, one class of which shall be known as permanent stock ; 6. How such several shares may be paid ; 7. What amount of capital, if any, will be actually paid in before commenc- ing business ; 8. The maximum extent, not exceeding the limits prescribed by section four [3255] of this act, to which such society is to receive money on loan or deposit ; 9. The time such society shall exist, not exceeding thirty years ; and 10. The names, in full, of the persons associating, their respective residences, and the number and class of shares subscribed for by each of them. Sec. 3265. — The articles of association required by the last preceding section shall be tiled and recorded in the office of the secretary of state of this state ; and two copies of such original articles shall be made, which the said secre- tary of state shall certify, over his official signature and the seal of this state, as being correct copies of such original articles so filed and recorded ; one of said copies shall be filed and recorded in the office of the clerk of the county in which the principal office of such society shall be located, and the said clerk shall certify, over his official signature and the seal of the circuit court of said county, that such certified copy of said original articles has been filed and re- corded in his office ; and the other copy of such [said] original articles shall be held by the society named therein ; and the said articles or copies thereof, duly and certified by either of the aforesaid officers may be used as evidence in all courts and places of the incorporation of, as well as for or against such society ; and the said secretary of state and the said county clerk shall each be paid such filing, recording and certifying at the rate of ten cents for each one hun- dred words contained in such articles. Sec. 3266. — After such articles shall have been filed and recorded as above required, the persons signing the same and such other persons, partnerships and corporations who shall from time to time be possessed of any share or shares in the capital stock of such society, and their several successors, and assigns, shall be deemed a body corporate and politic by the name mentioned in such articles , but such name shall not be identical with that of any other society already formed under this act, or so nearly resembling the same as to be cal- culated to deceive, unless such other society consents to the adoption and use of such name at any time within the thirty days immediately preceding the expiration of its charter. 744 APPENDIX IV. Sec. 3267. — Each society established under the provisions of this act shall have a common seal, which seal shall not be altered or imitated, and shall in all cases bear the corporate name of, together with such devise or motto as may be adopted by, such society, and such seal shall be impressed upon the original articles of association of such society and shall have power in its cor- porate name to sue and be sued, appear, prosecute and defend all actions and causes to final judgment and execution in any courts or elsewhere ; to do all acts that may be necessary for receiving or repaying the moneys paid in from time to time by its members or other persons, partnerships, or corporations, and for crediting or paying profit dividends or interests on such moneys ; for loaning or investing the moneys so received, or any part thereof, and the in- terest and profit arising therefrom upon such real estate, stocks or bonds, as are stated in section eight [3259] of this act, and for receiving and obtaining repayment thereof, and for compelling the payment of any interest or other moneys due on or in connection with any sum or sum or loaned or invested ; and for enforcing the observance and fulfilment of any conditions annexed to or connected with money so received and repayable, or so loaned and invested, or the forfeiture of any term or delay of payment consequent on the non-fulfil- ment thereof ; and to give receipts and acquittances and discharges for the same, either absolutely and wholly, or partially ; and such society may, for all and every and any of the foregoing purposes, and for every and any other purpose in this act mentioned or referred to, lay out its capital or other moneys and property for the time being, or any part thereof, with power to do, authorize, and exercise all acts and powers whatsoever in the opinion of the directors, such society requisite or expedient to be done or exercised in relation thereto. Sec. 3268. — The only real estate which shall be lawful for any society formed under this act to acquire, by purchase or otherwise, shall be such as it may be necessary to buy or take in the enforcement of its securities and the collection of any claims or debts due to it ; and all conveyances of real estate so acquired shall be taken by such society in its corporate name ; and such real estate shall be sold by such society within ten years after the same shall be vested in it by purchase or otherwise, and such society shall sell and convey such real estate free from any claim thereon by any of its members or any person claiming under them, by an instrument under its corporate seal and under the hands of its president and manager, duly authorized, and duly acknowledged ; Pro- vided, however, that such society may purchase, or hold upon lease, any land for the purpose of erecting thereon a building for its accommodation and the convenient transaction of its business, or it may purchase, build, hire or take npon lease any building, and may adapt and furnish the same for so conduct- ing its business, and if occasion requires may sell, exchange, or let such land or buildings, or any part thereof. Sec. 3269. — It shall not be lawful for such society to acquire, hold or, deal in any personal property other than as provided in this act and such as may be necessary for the transaction of its business. SEC. 3270. — The first meeting of such society may be called by a notice, signe 1 by any two of the associates who signed its articles of association, set- ting forth the time, place, and objects of such meeting, such notice to be mailed t< > the residence of each associateat least ten days prior to such meeting ; and a in ijority of such associates al such meeting shall be competent to make all such by-laws as they may deem necessary for the proper management of such si K i- ety's business, SO as such by-laws are it >t repugnant to, or inconsistent with, the provi ions-of this act or of any law of this state or of the United States ; to elect the first board of directors, which board, and all subsequent boards, shall con- sist of not less than six nor more than nine members of such society, and which board shall elect from their own number the president and vice-presi- dent of such society ; and also to elect two auditors who, as well as all their 11 i, may or may nol In- members of such society; such directors and auditors to hold their Offices until their successors shall have been elected as 1 provi Id tor in the next following section ; and to transact any other busi- foi tin- organization of such society and appropriate to such in-' ; ing , and tin- sei r< tai y 1 >i such meeting shall make full and correct minutes < .1 it pi 01 eedings upon the books or rei ords ol such society, and the same be- igned by chairman, shall be deemed and taken to be prima facie of the action ( >l SUI h meeting. Sei . $271. — Every society formed under this act shall hold an annual meet- >f its meml 1 me one of the first fourteen days in the month of Feb- di ei ■■•■ai. i" 1 the purpose of considering and determining upon any matter, nol requii ing special not ire, relating to such society's business, and for the election of directoi and auditors to serve for the ensuing year orun- GENERAL LEGISLATION. 745 til their successors are elected and qualified ; but before such election takes place the retiring directors shall present to Mich meeting a report, signed by the E resident of such society's transactions during their term of office accompanied y such information and suggestions as they may deem proper to give in re- lation to such society's affairs, and to the future management thereof ; and they shall also present to such meeting an account of all the receipts and dis- bursements of such society for the year ending on the thirty-first day of Decem- ber next previous thereto, and a general statement of such society's funds and effects, liabilities and assets, as at the closeoi the date last aforesaid; such account to state fully and clearly the amounts received "ii each class of shares issued, the amounts received on loans, the amounts received on deposits, the amounts received as principal and interest from bonds and mortgages i >i notes and mortgages, the amounts received as principal and interest from stocks and bonds, the amounts received for fines from members and borrowers, and the amounts received for incident. ds and for any and all other matters ; and such account shall show on its contra side the amounts paid out for principal and interest or dividends on each class of shares, for principal and interest on loan-, for principal and interest on deposits, for amounts loaned on bonds and mort- gages, or notes and mortgages, for amounts invested in the several stocks and Bonds as allowed by this act, for amounts paid on accounts, or for any matter or thing other than general management expenses, and the amounts paid for rent, taxes, salaries, law charges, stationery, printing, advertising, and other expenses of management ; and such general statement shall clearly show such society's liability for principal and interest or dividends (including periodical instalments in arrears the amount of which shall be stated in brackets) on each class of shares, for principal and interest on loans, for principal and interest on deposits, and for all indebtedness on any and every other account ; and such general statement shall state fully on its contra side the amounts due and unpaid for per- iodical instalments and fines on shares, the amounts due and unpaid for princi- pal interest and fines on bonds and mortgages or notes and mortgages, the amounts due and unpaid for principal and interest on stocks and bonds, the amount outstanding and not then due (not including prospective interest) on bonds and mortgages or notes and mortgages, the amount of principal outstand- ing and not then due on stocks and bonds, the amount of interest accrued but not then due on said stocks and bonds, the amount [amounts] of any other moneys, claims, debts, costs or damages owing to such society, and the amount or cash value of any and all real estate, and of any and all personal prop- erty, owned and held by such society ; and in all cases the amounts for prin- cipal shall be stated in such accounts and general statement separate and dis- tinct from amounts for interest or dividends ; and such account and general statement shall be signed by the president, countersigned by the manager, and attested by the auditors of such society ; and each member of such society shall have a printed copy of such report, account and general statement sent to him along with the circular notice convening such annual meeting, such notice to be mailed, at least ten days before such meeting, to the registered address of each member ; and such society shall also publish such report, ac- count and general statement in some newspaper printed in the county where the principal office of such society is located ; and any director, president or other officer who shall include, or knowingly consent to, any false statement in such statement or report, or in any other statement required to be made by this act, or by any vote of such society at any meeting thereof, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof, be punished by a fine of not more than one thousand dollars, or by imprisonment in the state- prison not more than one year, or by both such fine and imprisonment, in the discretion of the court. Sec. 3272. — The profits or losses of such society's business shall be as- certained as at the close of the thirty-first day of December in each and every year, and the same shall be declared by the' directors in their report to the next following annual meeting of such society. The net profits, alter provid- ing for the payment of accrued interest and all liabilities other than for in- terest or dividends on capital, and after setting apart for the purpose of form- ing and maintaining a permanent reserve fund to meet future contingencies, such sum, not less in any year than two per centum upon the net profits of the business of such year, as the directiors for the time being shall think fit, shall be apportioned pro rata between each class of shareholders according to the moneys paid on their several shares, and for the average or actual time that such moneys have been in the possession and use of such society, but no such interest or dividend shall be paid to any member (except on his withdrawal from such society under the provisions of its by-laws ) until his share or shares 746 APPENDIX IV. are fully paid up, and the interest or dividends on paid-up shares may be paid annually or semi-annually, as the directors for the time being may de- termine and order. Sec. 327s. — Every society formed under this act shall, on or before the seventh day of February in each and every year, report to the state treasures of this state the amount of paid-up capital, an account of all the cash receipts and disbursements of such society for the year ending on the thirty-first day of December next previous thereto, and also a general statement of such society's funds and effects, liabilities and assets, as at the close of the date last aforesaid, such account and general statement to contain all the facts and information as are required by section twenty [3271] of this act, to be given in the account and general statement to be presented to such society's annual meeting in said month of February, and every such report shall be signed and verified on oath or affirmation, before a notary public, by two directors and by the president and manager of such society, and if any person signing such report shall, as to any material facts, knowingly and wilfully swear or affirm falsely, he shall be deemed guilty of perjury, and he punished accordingly ; and such report shall be filed in the office of said state treasurer, and shall be published by him in his annual report. If any such society shall neglect to make out and transmit the report required in this section for one month beyond the period when the same is required to be made, such society may be deemed to have wilfully violated the provisions of this act, and may be proceeded against and dissolved in the same manner as any other corporation mav be proceeded against and dissolved. Sec. 3274. — Whenever the slate treasurer of this state shall upon knowl- edge, information or belief, derived from any report made to him by any such society, or from any other source, be satisfied that the business of such society is being conducted in a manner inconsistent with the provisions of this act, or of any of the laws of this state, and prejudicial to the interests of the creditors of such society, or if such society shall neglect to make the report as required by the last preceding section, he shall notify the governor and attornev-general of this state of such fact, and it shall thereupon become the duty of the said attorney-general to examine into the affairs, condition and management of such society, and to report such examination in writing, together with a detailed statement of facts to the said governor, who shall lay the same before the legislature ; and for the purpose of making such exami- nation, the said attorney-general shall have power to call to his assistance the services of an accountant, to administer all necessary oaths to the directors and officers of such society, and other witnesses, and to examine them on oath in relation to the affairs, conditions, and management thereof, and to examine the vaults, safes, securities, books, papers and documents belonging to such society, or pertaining to its affairs, condition and management"; and if the said governor on receipt and consideration of such report shall deem such society to be insolvent, or to have conducted its business in a manner incon- sistent with the] rovisions of this act, or of any of the laws of this state, he shall order and it -hall be the duty of the said attorney-general to institute proceedings against such society for the dissolution thereof in the proper court, and in the manner as any other corporation mav be proceeded against and dissolved. Si-:c. 3275. — Every officer of a society formed under this act, having the ; ;e of any money or other property belonging to such society shall, before entering upon the execution of his office, become bound with ire sufficient sureties, in such sum as the directors shall require, and ding to the following form of bond : Know all men by these presents, thai we, A B, of , one of (he officers of the society, limited, established at in the county of in the of Michigan, and C I) and E F, of (as sureties on behalf of the said A i'. I, are jointly and severally held and firmly bound to the said society, in the sum of dollars of lawful imone} ol the United States, to be paid to lid so< iety, for which paymenl well and truly to be made we jointly and ,.; and each ol us by himself, our and each of our heirs these presents, sealed with our seals. Dated : day ol in the year of oui Lord . Whet il >ove bounden A B, hath been duly appointed to the oft ice of 1 ilished as aforesaid, and he, together with bounden C D and E Fas his sureties, have entered into the jeel to the condition hereinafter contained: Now, on ol the above written bond is such, thai it the said A B ute his said "Mice, and shall and do 1 mi t and true account on such society's books of all moneys GENERAL LEGISLATION. 747 received and paid bv him, and shall and do pay over all the moneys remain- ing in his hands, and deliver all securities and effects, hooks, papers, and pro- perty of or belonging to such society in his hands or custody, to such pi i or persons as such society shall appoint, or according to die by-laws of such society, together with the proper or legal receipts or vouchers for such i ay- ments, then the above written bond shall be void and of no effect ; otherwise shall be and remain in full force and virtue. Sec. 3276. — If any director, officer, clerk, agent, servant or other person in the emp oyment of any society funned under this act, shall embezzle or fraud- ulently dispose of or convert to his own use, or shall take or secrete with intent to embez/.le and convert to his own use. any money or property of such s< iciety, or of any of its dealers or customers, which shall have come to his possession, or shall be under his charge by virtue of such office or employment, or other- wise, he shall be deemed by so doing to have committed the crime of larceny, and shall be punished accordingly. Sec. 3277. — Service of legal process on any society formed under this act may be made on any one of the directors or on the manager thereof, or any other officer of such society, if any such director or manager or other officer be in the county where such society's principal office is located; but if not there by leaving a copy of such process with any officer thereof, at such office as aforesaid. Sec. 3278. — It shall be lawful for any minor above fourteen years of age to take and hold shares in, or to make loans or deposits of money to or with any society formed under this act, and for such society to pay to any minor any moneys that may be due to him in respect of any such shares, loans or deposits standing in his name, and his receipt therefor shall be in all respects valid in law ; but such minor shall not be eligible to hold any office in such society, though he mav, subject to its by-laws, vote at any meeting of its members. Sec. 3279. — It shall be lawful for any society formed under this act to charge its members, borrowers or other persons, partnerships or corporations do- ing business with it, by way of fine, for any default or delay in payment of periodical instalments on shares, loan repayments on bonds and mortgages or on notes and mortgages, or of any other moneys, at the time when the same are due and payable, at a rate not exceeding ten per centum per annum on the amount so past clue and unpaid, which fines, however, shall not be in addition to, but in lieu of, interest on such arrearages ; and such society may charge its members, borrowers or other persons, partnerships, or corporations doing business with it, by way of fine for any breach or non-observance of its by-laws, or any of its business rules and regulations, such reasonable sum, not exceed- ing five dollars for each offence, as the directors shall determine and order ; and all such fines shall be due and payable to such society in one month from such default or offence. Sec. 3280.— The by-laws of every society formed under this act shall set forth— 1. When and how persons may be admitted and registered as members of such society ; 2. The terms on which shares to be known as permanent stock, and which shall not be repayable or withdrawable, are to be issued ; 3. The terms on which other shares may be issued, and by what name or names they shall be known, and how they may be withdrawn or converted into permanent stock ; 4. The form of certificate to be issued for the several denominations of shares, and how the same shall be registered ; 5. When shares may be transferred, the forms and conditions of transfer ; 6. Provisions for renewing lost or destroyed share certificates ; 7. How shares in default may be forfeited and disposed of ; 8. The amount of stock, not exceeding the limits prescribed by section six [3257] of this act, any one person mav hold in his own name < >r right, and what amount may be held by persons jointly, by partnerships, and by corpo- rations ; 9. The conditions on which shares may be held by persons jointly, by part- nerships, and by corporations ; 10. When share subscriptions, loan repayments, or other moneys may be paid bv members and borrowers ; 11. When and how loans to. or deposits with, such society may be made ; 12. The form of bond or certificate to be issued for such loans or deposits • Provided, that there shall be printed in red ink on the face of every such bond or certificate a notice referring the holder to sections three, four, and live [3254. 3-55. and 3256] of this act ; 748 APPENDIX IV. 13. The terms on which borrowers may obtain loans, and how such loans may be repaid and redeemed ; 14. Provisions for the registration, custody and delivery of securities ; 15. Provisions for banking and checking the funds of such society ; 16. Provisions for the custody and use of the corporate seal of such society ; 17. How special meetings of the members of such society shall be called, and on which of the rust fourteen days of February the annual meeting of such members shall be held ; 18. What members may vote, and how they may vote, at any meeting of such society, and the regulations for the use of proxies ; 19. How questions shall be submitted and decided at any meeting of members ; 20. Provisions for adjourning or removing any meeting of members ; 21. The number of directors, and how the directors and auditors shall be elected at the annual meetings ; 22. How and what officers other than directors and auditors shall be ap- pointed and removed ; 23. What shall disqualify and remove directors and auditors from office ; 24. How vacancies in the directors, auditors or other officers shall be filled ; 25. The powers and duties of directors, auditors and other officers ; 26. The manner of remunerating the directors, auditors and other officers ; 27. That such society shall not be responsible for any trust, express or im- plied, created by any member in reference to its stock, or by parties loaning or depositing monev to or with such society, and such society snail not be bound to see to the execution of any such trust," nor shall notice of any trust, express, implied or constructive, be entered upon its registers ; 28. That any member, borrower or other person doing business with such sociey may see and examine his account on the books thereof ; 29. Such other rules and regulations as such society's business may require. Sec. 3281. — Any society formed under this act may alter or rescind any by-law, or make any additional by-law, with the consent of a majority of its members (holding not less than two-thirds of its capital for the time being), present at a special meeting convened for that [such] purpose, but the notice calling such meeting shall set forth fully and clearly the proposed alteration, rescis- sion or addition. Sec. 3282. — The by-laws of any society formed under this act shall be re- corded in a book to be kept for that purpose, and such book shall be open dur- ing business hours for the inspection of the members. The by-laws so recorded shall be binding on the several officers and members of such society, and on all persons claiming on account of any or either of them, or under such by- laws, all of whom shall be deemed and taken to have full notice thereof by such record. The entry of such by-laws in the books of such society, or a true copv of (lie same, examined with the original, and proved to be a true copy, shall be received as evidence thereof in all courts and places. SEC. 3283. — It shall be the duty of every society formed under this act, to print and publish in pamphlet form, the whole of this act, and the whole of such society's articles of association and by-laws, and of any amendments, alterations, or additions thereto, and to supply a copy thereof to any person on demand, on payment therefor of a sum m >t exceeding fifty cents. SEC. 1284. — Any society formed under this act, desiring for any reason to be lived prior tn the expiration of the term of years specified in its articles k iation, may, with the consent of the majority of its members (holding nolle 5 than two-thirds of its capital for the time being) given by resolution dai a special meeting convened for such purpose, tile a petition in the circuit court for the county wherein it is located, setting forth— 1. I he reasons for such dissolution; 2. The indebtedness of such society of all kinds, with a classification of its tors ; and ■ t and effects belonging to such society. .11 the filing of such petition, said court or circuit judge may make an ord< : appearance in said cause of all persons interested in such society, h I'M in a shall be properand just. On proof of the publication of er, and the entering of appearance of such persons as shall have appear- ed court may proi eed and take the proofs in said cause, and hear the ind make such order or ordei thereon as shall be just and proper ; and 1 more trustees for the purpose of winding up such society, a nlding 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 prescribe. Sec. 3970. (as amended by act 74, acts of 1887). — All arrangements for the liquidation of shares shall be made with a member of the corporati n, 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 or note and mortgage duly executed, acknowledged and recorded, or 11 ion shares in said corporation upon estimates according to the dues actually paid thereon, or upon both such real estate security and such share--. Sec. 3971. — It shall and may be lawful at any regular meeting of the corpo- ration to offer of [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 peri »dic sums not exceeding the rate of seven rer 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 additi mal periodic due-, 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 be applied according to -ail lot upon the like securities being given as in other cases: Provided, that in case the owner ol" the share so designated by lot shall noi give the re- quisite security, then that the money shall be deposited in some bankupon 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 be fully paid : Provided further, however, that such portion of the same <•■ paid to the owner of such share as in the judgmenl of the committee i authorized by the by-laws to decide can be safely paid and leave p lyments to be made to the corporation adequately secured. Sice. 3972. — Any officer nol acting as auctioneer may Bid at any auction au- thorized by this act, but if the purchase shall be struck off to any officer having anything to do with the taking of securities, or if the share of such officer shall ;n ited by the lol mentioned in the last preceding section, the security wlin h Bui h officer shall offer, shall be brought before a regular meeting of the trators, and approved before any money shall be advanced or paid thereon. Sec. 3973. — No member of such corporation shall receive any greater iniary benefil or advantage from his share therein than its payment in full. I or p. 11 value ; every dis nl and um ol interest allowed ery fine oi ted shall, equally and ratably in 1 ro- 1 hare , befoi the benefitand advantage of selling and non- GENERAL LEGISLATION. 751 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. Ins ratable proportion oi the sums necessary, with the profits accruing from initiation fees, discounts, dues, fines and all other sources, alter paying all expenses, to pay in mil all shares in the corporation. Whenever such payments shall have been said corporation shall cea e and determine for all purposes, exce] t winding up its affairs. The cancellation and discharge of a security given bya selling share- holder, to an amount equal to his share or shares, shall be deemed the pay- ment thereof. Sec. 3974.— 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, winch 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 interest 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. Sec 3975. — No corporation authorized by this act shall become the owner of any real estate except by purchase at sales made upon foreclosure ol mort- gages taken by it, and in such case, the land purchased shall be sold and dis- posed of within two years after the purchase , Provided, however, that it may rent an office and room for holding the meetings of the corporators, as may be convenient or necessary. Sec. 3976. — Any voluntary association which, before the going into effect of this act, may have been organized for like purposes, may, Dy the unanimous consent and agreement in writing 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 second section [3962] of this act, not already stated in the original articles, and modify such articles, if neces- sary, to conform them to this act, with the county clerk of the county, as required by the third section [303] hereof ; and 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 agree- ment are genuine, that the persons 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 hied 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 with this act, shall be deemed valid and binding as though the original orga- nization had been under this act. Sec. 3977. — Every such corporation may require, by its by-laws or otherwise, 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 performance of the duties of its officers. The duties of all officers shall be prescribed by by-laws adopted by the corporators, and all powers granted by this act, not expressly devolved 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 [3966] shall be present. Sec. 3978. — 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 : 1. The amount of its shares which have been subscribed for ; 2. The amount which has been paid upon such subscriptions in dues and penalties ; 3. The number of shares which have been purchased, and the gross amount of the discounts allowed upon purchases ; 4. The number of shares otherwise paid or extinguished ; and 5. The gross amount of the debts of the corporatu m : 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 interests [interest] may require, and he may persona'lv make any investigation of their books, papers and securities which he shall judge for the interest of the public. 752 APPENDIX IV. Sec. 3979.— Every member of such corporation, and every creditor whose just claim exceeds twenty-five dollars, shall at all reasonable times be allowed to inspect the records and securities of said corporation. Sec. 3980. — 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. Sec. 3981. — The circuit court for the county in which any corporation organized under this act shall be located may, on application of the corpora- tion, or on petition of any member or creditor aggrieved by delay in winding up its affairs, and notice to the corporation, make such order and direction as it shall deem best calculated to secure the just and speedy disposition of its unsettled or uncompleted business. HOWELL'S ANNOTATED STATUTES. SUPPLEMENT 1883-1890. Section 3981A. — Whenever any number of persons, not less than five, may desire to become incorporated as a mutual building and loan 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 acknowledgment of deeds. Such statement shall set forth the name of the proposed corporation, its capital stock, its location, and the duration of the corporation, which shall not exceed thirty years ; which statement shall be tiled in the office of secretary of state. The secretary of state shall there- upon authorize such persons to open books for subscription to the capital stock of said corporation at such time and place as they may determine ; but shall not authorize two corporations having the same name. Sec. 3981B. — As soon as one hundred shares or more of the capital stock shall be subscribed, a meeting of the subscribers shall be convened for the purpose of electing directors (not less than five in number), adopting by-laws, and the transaction of such other business as shall come before them. Notice thereof shall be given by depositing in the postoffice, properly addressed to each subscriber, at least five days before the time fixed, a written or printed notice, stating the object, time and place of such meeting. Directors of such corporations, organized under this act, shall be elected, classified, and hold their office for such period of time as is provided in the by-laws of such corporation or association. SEC. 3981C. — The persons authorized to receive subscriptions to the capital stock of said corporation shall make a 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 by-laws adopted by the corporation and the names oi the directors elected, and their respective terms of office; which ! shall he sworn to by at least a majority of them, and shall be filed in office of the secretary of state. The secretary of state shall thereupon make a copy of all papers filed in his office in and about the organization of oration, and duly authenticated under his hand and seal of state, and ha i be recoi fed in the office of the register of deeds in the county in which the principal office oi uch company is located. Upon the recording I copy the cor] oral ion shall he deemed fully organized, and may proceed toh', Unless such company shall he organized and shall proceed to • ided in this art within two years after the date of authoriza- tion, it shall he deemed revoked, and all the proceedings thereunder void. Sic. 598] I). — ( lor] oration formed under this act shall be bodies corporate and politii for the period for which they arc organized; may sued and be sued ; 1 i common seal which they may alter or renew at pleasure. Sic. 598 1 E. — The corporate powers shall be exercised by a hoard of direc- / vided, rhe numbers of directors shall not be increased or diminished, 11 '.I office changed, without the consent of the owners of two- third of thi fn' ofstock. The officers of the corporation must be mem- ol thi board of dire< tors, and shall consist of a president, vice-president, and trea urer, and such othei officers as may be provided tor in the by-la 1 .ilp in 01 . 1. social ion, to he elected as the annual meeting na ; he provided for in the by-laws of the corpora- GENERAL LEGISLATION. 753 tion ; Provided, That the expense of carrying on said corporation, including compensation for officers and directors, shall be provided For in the by-laws of such corporation: Ami provided, That the secretary and treasurer shall give bonds and security to be approved by the board of directors. Sec. 3981F. — The shares of stock shall not exceed two hundred dollars each and shall be deemed personal property, transferable upon the books of the company in such manner as may be provided by the by-laws, and subscrip- tions therefor shall be made payable to the corporation, and shall be payable in such periodical instalments and at such time as shall be determined by the by-laws ; but no periodical payment to be made exceeding two dollars on each share. Said stock may be paid off and retired as the by-laws shall direct, and every share of stock shall be subject to a lien for the payment of unpaid in- stalments and other charges incurred thereon under the provisions of the by- laws, and the by-laws may prescribe the foi 111 and manner of enforcing such lien. New shares of stock may be issued in lieu of shares withdrawn or for- feited, and the stock may be issued in one or in successive series, as may be provided in the by-laws, and in such amount (not to exceed the capital stock) as the board of directors may determine, and any stockholder wishing to with- draw from the said corporation shall have the power to do so by giving thirty days' notice in writing at a stated meeting 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 thereon as the by- laws may determine, less all fines and other charges; but payments of the stock so withdrawn shall only be due when the funds 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 the presentation of the notices of such withdrawal ; 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 with- drawing stockholders without the consent of the board of directors, and that no stockholder shall be entitled to withdraw whose stock is held in pledge for security. Upon the death of a stockholder his or her legal representative shall be entitle to receive the full amount paid in by him or her on all shares not borrowed upon or pledged to the association as collateral security, and such interest thereon or such proportion of the profits thereon as are granted to withdrawing stockholders, first deducting all charges that may be due on the stock ; but no fines shall be charged to a deceased member's account from and after his or her decease unless the legal representatives of such decedent as- sume the future payment of the dues on the stock. Sec. 3981 G. — Married women may become subscribers to the capital stock of such corporation, and hold, control and transfer their stock in all respects as femmes 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 corporations 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 the owner or legal representative of the stock of sucb. association shall be entitled to vote at any election, when the stockholders are called upon to vote, in the manner provided in the by-laws of such associa- tion ; And provided further, That no stockholder shall cast more than forty votes. Sec. 3981H. (Am. 1889,/). 368, act 247).— The board of directors shall hold such stated meetings as may be provided by the by-laws, at which the money in the treasury, if more than the amount fixed by the by-laws as a 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 entitled to receive a loan of not more than the amount fixed by the by-laws as the full value of a share of stock, for each share of stock held by the stock- holder. The said premium bid may be deducted from loan in one amount, or may be paid in such proportional amounts or instalments and at such times during the existence of the shares of stock borrowed upon, as may be desig- nated by the by-laws of the respective associations ; Provided, That no loan shall be made by said corporation except to its own members, nor in anysum in excess of the "amount of stock held by such members borrowing. Good and ample real estate security shall be given by the borrower to secure the repayment of the loan, but wnen the amount at risk shall exceed three-fourths of the appraised value of real estate, other collateral security shall be required as provided in by-laws of association ; Provided, however, That the stock of 754 APPENDIX IV. such association may be received as security, to the amount of the withdrawal value of such stock. Sec. 3981L— In case the borrower shall neglect to offer security, or shall offer security that is not approved by the board of directors by such time as the by-laws may prescribe, he or she shall be charged with one month's in- terest, together with any expenses incurred, and the loss in premium, if any, on a resale, and the money may be resold at the next stated meeting. In case of non-payment of instalments, or interest and fines, by borrowing stock- holders for the space of six months, payments of principal and interest and fines, without deducting the premium paid or the interest thereon, may be en- forced by proceedings against their securities, according to law, upon the order of the board of directors ; Provided, That fine or penalties for the non- payment of instalments of dues, interests and bonus of premium shall not exceed two per centum per month on all arrearages. Sec. 398 1 J. {Am. 1889, p. 368, act 247.)— A borrower may repay a loan at any time, and in the event of the repayment thereof before the expiration of the [eighth] eight years after organization of the association, [or] on 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 ; Pro- vided, That where the said premium has not been deducted from the loan, but paid in instalments, there shall be no premium refunded, and any mutual building and loan association, which may have heretofore been incorporated under the laws of the state of Michigan, may avail itself of all the powers con- ferred by tins act ; Provided, That at the time of such repayment the stock upon which such loan is based shall be withdrawn in the manner provided in section six of this act relative to withdrawing stockholders. Sec. 3981 K. — Corporations organized under this act being of the nature of co-operative associations, therefore no premium, fines nor 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 other debts of like amount may be collected bylaw in this state. Sec. 3981 L. — No corporation or association created under this act shall cease or expire from neglect on the part of the corporation to elect officers at the time mentioned in their by-laws, and all officers elected by such corpora- tions shall hold their offices until their successors are duly elected and quali- fied. Sec. 3981M. — Any loan or building association incorporated by or under this act is hereby authorized and empowered to purchase at any sheriff's 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, lien or other incum- brance, or in which said association may have an interest, and the real estate so purchased to sell, convey, lease or mortgage at pleasure to any person or persi ms whomsoever. SEC 3981N. — 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 slate, who shall make a duly authen- ticated copy thereof, as provided in said section three of this act, certifying to the extensions of time or such corporation, and the same shall be recorded d in aid section three of this act, and any building and loan asso- ciation incorporated under any prior act, and extending the duration of the time tor winch it was incorporated, in the manner herein provided, shall deemed a incorporated under and be vested with all of the power given in this act, the same as though such corporation had been originally incor- poi ated under it. SEC. }08lO. — Bach association formed under (he provisions of this act shall, ai the clo 1 oi its lust year's operations, and annually at the same : i eai thereafter, publish in at least two newspapers published m the same place-, where their business may be located, or if no newspaper be 1 in ii' li place, then in any two newspapers published nearest 1 e statement, verified by the oaths or its president and ring the actual financial condition oi the association, and the ropertyand liabilities, specifying the same particularly. [981P. — The shares held by any member, being a householder, oi any iation incorporated under the provisions of this act shall be exempted from levy and sale on execution or attachment to the amount of one thou- GENERAL LEGISLATION. 755 sand dollars in such shares, at the par value thereof ; Provided, That such exemption shall not apply to any person who shall have a homestead ex- empted under the general laws of this state. SEC. 3981Q. {Added [889, />. [44, act 124.)— The shares held by any mem- ber of any such association incorporated under the provisions ot this act, and all mortgages or other securities held by such associations, shall be exempted from all municipal or other tax under the laws of this state. Added, Acts 1895, p. 580. Sec. 18. — Every corporation organized under the provisions of this act and doing business in this state, shall hereafter annually during the month of August, file with the secretary of state, a statement under the oath oi the secretary and treasurer, for the year ending on the first day of the preced- ing July, showing : The name and location of such corporation. Date of incorporation. Names of its officers and directors. Amount of its capital stock. Amount of its capital stock paid in. Amount of its assets. The character of such assets and the fair cash value thereof. The liabilities of such corporation and the character of such liabilities. The par value and the amount of dues or assessments chargeable on each share of stock issued by such corporation, and the proportion of such dues or assessments credited to the loan fund, expense fund, or other fund, and such other information of any class, kind or character, as the secretary of state may require. Sec. 19. — It shall be unlawful for any corporation organized under the laws of any state (other than the state of Michigan) or of any government foreign to the government of the United States, to conduct or engage in the business of a building and loan association as authorized by this act without having first tiled in the office of the secretary of this state a copy certified under the oath of its secretary of its act of incorporation or memoranda of association, and without having first paid to the secretary of state (as provided by act one hundred eighty-two, public acts of eighteen hundred ninety-one, .is amended by act seventy-nine, public acts of eighteen hundred ninety-three), a franchise fee of one-half of one mill upon each dollar of its authorized capital stock. And such corporation shall be subject to all the provisions and requirements of said act one hundred eighty-two, as amended by said act seventy-nine. SEc/20. — Said foreign corporations shall file with the secretary of this state, a oipy of its act of incorporation, and of the general statutes under which it is organized, properly authenticated by the officer of the state in which said foreign corporation is incorporated, a copy of the by-laws and rules govern- ing it, and of each of the several kinds of certificates issued to its shareholders and stockholders, which statement shall be made upon blank forms to be furnished by the secretary of state. Sec. 21. — Upon compliance with the preceding sections of this act by any foreign corporation, and the secretary of state being satisfied that it is doing a lawful business, he shall authorize such foreign corporation to do business in this state by certificate under his seal. Unless the provisions of this act are fully complied with, no building and loan association either foreign or domestic, shall be permitted to do "business in this state, and all contracts made by them while in default shall be absolutely void. Sec 22. — Every foreign corporation organized under the laws of any state or of any government foreign to the government of the United States, author- ized to transact business in'this state, annually shall file with the secretary of state of this state, a statement which shall comply exactly with the require- ments relative to Michigan building and loan associations, as provided in section eighteen of this act. Sec 23. — If it appears from any statement filed with the secretary of state under the provisions of this act that the corporation filing such statement, whether a foreign corporation or one organized under the laws of this state, is doing an illegal or unsafe business, the secretary of state shall make, or cause to be made, an examination into the affairs of such corporation. Or when upon petition of fifty of the shareholders, setting forth that such peti- tioners believe said corporation to be conducting its business contrary to law, or that its affairs are in an unsound condition, or that they believe any of its 756 APPENDIX IV. statements are not correct, then said secretary of state snail make or cause to be made an examination into the affairs of such corporation. Such examina- tion shall be full and complete, and in making the same the examiner may put any officer of such corporation, or any other person, under oath to answer truthfully any questions that may be asked him, touching the affairs and busi- ness of such corporation, and all the books, papers and records of such cor- poration, and all securities held by it shall be subject to his inspection. Any wilful false swearing in any examination shall be deemed perjury. The secretary of state or the deputy employed by him, shall be entitled to five dollars per day for each day occupied in making such examination, and neces- sary expenses, to be paid by such corporation. The secretary of state, his deputy and every clerk and examiner in the employ of the secretary of state, shall be bound by oath to keep secret all facts and information obtained in the course of such examination, except in so far as the public duty of such officer requires him to report upon or take official action regarding such cor- poration, and no corporation shall be subject to visitation, other than such as is required by this act, or otherwise authorized by the laws of this state. Sec. 24. — Should the secretary of state, or the deputy appointed by him, find any corporation organized under this act conducting its business in whole or in part contrary to law, or failing to comply with the law, he shall so notify the board of directors of such corporation, and if, after thirty days, such illegal practice or failure continue, he shall report the facts to the attorney- general, who shall cause proceedings to be taken in the proper court to revoke the charter of such corporation. Sec. 25. — If the secretary or treasurer of any such corporation organized under this act shall fail to make and file the reports required by this act, within thirty days after the same are due to be filed, he shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be fined any sum not exceeding five hundred dollars. Upon failure to file such report, it shall be the duty of the secretary of state to notify the president, secretary and treas- urer of such corporation of such failure, and if such report is not filed within thirty days from the date of such notice, then it shall be the duty of the secre- tary of state to examine such corporation, as provided in section twenty-three of this act Sec. 26. — The refusal of any such corporation organized under this act to permit the examination of its affairs authorized by this act, shall be sufficient cause for institution of proceedings to wind up its affairs, as provided in section twenty-four of this act. Sec. 27. — The secretary of state may at any time, for reasonable causes, with the concurrence of the attorney-general, revoke the authority of any foreign corporation to do business in this state ; and in such event, the attorney-gen- eral shall take proceedings to wind up the business of such foreign corporation in this state, and a receiver may be appointed for the assets of such foreign corporation in this state. Stockholders and creditors in this state of such foreign corporation shall have a first lien on all assets in this state of such foreigh corporation, and the business in this state of such foreign corporation shall be closed by such receiver, and its assets converted into money to satisfy the claims of such stockholders and creditors. SEC. 28. — In cisc the authority of any foreign corporation to do business in this state is revoked, notice thereof shall be sent such foreign corporation by mail, postage prepaid, and notice thereof shall be published in at least three newspapers printed in this state daily, for six successive days ; the expense of publication shall be charged against such foreign corporation, and shall be paid by it, or by a receiver duly appointed. Sec, 29. — Every officer, clerk or agent of any corporation organized under this act, who embezzles, abstracts or wilfully misapplies any money, funds or erty of the corporation, or who, without proper authority, assigns any nole, bond, mortgage or other asset, or makes any false entry in any book, re- fiorl 01 tatement oFthe < orporation, with inteni in either case to injure or de- th( corporation, 01 any member thereof, or to deceive any officer or linted to 1 amine the affairs of such corporation, on conviction thereof, shall be imprisoned in the state prison, or state house of correction or ory at Ionia, for a pei iod 1 »1 ni >t to exceed ten years, or fined not ed fr e thousand dollars, or both, at the disc retion of the court. ■ ol procei against any foreign corporation doing business under tn< ofthi ad maybe had upon such foreign corporation by ng with process again I uch foreign corporation upon the secretaryof ho hall immediately for waul a copy ol the process served by him by mail, prepaid, directly to the secretary of such corporation at the last known GENEUAL LEGISLATION. 757 postoffice address of such foreign corporation, and for each copy of the pro- cess the secretary of state shall be paid two dollars by the moving party of the suit, and the same taxed as costs against such foreign corporation. SEC. 31. — The secretary of state shall annually compile the reports of such associations required to be filed in his office and publish the same in his an- nual report to the governor. SEC. 32.— Every corporation doing business under the provisions of this act shall pay to the secretary of state for the use of the state the sum of five dollars for receiving and riling each annual report required under the several sections of this act. Sec. 33. — Every association incorporated or existing under theprovisions of this act may, at any annual meeting, or at any meeting duly called for such purpose by a resolution adopted by a vote of two-thirds in interest of its capi- tal stock, increase or decrease its authorized capital stock or amend its articles of association or by-laws in any manner not inconsistent with the provisions of this act ; but no such increase or decrease of authorized capital stock nor such amendment shall take effect or become operative until a copy of such resolution, signed by the president and secretary of the association, shall have been filed and recorded as is required in section three of this act, with relation to the final report of such association. M1WESOTA. STATUTES OF 189S Sec. 2855. — Whenever any number of persons, not less than ten (10), desire to be incorporated as a building and loan association, for the purpose of accu- mulating the savings and funds of its members and lending them only the funds so accumulated, they shall make and execute a written declaration to that effect in the form now provided by statute for the execution of deeds of real estate, to entitle the same to the record. Said declaration shall state the name of such association, its principal place of business, which shall be with- in this state, the limit of capital to be accumulated, the time of its duration, the names and places of residence of such persons, and that it is organized under this act for the purposes herein expressed. When so executed, said declara- tion shall be filed and recorded in the office of the secretary of state, where- upon such officer shall issue a copy of such declaration under his certificate, in proper form, setting forth the time and place of filing and recording thereof in his office, which declaration and certificate shall thereupon be recorded in the office of the register of deeds of the county where said association is located, and published once in a daily or weekly newspaper printed and published and of general circulation in said county. Upon complying with the foregoing requirements, and upon filing an affidavit of proof of such publication in the office of the secretary of state, the persons executing such declaration, their associates and successors, shall become a corporate body. Sec. 2856. — The name shall not be the same as, nor too closely resemble, that in use by any existing corporation established under the laws of this state. The words " building and loan association," or " savings and loan as sociation," shall form a part of the same, and no corporation not organized under this act shall be entitled to use a name embodying either said combina- tion of words, providing that associations now existing may continue their present names. Sec. 2857. — The directors of such association shall adopt by-laws for its government and therein describe the manner in which its business shall be transacted, which by-laws shall be conformable to the provisions of this act and the laws of this state, and at all times be open to the inspection of all members of the association at its home office, and a copy thereof and of any amendments thereto, duly certified by the president ami secretary of the asso- ciation, shall, immediately upon its adoption, be filed in the office of the public examiner. The directors may amend said by-laws from time to time in such manner as they see fit so long as such amendments are not in conflict with the provisions of this act or the laws of this state. Every such association, which has not already done so, shall, before its next annual election after the passage of this act, divide its board of directors by resolution thereof into three classes, consisting of an equal number in each class, as nearly as may be ; the term of office of the first class shall expire at the end of one year from and after the next annual election ; of the second class at the end of two years, and of the third class at the end of three years ; and at each succeeding annual election after the one at which the full board is elected there shall be elected a number of directors equal to those whose 758 APPENDIX IV. terms of office expire at that time, and the directors so elected shall hold their office for the term of three (3) years, and until their successors are elected and qualified. Sec. 2858. — For every loan made, a note, non-negotiable, or bond, secured by hrst mortgage on real estate shall be given, which security shall be in double the value of the loan and satisfactory to the directors, and shall be accompanied by a transfer and pledge of the shares of the borrowers to the association. The shares so pledged shall be held by the corporation as col- lateral security for the performance of the conditions of said note or bond and mortgage, provided that the shares, without other security, may, in the discretion of the directors, be accepted as security for the loans for an amount not exceeding their withdrawal value as provided by this act. Stockholders who have borrowed money of an association on real estate security, and who have pledged their stock, or any portion thereof as collateral thereto, as pro- vided herein, shall not be entitled to have the value of such stock applied on the mortgage debt where the payment of such stock is more than three (3) months in arrears, unless the same has reached a withdrawal age as fixed by this act, and when such stock has reached that age the withdrawal value thereof shall be applied on said debt whenever the stock is three months in arrears. Sec. 2859. — Any such association may purchase at any sale, public or private, any real estate, upon which it may have a mortgage, judgment, lien or other incumbrance, or in which it may have any interest, and may sell, convey, lease or mortgage the same at pleasure to any person or persons and may ac- quire and hold a lot or lots whereon is erected a building or buildings requi- site for the convenient transaction of its business, and from portions of which not required for its own use a revenue may be derived ; the cost of such build- ing and lot or lots in no case to exceed five (5) per cent, of its assets ; provided that any such association may acquire any leasehold interest necessary for the transaction of its business. Six. 2860. — Every building and loan association heretofore or hereafter in- corporated under the laws of this state and governed by this act shall deposit and keep with the state treasurer, or with a duly chartered trust company of this state, approved by the public examiner, in trust for all its members and creditors, all mortgages or other securities received by it in the usual course of its business. When deposited with a trust company, such company shall certify to the public examiner the possession of such securities, and the same shall not be surrendered without the authority and sanction of the said public examiner. Provided, that every such corporation heretofore organized not having or owning mortgage or other securities to the amount of twenty-five thousand dollars ($25,600) shall deposit witli the state treasurer additional nlirs to make, with the securities so owned and deposited, the sum of twenty-five thousand dollars 1 §25,000), and every such association hereafter Organized under this act shall deposit and keep with the state treasurer in trust as aforesaid, securities of the value of twenty-five thousand dollars ($25,0001 before commencing to do business. The securities mentioned in provision shall consist of bonds or treasury notes of the United States, or national hank stocks, or the bonds of this state, or of any other state of the ed Slates, or of any solvent city, county or town oi this state or of any other state of the United States, having the legal authority to issue the same, and such securities maybe withdrawn from time to lime when mortgaged ities oi ( orresnonding value shall be deposited as provided in this act, or when securities of like character are substituted therefor, or when the same shall have been pad or are required for foreclosure or suit ; and it shall be f he duty of the public examiner from time to tune to examine such association to i.im whether or nol its securities are deposited as required by this act Pro- when* 1 required by the laws of any other state or territory .lion, all set' 1 111 ties taken in SU( h slate, territory or nation, by any associa- tion 01 anized under the laws oi tins state, and subject to (he provisionsof d othet securities sufficient to allow such association to enter and do 1 in ihIi state, territory or nation, maybe deposited with some • 1 authorized to n ceive the same in such slate, territory or nali m, under the I I • of, I or the benefit oi its mem hers and creditors, and to this end, upon entation to the nublii examiner of a duly authenticated copy of ilution ol the board ol directors ol any such association, having on de- i'- a with the tate treasurer or a duly chartered trust company securities in of twenty-five thousand doll. us ($25,000) demanding the transfer and ecuritii to be tran ferred or the amount thereof to any other Btate, tei 1 itoi y or nation for the purpose of enabling such association to com- GENERAL LEGISLATION. 759 ply with the laws thereof, it shall be the duty of the public examiner to cause such transfer to be made. The expense of making such transfer shall be borne bv the association requiring the same and a receipt shall be taken by the officer or trust company making the transfer, and filed and kept in the office from which the securities are transferred in lieu thereof. But the secu- rities kept on deposit in this state by any such association as required by this act shall at no time be reduced in amount by such transfer or otherwise, below twenty-live thousand dollars ($25,000) ; and in every case where securities taken in another state, territory or nation, are deposited in such state, territory or nation, or when other securities are removed from this state to such other state, territory or nation for the purpose aforesaid, the association to which they belong shall make a certificate of such depository showing the amount and character of such deposit, which certificate shall be filed with the public examiner and renewed annually, together with a statement verified by the af- fidavit of some officer of such association, who has knowledge of the facts, showing all the securities taken or deposited by such association in such state, territory or nation at the time of the filing such certificate ; and in case any securities taken in such state, territory or nation are not deposited there, then the same shall be deposited in this state as required by this act. Sec. 2861. — All interests and dividends and premiums which may accrue on securities held by the state treasurer or such trust company, as provided for herein, and all dues or monthly payments which may become payable on stock pledged as security for loans, the mortgages for which are so deposited in accordance with the provisions of this act, may be collected and retained by the association depositing such securities or mortgages so long as such as- sociation remains solvent and faithfully performs all contracts with its members, and when any mortgage shall have been fully paid to said corporation the same may be surrendered to it upon filing with the depository the affidavit of the president or vice-president and secretary of any such association that such indebtedness has been paid in full, which affidavit shall be first presented to the public examiner and by him approved. And any mortgage upon which default has been made may be surrendered as aforesaid for foreclosure upon like affidavit that default exists and that such mortgage is withdrawn for the purpose of foreclosure of suit. Sec. 2862. — No building and loan associations organized under the laws of any other state, territory or nation, shall do business in this state unless such associations shall have securities of the value of one hundred thousand dollars (.$100,000). and of the character mentioned in this act on deposit in trust for all its members and creditors with some responsible trust company duly in- corporated under the laws of such state or territory in the United States, or with some authorized officer of this or some other state of the United States. Certificitaes of such deposit shall be made to the public examiner of this state, certifying the possession of such securities, which shall not thereafter be sur- rendered without the authority or consent of the public examiner or other authorized officer of the state or territory in which said company is incorpo- rated. Sec. 2863. — Every building and loan association organized under the law of any other state, territory or nation shall, before commencing to do business in this state, first file with the public examiner of this state a duly authenticated copy of its charter or articles of incorporation ; second, file with the public examiner of this state the certificate of the authorized officer of another state, showing that securities of the value of one hundred thousand dollars (Sioo,ooo) are on deposit with such state officers or duly incorporated trust company in trust for all the members and creditors of such building and loan association ; third, file with the public examiner of this state a du!v aul I o >py of a resolution adopted by the board of directors of such association, stipulating and agreeing that if any legal process affecting such association be served on such examiner, and a copy thereof be mailed", postage prepaid, by the party procuring the issue of the same, or his attorneys, to sail association, addressed to its home office, then such service and mailing of such process shall have the same effect as personal service on said association in this state, and also an agreement that said associations will not remove any action commenced in any state court in this state against the same to the United States court, and will pay every judgment that may be taken against it upon any such action within sixty (00) days after the final judgment shall have been entered ; fourth, pay to the public examiner twenty-five dollars (S25) as fees for filing the papers mentioned in this section. Sec. 2864. — When process against or affecting any foreign building and loan association is served on the public examiner, the same shall be by duplicate 760 APPENDIX IV. copies, one of which shall be filed in the office of the public examiner, and the other by him immediately mailed, postage prepaid, to the home office of said association. Sec. 2865. — The word " process " in this act shall include any writ, declara- tion, summons or order whereby any action, writ or proceeding shall be com- menced, or which shall be issued in or upon any action, suit or proceedings authorized by law in this state. Sec. 2866. — Service of process according to a stipulation provided in sec- tion 9 of this act, shall be sufficient personal service on the association filing such stipulation. Sec. 2867. — When by the laws of any other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money or securities, or other obligations or prohibitions are imposed on buildings and loan associations of this state doing business in such other state, territory or nation, or upon their agents therein, so long as such laws continue in force the same obligation and prohibition of whatever kind, shall be imposed upon all building and loan associations of such other state, territory or nation, doing business in this state and upon their agents here. Sec. 2868. — Any building and loan association organized under the laws of any ether state or territory that shall remove any action that shall be com- menced against it in a court of this state to the United States court, or that shall fail to pay any judgment rendered against it upon a suit in any court of the state within sixty (60) days after the rendition of final judgment in such case, or that shall fail to make yearly statements to the public examiner as hereafter mentioned, or statements of the amount and value of its stock held in this state as hereafter required or to pay the fees of the public examiner as provided in this act or to do any other act required in this act to be done and performed, shall upon violation of the provisions of this act have no right or authority to do or transact any further business in this state, and the public examiner shall thereupon cause notice of determination of such authority to do business to be mailed to such corporation and to be published in some newspaper of general circulation at the capital of this state, and shall com- municate the facts to the attorney-general of this state, who shall institute such proceedings in the matter as the case may require ; Provided, any such cor- poration may be again authorized to commence business in this state upon such terms as the public examiner may deem just and proper, and upon full compliance with the provisions of this act. SEC. 2869. — All building and loan associations hereafter incorporated in this stale --hall have an authorized capital of two million dollars (62,000,000) at the time of the -incorporation. Every share of capital stock issued by any such associations shall be of the par value of one hundred dollars ($100), but this provision shall not be construed to forbid the issue by any such association of ] .iii state, and be published four successive times in ly ■>! weekly nev papei published at the capital of the state, or in the county where the as ociation has its home office. Proof of which publi- II be filed in tin- ofn< e "i the se< retary of slate. ' 7-'- — In each year every building and loan association organized GENERAL LEGISLATION. 761 under the laws of this state and doing husiness in this or any other territory shall, within thirty (30) days after the end of the year for which its report to its stockholders is made, deposit with the public examiner an annual report of its affairs and operations lor said year. Such report shall be verified under oath of the president and secretary, or by three directors of the association, and shall contain the following information: first, the amount of authorized capital, and the par value of each share of stock ; second, the number t>i shares sold during the year ; third, the number of shares cancelled and with- drawn during the year ; fourth, the number of shares in force at the end of the year; fifth, a detailed statement of the receipts and disbursements during the year ; sixth, a detailed statement of the assets and liabilities at the end of the year. Such report shall also show the total amount received as dins on stock under each separate class or kind of stock, and all deductions therefrom for expenses, withdrawals, cancellations, forfeitures, refunded or otherwise, and the amounts, if any, Of such profits credited to stock or subject to such credit. The report shall also show the number of shares in force of each monthly issue or series, and the amount expended during the year in payment of salaries of officers, clerks, agents and all other employees, the amount ex- pended for travelling expenses, rent, postage, including telegraph and ex] ress charges, printing, books and stationery, office supplies, office furniture, adver- tising, commission paid agents or other persons, and all other items of ex- pense. In addition to such annual report and six (6) months after such re- port has been submitted to the public examiner, every such association shall prepare a report of its business for the preceding six (6) months, which report shall state the amount of resources included in mortgage loans, the amount of loans on stock of the association, the amount of loans on other securities, specifying the kind of such securities, the amount of unpaid dues, fines, pre- miums and interest, the amount due from agents, the amount due from banks, the amount invested in real estate and secured by foreclosure, the amount in- vested in furniture and fixtures, the amount of expenses paid during the six months, the amount of cash on hand, and the amount of all other resources of the association not enumerated heretofore, and shall state as its liabilities the amount received from stock subscriptions, the amount due from stock delin- quent in each class or kind of stock, and the unpaid clients on such stock, the amount set aside as an expense fund from each class or kind of stock, the amount of undivided profits at the beginning of said period of six (6) months, the amount received as interest, premiums, fees, fines or other sources as profits during said period, the amount of such interest and premium delinquent at the end of such period, the amount of all bills payable and the amount of all other liabilities at the close of said period of six (6) months. Such report shall be made within twenty (20) days after the close of said period of six (6) months, and shall be verified by the secretary and president or vice-president of the association, and within thirty (30) days a statement of the assets and liabilities shall be published at least once in some newspaper in the city or town where the association's principal place of business is, and a copy of such semi-annual report verified by the secretary shall be filed with the public examiner within ten (10) days after the printing thereof ; Provided, that all such statements herein required to be made shall be uniform and in accordance with a form to be prescribed there- for by the public examiner, and shall correctly show the proportion which the entire expenses of the association for the term reported bears to the gross earnings of said association for that term. And provided further, that all re- ports required of building and loan associations organized under the laws of this slate and doing a general business are also required of all foreign build- ing and loan associations doing business in this state, and all the provisions of this act relating to such reports, the filing thereof and the fees therefor shall apply to such foreign building and loan associations. If any such association shall fail to furnish to the public examiner of the state any report required by this act at the time so required it shall forfeit the sum of twenty-five dollars ($25) for every day such report shall be delayed or withheld, and the examiner may maintain an action in his name of office to recover such penalty, and the same shall be paid into the treasury of the state and applied to the expenses of the department of said examiner. After receiv- ing such annual report, the public examiner, if satisfied that such corporation has complied with all [the] provisions of this act and is entitled toclo business in this state, shall issue his certificate stating the compliance with such provi- sion and that that such corporation is entitled to do business in this state, which certificate shall be in force for the period of one (1) year unless sooner rescinded as provided in this act. The public examiner shall also issue such 762 APPENDIX IV. certificate to a domestic corporation which has complied with the law in re- gard to its articles of incorporation, and the deposit of securities and in all other respects except the filing of said report, which commenced business at some intervening period in any year. Such certificate shall also be issued to any foreign corporation authorized to do business in this state after conn lying with the conditions of section nine (9) of this act and shall be in force until the time herein required for such annual report. Sec. 2873.— It shall be the duty of such public examiner, at least once in each year, and as often as he may deem necessary, 10 assume and exercise over every building and loan association incorporated under the laws of this state, its business officers, directors and employes, all the powers and authority con- ferred upon him over banks and other moneyed corporations under the laws of this state, provided he shall not have the power to suspend operations of any such association, except in the manner provided in the next succeeding section. And such public examiner shall have the same supervision and con- trol over the business, within the state, of other corporations of like kind in- corporated under the laws of other states, territories or nations, doing business in this state. Upon the completion of any examination of any association made by said public examiner or under his direction, the association so exam- ined shall pay to said examiner a fee to be determined as follows, viz. : For the first one hundred thousand dollars iStoo,ooo) of assets, a fee of ten ($10) and for each additional one hundred thousand dollars ($100,000 j of assets, or major portion thereof, an additional fee of five dollars 1851. Sec. 2874 ( as amended, acts 1897, p. 461).— If it shall appear to said pub- lic examiner from any examination made by him, or from any report of any examination made bv him, or from any annual or semi-annual report afore- said, that any corporation governed by this act is violating its charter, or the law, or that it is conducting business in an unsafe, unauthorized or dishonest manner, he shall, by an order under his hand and seal of office addressed to such corporation, direct conformity with the requirements of its charter and of the law ; and whenever such corporation shall refuse or neglect to make such report or account as may be lawfully required, or to comply with such order aforesaid within thirty" days from the date thereof, or if it has become apparent that there is such a deficiency in its assets that the purpose for which the association was organized cannot be carried out, the public ex- aminer may, if such corporation be organized under the laws of the state of aesota, forthwith take possession of the books, records and the assets of every description of such corporation and shall at once proceed to make a careful and detailed examination of the condition of the affairs of such cor- poration ; and the hooks, records and assets of such corporation so held by him shall not be subject to levy or attachment or garnishment at any time while under his control. If at the close of such examination it shall appear to the public examiner that such corporation is able to complete and fulfill its contracts with its members, and that it is for the best interests of the stock- holders that such corporation --hall continue to do business, but that its offic- and directors or any of them are disqualified from acting as such by reason of in v, dishonest v or negligence in the management of the affairs of -aid corporation, he shall tile a statement in writing with the attorney- general settingforth the facts in relation to such disqualification, whereupon the attorney-general shall apply to the district court of the county where the , 1 corporation islocated for an order to show cause why uch tnd directors or any of them should not be removed, which order if gra 1 I be 1 turnable nol less than ten (10) days from the date of [j lI hi heal upon said order to --how cause, the court th ' th tffairs of such corporation are being mismanaged, or that are dishonest, incompetent or negligent, the . direct the removal of such officers or directors or any of them, and ni.r i lire thi public examiner to call a special meeting of the stock- hol poration at its home office in the manner prescribed by its by-laws for the purpose of electing directors or officers to fill such vacancies mii ( ,i such removal and for such other business as may ich meeting. The officers and directors elected at 1 1 ,1 1,, :. til hold offii until Mp- nexl annual meeting of such 1 on, and until their succes 01 are elected and qualified, but no 01 directorwho shall ha removed for cause shall be eligible I ion. Upon the election and qualification ol uch newly elected officers and direc- ; ill forthwith relinquish the books, records and i< h . 01 ] mi atii 'ii to ii . pro] er officers. GENERAL LEGISLATION. 763 If at the close of such detailed examination, as aforesaid, it shall appear to the public examiner that the corporation is unable to complete and fulfill its contracts with its members, and that it would be unwise and unprofitable for such corporation to continue to do business, he shall file a statement in writ- ing with the attorney-general, setting forth the condition of such corporation, with his reasons for such proceedings. Whereupon the attorney-general shall apply to the said district court tor an order to show cause why the affairs of such corporation should not be wound up and settled for the best interests of all its stockholders, which order, if granted, shall lie returnable not less than ten (10) days from the date ot service thereof. If at the heai ing upon said order to show cause, the court shall find that such corporation is unable to complete and fulfill its contracts with its members, and that it is unwise and inexpedient to continue to business, the court shall order and direct that such corporation go into liquidation and its affairs be wound up and settled under the direction of the court. And the court shall thereupon vest the management and control of such corporation in such of the direc- tors or officers thereof as may be best fitted in the judgment of the court to settle and wind up the affairs of such corporation. The office of the remain- ing directors and officers of such corporation shall be declared vacant by the court ; Provided, that the court may remove all or any of the directors' and officers of such corporations, if in its judgment it shall be for the best interest of the corporation so to do ; and upon the removal of all directors, the court shall appoint as directors of such corporation not less than three persons, at least two of which shall have been stockholders for at least one year prior to the date of such appointment ; the persons in whom the management of the affairs of such corporation is vested, as aforesaid, shall give such bonds, or fidelity insurance, as may be required by the court ; Provided, that at least two ot such directors shall reside in the state of Minnesota. The court may, at any time, for cause, as aforesaid, remove any or all officers and directors, and appoint others, as aforesaid ; Provided, further, that whenever the number of shareholders of such corporation shall be less than fifty 1 50 1 and their hold- ings of stock less than five hundred (500) shares, the court shall remove all officers and directors of such corporation and appoint one stockholder resid- ing in the state of Minnesota as special commissioner to wind up its affairs ; and, provided, further, that all such liquidation shall be under the supervision of the court. Such officers and directors shall report in such manner and at such times as the court shall direct. Sec. 2875.— All officers of any buildingand loan association governed by this act and doing business in this state, who sign or endorse checks, or handle any funds of such association, shall give such bonds or fidelity insurance for the faithful performance of their duties as the board of directors may require, and no such officer shall be deemed qualified to enter upon the duties of his office until his bond is approved by the board of directors and the public ex- aminer, with whom such bond shall be filed ; provided, that the public exam- iner may require of any association at any time such increase of said bond or additional security thereto or such increase of said insurance as he may deem necessary for the protection of the members. The penalty for the failure of any association to file and maintain the bonds or policy as required by the provisions of this section shall be a fine of one hundred dollars ($100) for each day such association transacts business after such bond has become due under the provisions of this act. Said bond or policy shall be held in trust for the benefit and protection of the members of such association and shall be enforceable by any member whenever the cause of action shall accrue thereon. Sec. 2876. — The name "building and loan association," as used in this act, shall include all corporations, societies, organizations or associations doing a saving and loan or investment business on'the building society plan, whether mutual or otherwise, and whether issuing certificates of stock, which mature at fixed time in advance or not. Sec. 2877. — Any officer, director or agent, or any foreign building and loan association, or any other person whatever.who shall in this state solicit subscrip- tions to the stock of such association, or who shall sell or issue or knowingly cause to be sold or issued to a resident of this state any stock of such associa- tion while such association shall not have had the certificate of the public ex- aminer authorizing it to do business in this state as herein described, or has not deposited as required by this act securities of the value and at the time herein prescribed or before said association has complied with all the provi- sions of this act, or when said association shall have been notified and re- quired to discontinue business in this state as hereinbefore provided, shall be 76-1 APPENDIX IV. guilty of a misdemeanor, and upon conviction thereof shall be punished by a hue of not less than one hundred dollars ($ioo) nor more than five hundred d( illars i S500 !, or by imprisonment of not less than ten ( 10) days or more than six (6) months, or both such tine and imprisonment in the discretion of the court. Any corporation governed by this act may, if ordered by a majority vote of its directors, or a vote of three-fourths of its stock, at any regular or special meeting of its shareholders, voluntarily go into liquidation ; Provided, that the public examiner shall consent in writing thereto. Notice of such action by the directors or stockholders, and the consent of the public examiner, shall be mailed to each stockholder of such corporation, at his last recorded address ; and thereupon such corporation going into voluntary liquidation may adopt such methods and measures as may be lawful, equitable and just for the wind- ing up of its affairs, subject to the direction and control of the public examiner ; Provided, that the methods so adopted shall, as nearly as may be, conform to the original plans and objects of such corporation; Provided, also, that any change in such plans or methods shall be approved by the public examiner be- fore being so adopted by such corporation ; and it is further Provided, that if it shall appear to be for the best interests of such corporation, the board of directors may change the plan of loans to a definite time or times of payment, at a rate of interest not exceeding the legal contract rate per annum ; or may negotiate or assign any or all of its mortgages for cash, at such times and on such terms of settlement as may appear to the best interest of such corpo- ration. Any such corporation in course of liquidation shall have authority to consol- idate with any other corporation organized for the same purpose upon such terms as •may be agreed upon and authorized by the boards of directors of the respective corporations, the majority of the stock consenting thereto, and to transfer to such consolidated corporation its entire assets, subject to existing liabilities. All expenses of such liquidation, whether voluntary or otherwise, including the compensation of officers, employes and directors, shall be paid from the funds belonging to such corporation, subject to the approval of the public examiner, in lieu of the expenses provided for in section thirty (30) of this act. And if such corporation shall have been organized under the laws of any other state or territory, the public examiner shall hie his statement in writing with the attorney-general, setting forth the facts or particulars in which said alleged violation or refusal consists, which statement shall be prima facie evidence of such violation or refusal ; and said attorney-general shall upon re- ceiving such communication, if, in his judgment, the facts of the case are suf- ficient to warrant such action, give notice to such corporation that it is no longer authorized to do business in this state, by depositing such notice in the ■nice, properly sealed and stamped, addressed to said corporation at its principal office in the state where incorporated, and thereupon said corpora- tion shall cease to have any right in this. state, and said notice may be published in the same manner as provided in section fourteen 1 141 of this act. The proceedings prescribed in this section for the winding tin and liqui- dation of the affairs of corporations governed by this act shall be exclusive of any remedies provided by the laws of the state of Minnesota relating to gen- eral corporations. Sec. 2878. — Any officer, director or agent of any building and loan associa- tion incorporated under the laws of this state or any other person whatever, who shall sell 01 i ue or knowingly cause to be sold or issued to any person not a resident of the county in which the home office of said association is I " ated, or in the counties immediately adjacent thereto, any stock of said ii 1 h [1 lid a iociation does not nave on deposit with the public < aminer 01 omeloanortru l company, as required by this act, securities of the value and at the time hereinafter prescribed, or while such association shall nol have a certificate ol the public examiner authorizing it to do business ribed, shall be guilty of a misdemeanor and upon conviction therefor hall he punii hed by .1 fineoi nol less than one hundred dollars ($100), and nol mon than five hundred dollars 1S500), or by imprisonment of not less than ii 11 1 10 da\ . more than |o , months or both such fine and imprison- in the 'ii ' retion "i < om 1. \nv premiums for loan, made by any association governed by thisacl hall nol Inc. ,n idered or treated as interest, nor render such associa- . the laws relating to usury. 1 ; refofore organized under the laws of this tale, or incorporated undei this acl shall not issued preferred stock, but GENERAL LEGISLATION. 765 may issue different series of stock, and all shares of stock hereafter issued shall be of the par value when matured of one hundred dollars ($100) each. Any such association mayissue instalment stock to be paid in periodical sums, and prepaid stock upon which a gross sum shall be paid in advance, and which instalment and prepaid stock shall mature when the amount so paid, together with the dividends declared upon the same, shall equal the par value of such stock (and a dividend bearing prepaid stock upon which a larger sum is paid than on the prepaid stock, and upon which a partial dividend may be paid annually out of the lull dividend apportioned thereto), and may also issue lull paid stock upon which the par value thereof shall he paid in advance, in the certificate of which stock the right of withdrawal may be waived for a defi- nite time, and upon which full paid stock a full dividend or a definite dividend may be paid, which dividend shall in no case exceed tlie per cent, of profits earned by all classes or series of stock at the time the said dividend is de- clared. Any such association may issue from time to time a limited amount of guaranty or permanent stock for which the full par value shall be paid at the time of issue or in instalments of five dollars ($5) on each share, from time to time, at the option of the purchaser, until the full par value of one hun- dred dollars ($100) is paid. Such guaranty or permanent stock to be paid a dividend on the amount paid in, such dividend not to exceed the per cent, of profits earned by all classes or series of stock at the time such dividend is -de- clared. The balance of profits (if any) and the principal paid on said stock not to be paid to holders of same until all lawful claims of every other class of stock shall have been fully liquidated and paid by such association. Pro- vided, that the total amount of guaranty or permanent stock at its par value issued by any association shall not exceed at the time of its issue twenty (20) per cent, of the amount of payments to the credit of all other classes of stock. No building and loan association shall issue any certificate of shares until the terms and conditions thereof shall have been first submitted to and approved by the public examiner. Sec. 2881 (as amended 1897, p. 521). — Any shareholder whose share or shares are not in arrears or pledged upon a loan, shall be entitled to withdraw such share or shares at any time twenty-four (24) months from and after the date of the first payment on such share or shares, and not before such date. Provided, that the board of directors may, if they deem it to the interest of the association, buy in the share or shares of any shareholder desiring to with- draw at a previous date, paying therefor the sum paid in on said shares less such discount as may be agreed upon, and which shall not in any case exceed eight (8) per cent. Any such shareholder may give notice of withdrawal in writing to the secretary of said association, and the liability of said share- holder to pay further instalments and right to share in future profits shall cease with said notice. Such withdrawing shareholder shall be entitled to receive, at the end of two (2) years from the date of his first payment, all monthly payments made on account of such share or shares (not including admission fees or fines) less the following deductions : Fifty (50) cents on each certificate in payment for issuing and cancelling the same, and two (2) per cent, of the amount so paid in for a contingent or reserve fund to be used by the association to meet any contingency or loss in its busi- ness, from the depreciation of its securities or otherwise (provided, that if the share or shares on which such notice of withdrawal is given are in arrears, a fine of ten (10) cents per share for each thirty (30) days such share or shares are delinquent maybe deducted, in addition to" the withdrawal fee and charge for the reserve fund hereinbefore provided for). All stockholders who do not give the notice as herein provided, failing to make payments shall be subject to a fine of ten (10) cents per share per month for each month such payments are in arrears, for a period of six (6) months after the last payment made (such fines in the aggregate not to exceed the sum of sixty (60) cents per share , and at the end of such period of six (6) months, if the arrearages and tines remain unpaid the balance of such monthly payments, if any, alter deducting the certificate fee, contingent fund and fines as herein provided, shall be sub- ject to withdrawal at a period not less than twenty-four (24) months from the date of the first payment, on application of the stockholder. If such delinquent shares are not reclaimed or called for within twenty-four (24) months from the date of the last payment, the balance, if any, to the credit of such delinquent shares shall be transferred to the contingent fund herein provided for, and the delinquent shareholder shall, from the time of such transfer, have no further claim upon the association on account of such share or shares, or the pay- ments made thereon. 766 APPEKDIX IV. Provided, that such shares which may have been pledged as collateral for the payment of a loan and become delinquent, shall be adjusted as provided for in section four (4) of this act If such withdrawing member has made twenty- four (24) or more payments and less than thirty-six (36) payments he shall re- ceive the amounts paid less the deductions provided for, and interest on such amount at the rate of rive (5) per cent, per annum, for the actual time the asso- ciation has had the payments in excess of twenty-four (24) months ; and if such withdrawing member has made thirty-six (36) or more payments and less than forty-eight 148) payments, he shall receive the amount paid in, less the de- duction provided for, and interest on such amount at the rate of six (6) per cent, per annum for the actual time the association has had the payments in excess of twenty-four (241 months ; and if such withdrawing member has madeforty- eight (48) payments and less than sixty (60) payments he shall receive the amount paid in, less the deductions provided for, and interest on said amount at the rate of seven (7) per cent, per annum for the actual time the association has had the payments in excess of twenty-four (24) months ; and if such withdrawing member has made sixty (60) or more payments, and the stock has not reached a maturity value, he shall receive the amount paid in less the deductions provided for, and interest on such amount at the rate of eight (,8) per cent, per annum for the actual time the association has had the pavments. Provided, that the net profits of the association for the time the association has had the use of all its funds, shall amount to the sum of five (5), six (6), seven (7), and eight f8) per cent, per annum, computed on the amounts paid in all the shares in force at the time such withdrawals are made, and if such profits are not sufficient when so computed, then the stock so withdrawn shall be en- titled to a rate per cent, found to be earned as net profits during said period, such interest payments to be in all cases in lieu of such profits. Provided, further, that if by reason of extraordinary losses the entire net profit is exhausted, the withdrawing member shall not be entitled to the in- terest herein named ; and if by reason of extraordinary losses, the association is compelled to charge such losses against its capital actually paid in, all with- drawing shares shall be subject to a "pro rata charge of such losses with those remaining undrawn, and in such case all payments herein provided shall be considered of no effect, and the withdrawing member shall only be entitled to such sums as may be found to be due him after the adjustment of such losses among all shareholders. And provided, further, that whenever the capital of an association has been impaired by losses in excess of its reserve fund and profits earned, it shall be the duty of the directors to suspend sales of all classes of stock until such losses have been adjusted and distributed pro rata as a charge upon the shares of stock in force. And provided, further, that no more than one-half {%) of the amount re- ceived in payments on stock by such association in any month shall be used to pay the withdrawal and maturity value of stock without the consent of the board of directors. And provided, further, that any association that has issued shares maturing at a definite period, which finds that its assets will not be sufficient under the mutual system to mature its stock at such period without unusual assessments, may with the consent of any stockholder settle and discharge his stock by paying to him at the maturity period, or sooner, if its directors deem it prac- tii able, such sum as he had paid into such association for monthly dues and withdrawal assessments, and such proportion of the profits as shall be mutu- ally deemed by them equitable. SEC. 27^. (As added, Acts [895, p. 238). — Every association shall, in addition to the contingent fund provided for by section twenty-seven (27) of this act, set apart out of the net profit of each year, for a contingent or reserve fund, the sum not less than five (SJ per centum, and not to exceed ten (10) per < . ntum of sin h nel profits tor that year ; Provided, that such contingent or . , Mm,! fiall not at any time exceed the sum of five (S) per centum of the total uch association, the same to be used for the purpose of making tnj i" by depreciation of stock, and not otherwise. Sei . 2882.- Upon the death "I a stockholder in any such association his heirs ..1 personal representatives upon giving sixty (60) days notice to the associa- tion, shall receive from such association the then withdrawal value of his eable to the provisions of section twenty-seven (-71 of this act. .-,-;_!•, -.cry such association shall provide in its by-laws in what GENERAL LEGISLATION. 767 manner application and bids for loans shall be received and who shall be en- titled to loans thereunder ; such proportion of the loan fund shall be loaned upon such application as the directors shall deem advisable ; Provided, the securities shall be in the character and amount as required by this act ; and Provided, further, that the provisions of this section relating to bidding lor loans shall not apply to associations which fix the rate of interest and pre- mium in any other manner. Sec. 2884. — All associations governed by this act may in payment of their expenses, use a sum not to exceed fourteen (14) per cent, of their receipts for payments on stock. Whenever a distribution the profits is made and at least twice in each year, each association shall charge against the profits accrued four-fifths of such expenses ; or, if there is not a sufficient amount of the profits to pay such part of the expense incurred, then the total amount of profits shall be so charged with expense and the balance of said four-fifths (4-5) of such expenses shall be carried as " Expenses Paid " until the next report or distri- bution of profits. The remaining one-fifth of such expenses shall, at the lime of making the charges to profits as herein provided, be carried to an account to be called "Permanent Expense," which shall finally be paid as follows: Whenever any share of stock has reached a maturity value the share of per- manent expense contributed by said share of stock shall be charged against it, and the sum found after deducting said share of permanent expense shall be deemed the true maturity value of said stock. All fees and fines received by any association may be used for the payment of expenses in addition to the amount herein provided for. Sec. 2885. — That not more than three (3) of the officers of any such associa- tion incorporated under the laws of this state shall be members of the board of directors of such association. Provided, that no change shall be required under this section until the next annual meeting of such association. Sec. 2886. — All corporations organized in this state and doing business in this or any other state as building and loan associations shall comply with and be subject to all provisions of this act within sixty (60) days after its pas- sage, and shall be entitled to all the privileges and benefits thereof without reincorporating. Sec. 2887. — This act shall not apply to any association organized under the laws of this state which confines its loaning and business operations wholly to its county and the counties adjacent and adjoining thereto ; Provided, that any such association heretofore incorporated which desires to hereafter con- fine its business to adjacent counties as aforesaid, may file with the public ex- aminer a statement to that effect, and also containing the names of those hold- ing the amount held by them of the stock of said association outside such counties, and so long as such association thereafter confines its sale of stock within the limits aforesaid, it shall not be subject to the provisions hereof, and any sales of stock outside the limits of said counties, made after filing of such statements by any officer, director, or agent of any association, shall subject such person to all the penalties prescribed in section twenty-four (24) of this act. Provided, further, that nothing in this section shall be so construed, to prevent the bona fide sale or transfer of the individual stock of any mem- ber of such association. Sec. 2888. — Every such association shall be assessed for and pay taxes upon its office furniture and fixtures, and all real estate acquired in the course of its business. Sec. 2889 (as amended 1895 p. ). — The amount standing to the credit of each member of any such association, upon its books, shall be considered and held as the individual credit of such member, and each member shall list the shares held by him for taxation at their real value in money in the county of his residence, the same as other creditors are listed. Sec. 1890. — It shall be the duty of every such association not incorporated under the laws of this state, to make and forward to the public examiner, upon the first day of May in each year, a statement containing the names and the withdrawal value of all its stock held and owned by residents of this state, to- gether with the place of residence of every such stockholder except those having loans as provided in the foregoing section, and it shall be the duty of said public examiner to make out and forward to the county auditors of the proper counties a statement of the stock held by them. And it shall be the duty of the said county auditors, upon receiving the statements provided for in this and the foregoing sections, to furnish the assessors of each town in his county having such stockholders, with the names of such stockholders, and the value of their stock as given in such statements, for the purpose of assessment 768 APPENDIX IV. Sec. 2891. — Any such association shall have authority to consolidate with one or more other corporations organized for the same purpose, upon such terms as may be agreed upon when such consolidation shall be deemed ad- visable by a majority vote of its members, and to transfer to such consolidated corporation its entire assets subject to the vested rights of its members. Sec. 2892. — All securities, cash, mortgages, certificates, bonds, notes, receipts, statements and records heretofore deposited with or received by the state auditor pursuant to law, shall upon the passage of this act, be transferred and delivered bv him to the slate treasurer, who shall receive the same, and who with his sureties shall be liable for the safekeeping thereof. The treasurer shall deliver up such securities only upon the written order of the public ex- aminer except in pursuance of this act. All securities of such association heretofore required to be deposited with the state auditor shall be hereafter deposited as in this act provided. Upon filing any mortgage, the treasurer shall receive a fee of fifteen (15) cents therefor, and upon withdrawal of the same he shall receive a fee 6( ten (10) cents therefor, to be paid by the association so filing or withdrawing it. Sec. 2893. — The public examiner and state treasurer respectively shall retain all the fees by this act provided to be paid to them or either of them in lieu of any allowance for clerk hire made necessary by the extra labor imposed by this act, and they are respectively hereby authorized and em- powered to make and execute any and all orders, releases or other papers which the state auditor was heretofore authorized to make or execute in the premises. Sec. 2894.— At least thirty (30) days nrior to any annual or special meeting of the stockholders of any such association governed by this act, a notice stat- ing the time and place of such meeting shall be deposited in the postoffice at the headquarters of such association, directed to each member to his address as the same appears at such time on the books of the association, and when so deposited, postage prepaid, shall be deemed a legal and sufficient notice of any such meeting, and there shall be attached to and accompany such notice any proposed amendment or amendments to the articles of incorporation, of any such association, and a statement of any officers to be elected at such meeting. Any amendments so proposed and of which such notice shall have been duly given, may be adopted at such meeting by the vote of two-thirds of the stock represented and voting thereat. Any member of such associa- tion entitled to vote at such meeting may vote in person or by proxy ; but no person shall be appointed such proxy who shall not reside in the same county where the stockholder so appointing him resides at the time of such appoint- ment, except that stockholders residing outside of this state may appoint proxies residing in any county in this state ; and no person shall be appointed proxy in any case who is, at the time, an officer, agent or employee of any such association ; and no person shall hold proxies to exceed five hundred votes for any such meeting. Upon all questions to be voted upon at such meeting the vote shall be taken by calling the roll of persons entitled to vote thereat with the number of votes which each is entitled to cast, and the vote shall be by written or printed ballot, the form for which may be prescribed by the board of directors. Approved April 2}, 1891. [ACTS 1895, p. 238.] This act shall not apply to any association organized under the laws of this state which confines its loaning and business operation wholly to its county and the counties adjacent and adjoining thereto ; Provided, that any such as- iiion heretofore incorporated which desires hereafter to confine its busi- it counties, as aforesaid, may file with the public examiner a statemenf to thai effect, and also containing the names of those holding the by them of the Stock of said association outside such counties; an'! iation thereafter confines its sales of stock within the limit afon said it -hall nol he subject to the provisions hereof ; and anysales of ti limil ol aid counties made after filing of such statements ny officer, directoi or agenl <•! any such association shall subject such on to all the penalties prescribed in section twenty-four of this act ; /'/<>- ■.■id, d, further, that nothing in this section shall be so construed to prevent the of the indiviilu.il .lock of any member of such asso- ciatioa 1 oved April 25, 1895. GENERAL LEGISLATION. 769 (ACTS 1895, p. 312). Section 1. — It shall be lawful for any building, loan and savings associa- tion, doing a general business and incorporated under the laws of this state, to receive deposits and invest their surplus money as hereinafter provided. Sec. 2. — Any such association may, by a resolution of a majority of the board of directors, invest its surplus moneys not otherwise invested as pro- vided by law, in the purchase of real estate at any tax sale held in any county in this state, or in the purchase from the state of any lands bid in for or by the state at any such tax sale, pursuant to the statutes in such case made and pro- vided, and remaining unredeemed ; and the auditor of the county wherein the lands so purchased are situated shall execute to the association so pur- chasing a certificate of sale, or a state assignment certificate, as the case may be, as if the purchaser were a natural person ; Provided, that the amount so invested in each month shall not exceed fifty (50) per centum of moneys not otherwise invested in any one month ; Provided, further, that the full amount so invested shall not at any time exceed twenty (20) per centum of the whole amount otherwise invested. But no moneys shall be invested in such tax titles except such moneys as shall have accumulated and remained uninvested for a period of sixty (60) days after all acceptable applications for loans by its members shall have been provided for. Sec. 3. — Any association mentioned in section one (1) of this act, to which a certificate of sale or a state assignment certificate is issued, pursuant to section three (3) of this act, shall, if the lands therein described are not re- deemed according to law, take hold and own the same in fee-simple and be authorized to sell and convev the same to all intents and purposes and to the same extent and degree as if said lands had been acquired by such association in the regular course of its business under and pursuant to chapter one hun- dred and thirtv-one (131) of the general laws of 1891, entitled " An act to amend an act entitled, 'An act relative to building, loan and savings associa- tions, doing a general business, the same being chapter two hundred and thirty-six (236) of the general laws of one thousand eight hundred and eighty- nine (1889) and all acts and parts of acts and all laws of this state incon- sistent with this act are hereby repealed. Approved April 26th, 1895. MISSISSIPPI. ANNOTATED CODE OF 1892. Sec 851. — A loan of money shall not be made by a corporation to any stock- holder therein * * * ; but banks and building associations may loan money to their stockholders. ACTS 1898, p. 10. Sec 1. — A privilege tax is levied as follow son the following industries carried on in this state, to-wit. * * * Sec 13. Building and Loan Associations : On each building and loan association whose stock or shares represent monthly payments not exceeding five hundred dollars ------- 25 00 Same : Whose shares of stock represent monthly payments of five hundred dollars or more and less than one thousand dollars - 50 00 Same : Whose stock or shares represent monthly payments of one thousand dollars or more and less than two thousand dollars - 100 00 Same : Whose stock or shares represent monthly payments of two thousand dollars or more and less than three thousand dollars - 15000 Same : Whose stock or shares represent monthly payments of three thousand dollars or more 200 00 And each building and loan association incorporated by any foreign country, or other state of this union, but whose principal office is not in this state, and which shall establish agencies or branches in this state, shall pay to the treasurer of the state direct a privilege tax as follows : ON EACH BUILDING AND LOAN ASSOCIATION, Whose stock or shares held by residents in this state represent monthly payments of not exceeding five hundred dollars - - 25 00 Same : Whose stock or shares held'bv residents of this state represent monthly payments of five hundred dollars or over and less than one thousand dollars 50 00 770 APPENDIX IV. Same : Whose stock or shares held by resident owners in this state represent monthly payments of one thousand dollars or over and less than two thousand dollars -- ioo 00 Same : Whose stock or shares held by resident owners in this state represent monthly payments of two thousand dollars and less than three thousand dollars -__.".____ j- oo Same : Whose stock or shares held by resident owners in this state represent monthly payments of more than three thousand dollars 250 00 Same : And all building and loan associations within this state, or doing business in this state, who loan their money to others besides their own mem- bers, or exclusively to others than their members, the same privilege as is herein imposed on building and loan associations which loan exclusively to its members. And the above tax on building and loan associations shall be in lieu of all other taxes, whether state, county or municipal (except tax on real estate) shall be made, and this applies to both resident and non-resident com- panies doing business in this state ; and when any foreign building and loan association shall desire to pay any such privilege tax, the treasurer of this state shall require from said association a statement, verified and sworn to by the president and secretary of said association, of the actual amount of stocks and shares of stock held by residents of this state in said association, for any and all calendar months for six months next before the date of the application for such privileges, and from said statement the treasurer shall estimate the said privilege and report the same to the auditor of public accounts, who shall issue the privilege, upon the payment to him by said association the tax due in accordance with the schedule set out in this act. ACT 1S96, p. 33. Foreign mutual benefit or insurance or building and loan or saving associa- tions doing business in the state of Mississippi, through local sections, branches, lodges or bodies, shall, by special appointment, in writing, executed like letters of attorneys to be recorded in the same manner in the office of the chancery clerk where such agent resides, or by law, designate some member of such local section, branch, lodge or body, in each county in which such benefit or insurance or building and loan or saving association may do business, who shall receive process of summons in any suit against such mutual association. Should such foreign organization refuse or neglect to comply with the provisions of this act, then the member of such local order or section who collects from the members thereof their dues or assessments, or who transmits or reports such collections to the chief or supreme officers of such foreign association, shall be deemed the agent of such organization upon whom the service of process issued by any court in this state, shall be sufficient to compel the appearance of such defendant Approved March 9, 1896. MISSOURI. ACTS 1895, P- 28 - Sec. 1. — Any number of persons, not less than twenty-five, who are residents of this state, and who shall have associated themselves together by an agree- ment in writing, such as is hereinafter described, with the intention to con- stitute a corporation for the purpose of assisting each other, and all who may . /ard bei ome associated with them, in acquiring real estate, making im- I rovements thereon, and removing incumbrances therefrom, by advancing to its members out 01 a fund accumulated by the payment of periodical instal- ments or otherwise, a sum equal to the par of their shares, and for the further I 11 1 ose of accumulating the savings of its members to be returned to such ol its members who do not obtain advances for any of tlie purposes above ntioned, when the savings and the profits arising therefrom shall amount toa ' ■ rtain sum per share, to I • • fied in the articles of agreement, shall tie .1 1 orporation on com] lying with the provisions oi this act, and shall tin a ( or] oration, with all the powers and privileges, and subject to all the dutie , [imitations and restrictions, conferred by general laws upon cor- poration , <■■■:< < 1 1 as hereinafter otherwise provided. Si o. 2. — Said articles ol agreemenl mentioned in the foregoing section shall <••! forth : t. The name of the proposed corporation, which shall not be the same as Uic name oi any coi poration already incoi porated in this state for similar pur- GENERAL LEGISLATION. 771 poses and actually carrying on business, nor so nearly the same as to be liable to be mistaken therefor. The words " building and loan association," or "savings and loan association," shall form part of the name of every corpo- ration created under this act. 2. The name of the city or town and county in which such association is to be located. 3. The limit of the capital to be accumulated, the number of shares into which it is divided and the par value of each share, the number of shares sub- scribed for, which shall not be less than 30 in number, and that the hrst month's dues have been paid there m. 4. The names and places of residence of the several incorporators, and the number of shares subscribed by each. 5. The number of directors and the names of those agreed upon for the first year. 6. The number of years the corporation is to continue, which in no case shall exceed fifty years. 7. The purposes for which the corporation is formed. The articles of agreement shall be signed and acknowledged, as required by law in the case of deeds conveying real estate, by any ten of the parties thereto, and shall be recorded in "the office of the recorder of deeds in the count v or city in which the corporation is to be located ; and a copy thereof, certified by the said recorder to be a correct copy of the same as filed in his office, shall be filed in the office of the secretary of state. Sec. 3. — The shareholders of such corporation may make and adopt all nec- essary by-laws, rules and regulations for the government of the affairs and business of the corporation, provided that the same shall not be inconsistent with the constitution or laws of the state. A copv of such by-laws, rules and regulations shall be filed in the office of the state treasurer. Unless corpora- tions organized hereunder shall engage in business as provided in this act within two years after the date of the issuing of the certificate of incorpora- tion, such certificate shall be deemed revoked. Sec. 4 — The number, title and functions of the officers of any corporation created by virtue of this or any previous act, their terms of office, the time of their election, as well as the qualification of electors, and the time of each periodical meeting of the officers and shareholders of such corporation, shall be provided for in the by-laws. No person shall be eligible to become or shall continue a director unless he shall be the owner of at least two shares of the capital stock of such corporation, and not delinquent in any manner upon any payments due from him to said corporation. Any proxy dated prior to six months before the annual meeting of any association's), as provided in its by-laws, shall be void. All officers of any building, loan and savings as- sociation (except the president and vice-president) doing business in this state, whether created under this act or any previous laws of this state, who have the custody or handling of, sign or indorse checks, or any of the funds or securities of such association, shall give such security for the faithful per- formance of their duties as the by-laws may require, and no such officer shall be deemed qualified to enter upon the duties of his office until such security is approved by the board of directors and the circuit court in the county in which the main office of the association is located. All such bonds shall be filed with the state treasurer, or some depository designated by him : Provided, that the state treasurer may require of any officer at any time such additional security, or such increase of said bond, or new bond, as he may, upon sufficient cause shown, deem necessary for the protection of the corpo- ration and its members. The penalty for the failure of any ass. .ciatii m to hie and maintain security furnished by its officers, as required by provisions of this section, shall be a fine of ten dollars ($10) for each day such association shall transact business after the time such bond should have been given and deposited under the provisions of this act, which penalty, when collected, shall be paid into the state treasury and credited to the building, loan and savings association fund in the state treasurer's office. Sec. 5.— 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 corporations 'shall hold their respective offices until their successors are duly elected. Sec. 6.— The object of such corporations shall be the accumulation of a capital in money, to be derived from payments by its members in periodical instalments or otherwise, at such time and in such manner as shall be pro- vided in the by-laws, and from the profits and accumulation arising from the investment of such payments. The capital so accumulated by any corpora- 772 APPENDIX IV. tion created by virtue hereof shall not exceed in the aggregate and full ulti- mate value the' sum of ten million dollars, and shall be divided into shares or equal value ; the ultimate value of such shares shall not exceed one thousand dollars. Said capital may be issued in full paid, prepaid or instalment shares, in such amounts and at such times and in such manner as may be provided in the by-laws. Payments of dues or instalments on shares shall commence and date from the time provided in the by-laws. There shall be issued to every shareholder a certificate signed by the president and secretary of the corporation, and evidenced by its corporate seal, setting forth distinctly and clearly the class of stock for which he has subscribed, and the provisions in the by-laws relating to stock of the class, the interest which it may draw, and the withdrawal value which it may have at any time, and also the time when the said stock shall be withdrawable. Such certificate shall be deemed in all courts of justice to be a contract between the corporation and the share- holder, and shall determine at all times the liability of the corporation to the holders of its shares. It shall be subject to a lien in favor of the corporation for the payment of unpaid instalments, hues and other charges incurred thereon, under the provisions of the charter and by-laws. The by-laws may prescribe the form and manner of enforcing such lien. New shares may be issued in lieu of any shares withdrawn, redeemed, cancelled or forfeited. Said capital, as accumulated, shall from time to time be loaned or advanced to members of the corporation, who shall give security for the prompt and con- tinued payment of all dues, interest, premiums and fines, until each of the shares so advanced upon shall reach the ultimate and full value thereof. Sec. 7. — The moneys accumulated for payments on account of stock, inter- est, premiums and fines as aforesaid, or from any other source whatsoever,, after due allowance made for all necessary and proper expenses, and subject to the provisions hereinafter in section 15 contained and set forth respecting the withdrawal and cancellation of shares, may, at times provided in the by- laws, be offered to such shareholder or shareholders who shall bid the highest premium for the preference or priority of right to have a loan or advance of a sum equal to 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 [a] sum of money equal to the full value of each share held by him, in the method provided for in the by-laws of such association ; the said premium bid may be deducted in gross from the amount of the loan, or may be charged, and be required to be paid in proportionate amounts or instalments, at such time during the existence of the shares of stock loaned or advanced upon as may be provided in the by- laws of the association ; Provided, that where the stock of an association is issued in series, or at different times, in such manner that all said stock will not mature at the same time, then the borrower shall pay only such propor- tion of the full premium as the number of months his stock lacks of being one hundred and twenty months old, bears to one hundred and twenty months. Said association may provide in its by-laws that the bid for loans at its stated meetings, instead (if a premium shall be a stated rate of annual in- I upon the sum desired, payable in periodical instalments ; such bids shall be the interest to be paid during the whole period of the loan or ad- vance. A shareholder shall be entitled to borrow such fractional part of a share as the by-laws mav provide. In case there shall be a balance of money remaining undisposed of at any stated meeting, the directors may, at their di cretion, loan the funds so remaining on hand l<> others than stockholders on til . of prime unincumbered real estate; Provided, that any such ition may, by its by-laws, dispense with the ol ering of its money for bid-, and in lieu thei eof loan or advance its money to members al such a rate ot im or interests and premium as may be provided by the by-laws, such 1 1 be paid in gross instalments. >] loans or ad vain es as af< iresaid shall consist of a per- 011 the ..in Mini to In- loaned, advanced or bon ov ed, and shall be a 1 addition to inter aforesaid, on the amount loaned, and said n hall !"■
  • — Any shareholder, or the legal representative of any deceased shareholder, wishing to withdraw from the said corporation, shall, subject to IIk- 1 .; the by-laws, and his certificate of slock and the limitations lafter mentioned, have power to do so, upon giving one month's written his intention so to do, delivered to the association at or before a I meeting of the directors, or at such other time as (he by-laws may pro- ire a stated meeting, the lime of such notice shall not be (Commenced to run until (he first stated meeting thereafter. 1 . ' nbei withdrawing, or, if deceased, his legal representative, shall, if hi idrawable according to the term of the contract, be entitled nand, the amount actually withdrawable al the time ol mak- ipplication foi withdrawal,; rding to the by-laws of the corporation and tl ions of the certificate of stock. At no time, however, shall more GENERAL LEGISLATION. 775 than one-half of the receipts of the corporation for any fiscal month, and, when the corporation is indebted on matured shares of an earlier'series, not more than one-third of said receipts, be applicable to the demands of the withdraw- ing shareholders, or of shareholders whose stock has been forfeited in the manner hereinafter provided, without the consent of the directors ; and when the demands of withdrawing shareholders exceed the moneys applicable to their payment, they shall be paid in the order in which their notice of with- drawal shall have been filed with the association. No shareholder shall be entitled to withdraw whose stock is pledged as security for a loan from the association, or whose stock is subject to any other hen or charge in favor of the association. Sec. 16. — In case any member not having a loan from the association shall fail to pay dues or fines for three months, then the shares of such member may, at the option of the board, be forfeited by paying back to or crediting such member with the same amount as he would oe entitled to if he had voluntarily withdrawn, less all tines and charges due. Should a member fail entirely in his payments for twelvemonths, then his shares shall ipso facto be can- celled, and he shall be credited with the same amount as if he had voluntarily withdrawn, less all hues and charges to date, and shall at once cease to be a member ol the association. The amount so placed to his credit shall be paid to him out of the funds hereinbefore made available for that purpose, but shall not bear interest. The by-laws may provide for fines to be paid in case of default in payment of monthly dues and premiums. All payments made by said corporation for any purpose whatsoever shall be by order, check or draft, signed by the president and the secretary. The name of the payee, the amount paid and the purpose for which said payment shall be made, together with the date of such payment, shall be entered on the said order, check or-draft Sec. 17. — All such corporations heretofore and hereafter organized in this state shall have the power, if provided in its bv-laws, to borrow money for temporary purposes, not inconsistent with the objects or their organization ; but no loan for such purpose shall have a longer duration than two years, nor shall such indebtedness exceed at one time the aggregate amount of the in- come from dues and interest for six months. Sec. 18. — The board of directors of any association formed under the pro- visions of this or any previous act may from time to time declare dividends from the earnings of the association, to be paid or credited in such manner as may be provided in the by-laws, but no dividend shall be declared except from the earnings of the association ; and if the said board of directors shall declare, credit or pay any dividend when the company is insolvent, they shall be jointly and severally liable, to the extent of the dividend so declared, cred- ited or paid, for all the debts of the association then existing, or that shall be thereafter contracted while they shall respectively continue in office ; Piv- vided, that any of the board of directors who shall object to the declaring of such dividend, or to the payment or crediting of the same, and who shall, at any time before the time fixed for the payment thereof, file a certificate of his objection, in writing, with the secretary of the company, and with the state treasurer, shall be exempt from such liability. But no director who shall be present at any meeting when such dividend is declared shall be exempt loin such liability, unless he shall then and there object to the declaration, credil or payment of such dividend, and shall also procure his objection to be noted in the book of minutes of such association. Sec. 19.— Any officer, director, trustee, attorney, agent or servant of any association heretofore or hereafter to be incorporated, who shall use or dis- pose of any part of the moneys, property, assets or funds of such association, or assign, transfer, cancel, deliver up or acknowledge satisfaction of any bond, mortgage or other written instrument belonging to such association, unless duly authorized, or otherwise than in the regular and legitimate business of the corporation, or who shall be guilty of any fraud in the performance of his duties, shall be liable civilly to the corporation, and also to any other party injured, to the extent of the damage thereby caused, and shall also be deemed guiltv of a misdemeanor. Sec. 20.— Any mutual building, loan and savings association hereinbefore organized under the laws of this state shall have power to provide for the transaction of future business under the provisions of this act, by calling a meeting of its stockholders for that purpose ; notice of such meeting shall be given in the manner provided in its by-laws for special or annual meetings of stockholders. When so assembled, the stockholders shall have the power, by a majority vote of the stockholders present, to change, alter or repeal their present constitution and by-laws, and to adopt such new constitution and by- 776 APPENDIX IV. laws as they may deem needful for their future government, provided they do not conflict with the laws or constitution of this state. Sec. 21. — Any two or more corporations may unite and become incorporated in one body, with or without any dissolution or division of the funds of such corporations, or any or either of them, or any such corporation may trans- fer its engagements, funds and property to any other such corporation upon such terms as may be agreed upon by three-fourths of the members of each of such bodies present at the meeting of the members con- vened for that purpose, by notice stating the object of the meeting, sent through the postofnee to every member, and by a general notice, appearing daily at least one week, or weekly at least two weeks, in some newspaper published at the place of the principal business of the corporation ; but no such transfer shall prejudice any right of any creditor of any such corpora- tion to have payment of his debt out of the assets and property thereof, nor shall any creditor be thereby deprived of or prejudiced in any right of action then existing against the officers or directors of said corporation for any neglect or misconduct. Sec. 22. — Xo member of any corporation who has borrowed money from the same shall be allowed to vote on any question affecting the claim of such corporation against himself. Sec. 23. — Every such corporation may extend the time of its duration so as to make the entire period of its corporate existence not to exceed fifty years, by a vote of three-fourths of its stockholders, at any meeting called for that purpose — notice of such meeting having been first given as provided in sec- tions 2499 and 2500 of chapter 42 of the Revised Statutes of 1889 of the state of Missouri — and by paying into the state treasury a fee of five dollars for a cer- tificate of such extension. Sec. 24. — Foreign building and loan associations doing business in this state shall conduct their business in this state in accordance with the laws of the state governing domestic associations, and no such association shall do any business in this state until it shall procure from the state treasurer a certifi- cate of authority to do so. To procure such authority such association shall comply with the following provisions : First — It shall deposit with the state treasurer one hundred thousand dol- lars, either in cash or bonds of the United States or of the state of Missouri, or of any county or municipal corporation in the state of Missouri, satisfactory to the state treasurer. Second— -It shall file with the treasurer a certified copy of its charter, con- stitution and by-laws, and other rules and regulations showing its manner of conducting business, together with a statement such as is required semi-an- nually from all associations. Third — It shall also file with the said state treasurer a written instrument, duly executed, agreeing that a summons may issue against it from any city or county in this state, directed to the sheriff of the county or city in which the office of the state treasurer is situated, commanding him to serve the same by certified copy personally upon the said state treasurer, or by leaving a copy thereof at his office. The said state treasurer shall, however, mail a copy of any papers served upon him, postage prepaid, to the home office of such asso- ciation. Sic. 25. — Whenever such association has complied with the provisions of this act, and the state treasurer is satisfied that such association is doing busi- ness according to the laws of this state, and is in sound financial condition, he shall issue his certificate of authority to such association to do business in this Annually thereafter, in the month of January, upon the filing of the semi-annual statement herein provided for, it" the state treasurer shall be satisfied as aforesaid, he shall issue a renewal of such certificate of authority. Sec. 26. — Such foreign associations may collect and use the interest on any 1 ities so deposited, so long as it fulfils its obligations and complies with the provisions of this act. It may also exchange them for other securities of equal value and satisfactory to the secretary ol the state. Si 1 27. rhe deposit made with the itate M easurer shall be held as security for all claims of residents of this state against said association, and shall be liable for all judgments or decrees thereon, and subjected to the payment of ! tin- ame manner as the property of other non-residents. Should ition cea e to do business in this state, the state treasurer may cm tii in his discretion, after one year's notice of the fact, retaining Buffil ienl to satisfy all outstanding liabilities. Sec 28. — Should the state treat urer find, upon examination, that any foreign association docs nut conduct its business in accordance with the law, or that GENERAL LEGISLATION. 777 the affairs of any such association are in an unsound condition, or if such association refuses to permit examination to be made, he may cancel ihe authority of such association to do business in this stale, and cause a n itice thereof to be mailed to the home office of the association, and to be published in at least one newspaper published in Jefferson City. After the publication of such notice, it shall be unlaw! ul for any agent of said association I any further stock deposits from members residing in this state, except pay- ments on stock on which a loan has been taken. Sice. 29. — Foreign building and loan associations shall pay to the state treasurer the following fees, which shall be paid into the treasury, to credit of the building and 1 ian association fund in the office ol said treasurer, to wit: For filing each application for admission to do bu 1 in this state, one hundred dollars ; for each certificate of authority ami annual renewal of same, fifty dollars. Said foreign associations shall pay t< 1 the said treasurer for filing each semi-annual statement as follows : If the assets of the association, as shown by the statement tiled, amount to §50,000 or less, S3.00 ; if more than $50,030 and less than $ 100,000, $5.00 ; if more than 8100,006 and less than $250,000, $10.00 ; if more than $250,000 and less than 8500,000, $20.00; it more than $500,000 and less than $1,000,000, $30.00, and if more than $1,000,000, $50.00; for each copy of a paper filed in his office, twenty-five cents per folio ; for affixing the seal of office and certifying any paper, one dollar. Sec. 30.— It shall be unlawful for any foreign building and loan association to do business in this state without having first complied with the provisions of this act, and any such association violating any of the provisions of this act, or failing to comply with any of its provisions, shall be fined not less than fifty nor more than one thousand dollars, to be recovered by an action in the name of the state, and on collection paid into the state treasury, to the credit of the building and loan association fund in the office of the said state treasurer ; Provided, that building, loan and savtngs associations organized in other states having heretofore transacted business in this state, which shall not have complied with the provisions of this act, shall have the right to close up their business and fulfil their contracts heretofore entered into with citizens of this state, through their duly authorized agents, without being sub- ject to the penalties prescribed by this act. Sec. 31. — The stock in any building and loan company or association shall be liable to sale on execution issued from a court of record by the sheriff, and upon such sale, it shall be the duty of the proper officer of said corporation or association to transfer and assign the same to the purchaser on its stock- book, and issue certificates to the purchaser, reciting the fact of such sale, and thereupon the purchaser shall be substituted to all the rights, duties and privi- leges that the original owner had before the sale. Approved April20, 1895. [ACTS 1897, p. 91.] Section I. — There is hereby created a bureau of building and loan super- vision. The chief officer of said bureau shall be designated as the super- visor of building and loan associations. He shall be a citizen of this state and have knowledge and experience of building and loan business, and be appointed by the governor, by and with the advice and consent of the senate, and shall hold his office for a term of four years ; but the governor shall have the power to suspend the supervisor from office whenever, in his opinion, the public interest may require it, or, with the advice and consent of the senate, to remove him from office. If a vacancy shall at any time occur, the same shall be filled by the governor by the appointment for the unexpired term, subject to confirmation of the senate, if in session ; if not, then at its next ses- sion. The supervisor shall receive a salary of two thousand dollars per annum and necessary travelling expenses. He may appoint such clerical help as mav be necessary to properly attend to the duties of his office, at a cost not to exceed fifteen hundred dollars per annum, and may from time to time appoint such examiners as may be necessary to carry out the provisions of this act. Before entering upon his duties the supervisor shall give bond to the state of Missouri in the sum of ten thousand dollars, to be approved by the governor and attorney-general, and shall be filed in the office of the secretary of state. Sec 2. — Every such corporation shall semi-annually, in the months of March and September, publish in one or more newspapers of general cir- culation in the county where the principal office of such corporation is lo- cated, a statement, verified by the oath of its president and secretary in such 778 APPENDIX IV. form as the supervisor may prescribe, and the said report shall be made upon blanks prepared by the supervisor and furnished by him to such association. The first report to be made under this act shall be made in the month of March, 1897, and every six months thereafter. In addition to the semi-annual reports hereinabove provided, each association shall, when requested by the mi: ervisor, answer in writing, under oath, by its president and secretary, such questions as may be propounded by the supervisor relating in any way to the business of such association. The state supervisor shall cause said report to be published in a newspaper published in the county, town or city wherein is located the principal office of such association, the cost of such publication to be paid by such association. Such report shall be verified by the oath or affirmation of the president and secretary of such association, and any wilful swearing to any statement or statements which are untrue with regard to such reports shall be deemed perjury, and shall subject the offender to prose- cution and punishment as 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 accompanied by twenty cents for each one thousand dollars of assets shown thereby, which moneys shall be paid into the state treasury, to the credit of a fund to be known as the " Building and loan supervision fund." The secretary of each association submitting such report shall deposit in the postoffice and prepay the postage thereon, correct copies of such semi- annual report properly addressed to each shareholder as his address may appear on the books of the association. Any secretary or president of any such association who shall wilfully neglect or refuse to file such statement within the period hereinabove prescribed, shall be subject to a fine of not less than twenty dollars nor more than two hundred dollars for each neglect or refusal to furnish such statement, said fine shall be recovered by indictment against such secretary or president, and when collected shall be paid into the state treasury and credited to the building and loan supervision fund. Sec. 3. — It shall be the duty of the supervisor, in person or by one or more persons by him appointed for that purpose, who are not officers or agents of or in any manner interested in any building and loan association, to make a full and careful examination of the affairs of any such association whether heretofore or hereafter organized, in his discretion not oftener than once in each year, and make his report thereon as herein provided. The officer mak- ing such examination shall have power to administer oaths, to take all testimony by him deemed necessary and proper, and compel the attendance of witnesses and the production of books and papers, and by like process and in like man- ner us is now provided by law to procure the attendance of witnesses and production of books and papers, in actions at law in the courts of record in this state. In every such examination, inquiry shall be made as to the nature and resources of the corporation generally, the mode of conducting and man- aging its affairs, the action of its directors, the investment of its funds, the se- curity afforded its members and those by whom its engagements are held, and whether the requirements of its charter and the law have been complied with in the administration of its affairs. The supervisor shall, as soon as practicable after such examination, forward a report of the result of such examination, to- gether with such suggestions as to him may seem proper, to the president of such association. The refusal of any such corporation to permit the examina- tion of it - affairs as required by this act shall be a sufficient cause for the institu- tion of proceedings to wind up its affairs as hereinafter provided. The ex- 1 examination shall be paid out of the building and loan super- vision funds, bul the amount to be charged therefor shall not exceed the sum of five dollars per day for the time actually expended in making Hie same, and the actual and necessary expenses incident thereto. ; iid supervisor shall, annually, on or before the first day of January in each year, report to the governor the financial condition of all as- sociations doing business in this slate. No association organized after the taking effeel ol tl acl shall be permitted to do business outside its home and immediately adjoining counties until it shall have assets equal to liabilities, ubtedly good, of at lea 1 one hundred thousand dollars based on dues paid in. SEi . 5. — If it shall a: | iear to the said supervisor from any report of any such iation, whether heretofore or hereafter organized, or from any exami- nation made by him, 01 by the person or persons appointed in- him to make lination, or from any knowledge or information in his possession, bom whal itained, thai any such association has committed a ition of its 1 harter or ol law, or thai aid association is conducting its busi- in an an afe and unauthorized manner, or that the assets of any such as- GENERAL LEGISLATION. 779 sociation are insufficient to justify the continuance of business by such associ- ation, he shall communicate the tact to the officers or directors of such asso- ciation. Such officers or directors shall be allowed sixty days within which to make the assets sufficient or to correct any illegal i radices ; and in case such assets are not made sufficient or the illegal practices corrected within the time herein provided, or whenever it shall appear to the said supervisor that it is unsafe or inexpedient for any such association to continue to transact business, said supervisor shall institute proceedings in the circuit court in the city or county in which such association has, or had, its principal office, to enjoin or restrain such association from the further prosecution ol its business either temporarily or perpetually, or for such injunction and the dissolution of such association and the settling and winding up of its affairs, or for any and all of said remedies combined as the supervisor may deem necessary. Sec. 6. — Such proceedings shall be conducted by the attorney-general of the state, and in the name of the state of Missouri as plaintiff, at the relation of -aid supervisor. The jurisdiction of circuit court, and the processes, j leading and proceedings had in the cases instituted under this act, shall be the same as are now provided by law for the winding up and dissolution of insurance com- panies, far as such provisions of law are applicable. The actual expenses of attorney-general shall be paid out of the " building and loan supervision fund " in carrying out the provisions of this section. Approved March 12, 1897. MOMTAMA. ACTS 1897, p. 231. Section, i. — A corporation for the purpose of raising money to be loaned among its members shall be known in this act as a building and loan associa- tion. Associations organized under the laws of this state shall be known in this state as " domestic " associations and those organized under the laws of other states and territories "foreign " associations. Associations may be organized and conducted under the general laws of Montana, relating to corporations, except as otherwise, provided in this act. Sec. 2. — Any building and loan association heretofore organized and exist- ing under and by virtue of the law of the state of Montana, may be incorpo- rated under the provisions of this act, by calling a meeting of its stockholders upon notice published in a paper having a general circulation in the county in which the general office of the company is located, and by mailing a notice of such meeting to the last known address of its stockholders ten days pre- vious to such meeting. Should a majority of the stock vote to become incor- porated under this act, the president and secretary shall file a certificate of the vote with the secretary of state, and such company shall thereafter act, and be incorporated under this act. The validity of its securities and contracts shall in no wise be affected by its reformation as provided in this sectii in. Sec. 3. — The capital stock named in the articles of incorporation shall be deemed to refer to the authorized capital, and the organization may be com- pleted and business commenced when five per cent, thereof is subscribed. Directors may be elected for any term not less than one year nor longer than three years, but if such term be longer than one year, it shall be so arranged that the term of office of an equal number of directors, as nearly as may be, will expire each year. Sec. 4. — Such corporation shall have power to issue stock to members on such terms and conditions as the constitution and by-laws may provide. To assess and collect from members and depositors such dues, fines, interest and premium on loans made or other assessments as may be provided for in the constitution and by-laws. Such dues, fines, premiums or other assessments shall not be deemed usury although in excess of the legal rate of interest. To permit members to withdraw all or part of their stock deposits at such times and upon such terms as the constitution and by-laws may provide. Any- member, however, who withdraws his entire stock, or whole stock is matured, shall be entitled to receive all dues paid in and dividends declared, less all fines or other assessments and lessa/wra/a share of all losses, if any have occurred ; Provided, that any member who withdraws within sixty days shall be entitled to receive the full amount paid in, less ten per cent, and any sum which he may have received from the company. To cancel shares of stock upon which all pavments have been withdrawn, or upon which loans have been cancelled and re-issue them as new stock. To issue stocks to minors and permit the same to be withdrawn as other stock and the receipt of such minor shall be a valid acquittance if his rights have been fully secured to him. To acquire 780 APPENDIX IV. hold, incumber and convey such real estate and personal property as may be necessary for the transaction of its business or necessary to enforce or protect its security. To borrow money not exceeding 20 per cent, of its assets and issue its evidence of its indebtedness therefor. To make loans to members and depositors on such terms, conditions and securities as may be provided in the constitution and by-laws. To cancel such loans and release the securi- ties on such terms as the board of directors may provide. But any member may have his loan cancelled upon the following terms, to-wit : After the premium for one year has been paid, and also the premium and interest up to date of cancellation, the borrower shall pay the sum actually borrowed less the dues paid and the dividends credited. He shall pay also any fines or other as- sessments required by the constitution and by-laws. To invest the money of the association in city, county or state warrants and bonds. To loan money to other building, and loan association. To accumulate from the earnings and in- vest as the board of directors may determine a reserve fund for the payment of contingent losses. To make such annual or semi-annual distribution of the earnings I after paying expenses and setting aside a sum for the reserve fund as hereinafter provided), as the constitution and by-laws may prescribe. To in- crease or decrease its authorized capital for the face value of its shares at any time by a majority vote of its directors, and a certificate of such action shall be made by the president and secretary and duly filed with the secretary of state. To dissolve the corporation when its continuance shall be deemed by a majority vote of its members to be no longer desirable, subject, however, to the vested rights of its members. To provide by constitution adopted by its members, and by laws adopted by its board of directors, for the proper exercise of the powers herein granted and of the conduct and management of its affairs. All such other powers as are necessary and proper to enable such corporations to carry out the purpose of its organization. Sec. 5. — Withdrawing members and depositors shall be entitled to all re- ceipts of the association, except what is necessary for the payment of expenses and outstanding contracts as fast as collections are made, in the order in which the application for withdrawals are registered on the books of the as- sociation, and shall be entitled to be paid as fast as collections are made by the association, and in no other way. Sec. 6. — All officers of such association who have charge or possession or (of ?) money, securities or property, shall give bond before entering upon their duties to the satisfaction of the board of directors and the State Ex- aminer for the faithful performance of the same, and the safekeeping and pro-ier application of all moneys or property coming into their hands. All officers of such corporation on being re-elected to office shall renew their bnuls. The bond may be increased or additional securities required at any time by the board of directors. Directors shall not be eligible as bondsmen. Sec. 7. — The amount to be set aside to the fund for contingent losses shall be determined by the board of directors, but in all permanent or serial associ- ations at least five per cent, of the net earnings shall be set aside each year for such fund until it reaches at least five per cent, of the outstanding loans. All losses shall be paid out of such fund until the same is exhausted, and whenever the amount in said fund falls below five per cent, of the loans as aforesaid, it shall be replenished by annual appropriation of at least five per cent, of the net earnings as hereinbefore provided until it again reaches said amount. Sec. 8. All expenses of any such association shall be paid in such manner as may be determined by the vote of the owners of the majority of the stock in force in any such association and indicated in its by-laws; Provided, that after an association h:is been organized for two years, the expenses must be paid oul of the earnings only. The charges incident to a loan if paid by the borrower, shall nol be deemed a part of the current expenses. A portion of the earnings to be determined by the board of directors shall also be reserved annually 01 semi annually for the paymenl of contingent losses as provided in '< 'I'M 7 "I this act, and the residue of such earnings shall be transferred as a dividend annually or semi-annually in such proportion to the credit of all i.i the corporation by its constitution and by-laws may provide, to be paid to them al such time and in such manner in conformity with this a* t 1 ill ■ . orporation by its constitution and by-laws may provide. All losses shall In- assessed in tin: same proportion and maimer on all members after am 'unt in the re ei ve fund ha 1 been applied to the payment of the same. 1 11 ii .1 ociation shall lie assessed for, and pay taxes upon furniture and fixture and all real estate acquired in the course of its busine ». Theamounl standing to tin- credit of each member of any such GENERAL LEGISLATION. 7 crs, securities and moneys, of the association under examination. He shall have power to administer oaths to and examine the officers and agents of such association and its affairs. SEC. 20. — When the state examiner deems it to be to the interest of the public, he may publish the results of such examinatii m in some newspaper of ral circulation in the county in which such association is located, if it bea <\' imestic association, and in some newspaper in the city of Helena. Montana, if it be a foreign corporation. The expense of such publication shall be paid by ill • asso< iation whose statemenl is published. SEC. 21. — Should the state examiner find upon examination that a foreign i not conducl its busine s in accordance with the law, or that "t any such association are in unsound condition, or if such asso- i! refuses to permit examinatii »n to be made, he shall report such facts to auditor, who may cancel the authority of such associatii m to do busi- i •• tate, and 1 in ea n >tii e thereof to he mailed to the home office of and hed in at least one newspaper published in the ! 1 lena. Alter the publication of such notice, it shall be unlawful for any 1 1 ion to receive any further stock deposits from members 1 cepl payment on lock on which a loan has been Foreign building and loan a doing business or desiring to the slate auditor the following fees : GENERAL LEGISLATION. 783 For filing each application for admission to do business- in this state, ten dollars, for each one hundred thousand dollars capital stock or fraction thereof actually issued and in force for any increase of capital the same rale per thou- sand shall be charged as for filing the original capital stock. For each certifi- cate of authorityand annual renewal of the same, one hundred dollars. Both foreign and domestic shall pay to the state auditor for filing each annual state- ment as follows : If the assets of the association as shown by the statement filed amount to fifty thousand dollars or less, three dollars ; if more than fifty thousand dollars and less than one hundred thousand dollars, five dollar- ; if more than one hundred thousand dollars and less than two hundred and fifty thousand dollars, ten dollars ; if more than two hundred and fifty thousand dollars and less than i\vc hundred thousand dollars, twenty dollars; if more than five hundred thousand dollars, twenty-five dollars : tor fur- nishing each copy of a paper filed in his office, twenty-five cents per folio. For affixing the seal of office and certifying any paper, one dollar. Both foreign and domestic associations shall pay to the state examiner for each ex- amination made by him a fee of one-twentieth of one per cent, of its assets as shown by its last annual statement; Provided, that the examination fee shall not be less than twenty dollars nor more than fifty dollars per annum for any domestic association, nor more than two hundred dollars per annum for any foreign association. Sec. 23. — All fees provided for in this act and paid to the state auditor, state examiner, or secretary of state shall be by them turned into the state treasury. Sec. 24. — The state treasurer and sureties shall be responsible for the safe- keeping of all securities or cash deposited with him in compliance with the the provisions of this act. Sec. 25. — It shall be unlawful for any building and loan association to do business in this state without having first complied with the provisions of this act, and any association violating any of the provisions of this act, or failing to comply with any of its provisions, shall be fined not less than fifty nor more than one thousand dollars, to be recovered by an action in the name of the state and on collection paid into the state treasurer and an}' officer, employee, or other person who solicits business for, aids or assists, any building and loan association to do business contrary to the provisions of this act, or without hav- ing complied with the provisions, shall be guilty of a misdemeanor, and on con- viction thereof shall be fined not more than five hundred dollars or imprisoned not more than six months, or both. Such fines when collected to be paid into the state treasurer. Provided, that except as to taxation, this act shall not affect any such association heretofore organized under the laws of the state of Mon- tana, unless it elects to come under its provisions. Sec. 26. — The state examiner shall keep and preserve in permanent form a full record of his proceedings, including a concise statement of each association ex- amined, and he shall annually make a report of the general conduct and condi- tion of the building and loan associations doing business in this state, with such suggestions as he may deem expedient. Such report shall also include the information contained in the statement required of the association and arranged in tabulated form. He shall also report the whole amount of the income of his office, the source whence derived and the expenses, in detail, during the year ending on the 30th dav of November. Sec. 27. — Building and loan associations shall be authorized to provide in their constitution and by-laws of the time and terms of the dissolution of such corporation ; also, in the cases of dissolution of such corporation its b< ard < >f di- rectors may, by a majority vote, be authorized to sell and transfer its mort- gage securities or other property, or both, to another corporation, person or persons, subject to the vested or accrued rights of the mortgagors. Every building and loan association heretofore incorporated under the laws of the state of Montana, which has loaned its money on real estate situated outside of the county in which its principal office is located, shall deposit and keep with the state treasurer or with a duly chartered bank or trust company of this state, approved by the secretarv of state, in trust for all its members and creditors, all mortgages or other securities received by it in the usual course of business. Every building and loan association which has heretofore made, or mav hereafter make, a deposit in accordance with the laws of this state, mav, at any time, by and with the c< insent of the state treas- urer, withdraw from the state treasurer or from the trust company or bank with whom its securities have been deposited, any such securities, for the purpose of depositing such securities with a special trustee for the purpose of securing the withdrawal value of its fully paid stock, or evidence of indebt- 784 APPENDIX IV. edness, or whenever required by the laws of any other state, territory or nation,' that its mortgages or other securities shall be deposited in such state, territory, or nation, for the purpose of enabling such association to enter and do business in such state, territory, or nation ; or whenever such mortgage securities are required for the purpose of foreclosure and suit ; or whenever any of such mortgages have been fully paid and liquidated. Provided, that at ho time shall the amount of securities on deposit with the state treasurer, or with the duly chartered bank or trust company, be of less value than twenty-five thousand dollars. Applications for the withdrawal of securities as herein provided shall be made by the president, or vice-president and secretary, who shall state under oath the purpose for which the withdrawal of such securities is to be made. Sec. 28.— Sections 770, 771, 772, 773, 774, 775, 776, 777, 778, 779, 780, 781, 782, 783, 784, 7S5, 786, 787, 788, 789, 790, 800, 801, 802, 803, 804, 806, 807, 808, 809, 81b, Sir, 812, 813, 814, 815, 816, 817, 818, 819, 820, 821, 822, 823, 824, 825, 826, 827, 828, 829, 830, 831, 832, 833, 834, 835, 836, 837, 838, 839, 840, 841, 842, 843, 844 and 845 of the Civil Code of Montana are hereby repealed. Sec. 29. — This act shall take effect from and after June 1, 1897. Approved March 4th, 1897. NEBRASKA. CONSOLIDATED STATUTES OF 1895. Section 1849. — Any number of persons, not less than five, may associate themselves together and become a corporation as provided in chapter twenty- five of the Revised Staututes, commencing at section 123 of said chapter [sec- tion 336, Consolidated Statutes of 1891] under the title of "corporations for the purpose of raising moneys to be loaned among the members of such corpora- tion, for use in buying lots or houses, or in building, or repairing, or re- moving incumbrances from houses ; and such corporation shall be author- ized 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 pre- miums 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 its business ; Provided, that the dues, fines, 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. Skc. 1850.— All stockholders of any such association shall be deemed and held liable to any amount equal to their stock subscribed, or by them at any time held in addition to said stock, for the purpose of securing the creditors of said association. Sec. 1851.— 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 ter twenty-five of the Revised Statutes [chap. 9, this stat], to and with any member of said corporation or association, and not inconsistent with the this state, nor anything in this act contained, are hereby declared to and binding contracts between said corporation or association and the !' 1 so contracting ; and the securities given by said mem- I contract or loan to said corporation or association, for the Li ity of any loan, fine, or forfeiture, according to the terms and conditions oi contract, therein referred to, and not inconsistent with law of this state or in this act contained, is hereby declared to be legal, I and binding security, and contracl in law in the hands of said corpora- tion ,i . nid with the 1 arty making the same, notwithstanding a ■ inter t than twelve per cent, per annum may have been con- ed in said contract. Sec. 18:52. — That in all corporations or associations now formed and in ex- in thi tati ind doing business in this state, which said corporation tion h. 1 e made loans to any of its members and taken securities oi their constitution and by-laws, thai any payment : ;e ol 'in, ail, by any memberto said corporation or as- forfeitun 01 fines which may be due to said corpora- tion 1 I cording to th( terms of the contract between said cor- poi ■ d aid member to said corporation or association,. GENERAL LEGISLATION. 785 shall be deemed in law a waiver of anything in said contract or loan that might be deemed usurious in the same under the laws of tins state at the time the same was made and securities given, and a ratification of said loan or eon- tract, and of its present and future- legality between said parties, as now ex- isting under and by virtue of this act. Sice. 1853. — Any association of not less than five persons, hereafter incor- porated under the laws of this state, which shall be organized within this state for the purpose of raising a fund for the collection of dues or stated j ay- ments from its members, to be loaned anion- its members, shall, in further- ance of such purpose, and after having complied with the requirements of this act.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 o! ] recedence in taking loans, as the corporation may provide for in its constitution or by-laws, also, to acquire, hold, and convey all such real estate and personal property as may be legitimately pledged to it upon said loans, or may otherwise be transferred to it in the due course of its business (subject, however, to the limitations hereinafter named). The words "loan and building association," "building association," or "building and loan association " shall form part of the corporate name of every such corporation. Sec. 1854. — Every such association hereafter formed shall adopt a constitu- tion which shall substantially give effect to the provisions of this act, and shall also adopt such by-laws for the government and management of its business as it shall deem proper ; Provided, the same shall not be inconsistent with this act, 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 such manner as may be provided by its articles of incorporation. Such con- stitution shall contain equitable provisions, permitting any shareholder wish- ing to do so to withdraw from the association, in manner as follows : After three months from date of issue of the certificate of shares, a shareholder, or the legal representative of a deceased shareholder, wishing to withdraw from the said corporation, shall have the power to do so by giving thirty days' notice of such intention to withdraw, such notice being given in writing at the regular meeting of the board of directors. At the first regular meeting after the expiration of the thirty days' notice, or at any time thereafter, the member so withdrawing, or, if deceased, his legal representative, shall be entitled to receive, on demand, the amount paid in by him or her, less the admission fee and expense charges and such rate of interest as the by-laws may determine, less all fines and other charges. Should there have been, however, a net loss instead of a net gain, then such withdrawing shareholder shall receive the actual amount paid in, less his proportion of such net loss. At no time, however, shall more than one-half of the unloaned funds in the treasury of the corporation be applicable to the demands of the withdrawing shareholders without the consent of the board of directors. No shareholder shall be entitled to withdraw whose stock is pledged as security for a loan, either from the association or from any other party. It shall contain equi- table provisions permitting the payment of loans before maturity, and for crediting borrowing members who have paid premiums in advance and who repay their loans before maturity, with an equitable share of the premiums paid by them. Such constitution shall also provide that if any member has become delinquent in his payments on any shares to an amount equal to the payments due thereon for any period named therein (not, however, less than three nor more than twelve months), such shares shall be cancelled, and he shall, as to such shares, cease to be a member, and shall become a debtor or creditor of such association as the case may be, and it shall make equitable provisions for crediting such member with the same amount as if he had voluntarily withdrawn from the association, and if any sum be due him after deducting fines and losses, if any, to date of cancellation, it shall, if he be a borrower, be credited on his loan, and if he be not a borrower it shall be held subject to his order. Such constitution may, within the limits aforesaid, fix different periods for the cancellation of shares of borrowers and non- borrowers, and may also, within said limits, leave the period for cancellation, wholly or in part, to the discretion of the board of directors. SEC. 1855. — A copy of the articles of incorporation, constitution, and by- laws of every such association shall be filed in the office of the auditor of public accounts, who shall, with the state treasurer and attorney-general, examine the same carefully and if they, or any two of them, shall find that they conform with the requirements of this act and contain a just and equi- table plan for the management of the association's business, they, or any two 786 APPENDIX IV. of them, shall issue to such association a certificate of their approval of such constitution and by-laws ; but if they, or any two of them, find their provisions to be unjust or inequitable or oppressive to any class of shareholders, they shall withhold their approval. It shall not be lawful for any association here- after organized within this state for the purposes set forth in section i of this act [163] to transact any business except the execution of its articles of incor- poration, the adoption of a constitution and by-laws, and the election of directors and officers, until it shall have procured the certificate of approval above provided for, nor shall any amendment of the articles of incorporation, constitution, or by-laws of any such association become operative until a copy of the same shall have been filed and a certificate of approval obtained as above provided in regard to original articles of incorporation, constitution, and by-laws. Sec. 1856. — No loan shall be made by such association except to its own members, nor shall any loan be made to any member of any sum in excess of the par value of his stock, and the association shall have a lien on as many of the borrower's shares as shall equal at their face value the nominal amount of the loan ; good and ample real estate security unincumbered, except by prior liens held by such association, shall also be given by the borrower ; Provided, however, that the stock of such association may be received as security for a loan of the amount of the withdrawal value of such stock without other security. No evidence of indebtedness taken by such association for the return of any such loan shall be negotiable in form, and, whatever be its form, every such evidence of indebtedness shall be non-negotiable in law, and no such debt, or evidence of debt, shall be assignable or transferable in any manner so as to prevent the discharge thereof by payment made to the association. Sec. 1857. — -Such associations may purchase, hold, lease, and convey real estate for the following purposes, and no other : 1st. Such as it may need to occupy as a place of business. 2d. Such as shall in good faith be conveyed to it in satisfaction of debts previously contracted in the ordinary course of business. 3d. Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall purchase in good faith to secure debts due to it. But no such association shall hold the title and possession of any real estate longer than three years, except for the first purpose above named. Nothing in this section shall be construed to forbid the mortgaging of real estate to such association. SEC, [858. — Shares of stock in any such association may be subscribed for, held, transferred, surrendered, withdrawn, and forfeited, and payments thereon received and receipted for, by any minor over the age of fourteen years, in the same manner and with the same binding effect as though such Eerson were of full age, except that the said minor, or his estate, shall not be ound 'Mi his subscription to stock except to the extent of payments actually made thereon. A trustee or guardian may acquire, hold, transfer, and with- draw and receive all moneys due upon shares in such association for the use and account of any minor ; but before he shall be permitted to withdraw, transferor receive payment u >on any shares so held, such trustee or guardian shall file with the county judge where such association is located a bond for twice the value of the snares withdrawn, transferred, or money received, which bond shall be approved by said judge and shall be conditioned upon his faithfully accounting for the proceeds of the shares withdrawn, trans- ferred, or money received, and the use thereof, and paying the same to said minor at his or her majority. Skc. [859.— Such associations shall not be subject to taxation on their capital stock, nor on their loans, advances, or mortgages, but shares in said associa- tion shall, for the purposes of taxation, be considered and held as credits, and members and holders of such shares shall list the same for taxation, and the ame shall be taxed in such manner and subject to such deductions as may be provided by law for the taxation of other credits. The real estate of such ill be subject to taxation in the same manner as provided by law in the case of other corporations and individuals. -The fees, dues, tines, ink-rest, premiums and other payments of money made, 1 ontracted for, or required to be made, by any member of such iciation, by virtue of or in conformity with the provisions of its constitu- tion and by-laws, though the same may aggregate a greater amount, taking into ai 1 ounl all the terms and conditions ol payment io and from such mem- ber, than 1 01 may be allowed by the lawsol this state to be taken or collected as interest on ordinary contracts for tin: payment of money, shall not make any bui h payment or contract therefor usurious, but all such contracts may be GENERAL LEGISLATION. 787 enforced, and such fees, dues, fines, interest, premiums and payments col- lected in the same manner as other debts on contracts not usurious ; Pro- vided, that the certificate of approval provided for in section 4 of tins act [1855], issued to such association, shall be conclusive evidence of such compli- ance with the requirements of this act .is to entitle it to the benefits ol this sec- tion ; Provided, further, that no association hereafter formed within this slate, except such as hold such certificate of approval, shall be exempt from the operation of the usury law of this state. Sec. 1861. — Every such association shall annually, and at such other times as required by the auditor of public accounts, state treasurer and attorney general, or any two of them, tile in the office of the auditor of public accounts a statement, verified by the oath of its president or secretary and ap| roved by three of its directors, in such form as maybe prescribed by the auditor of public accounts, setting forth its actual financial condition and the amount ol" its assets and liabilities, and furnishing such other information as to its affairs as the auditor of public accounts may require, and a copy of such annual statement shall be published in a newspaper of general circulation in the county where such association is located, three consecutive tunes, ami due proof of such publication by affidavit shall be filed with the auditor of public accounts. Whenever the constitution of an association fixes a date for the close of its fiscal year, the annual report of such associations [association] shall show its condition at such date ; in all other cases such report shall show the condition of the association at the close of the calendar year, and no other or further notice or statement of the amount of the existing debts of such cor- poration shall be required to be published or given. The auditor of public accounts, state treasurer and attorney general, or any two of them, shall have power to call for special reports from any such association, whenever in their judgment the same may be necessary or advisable. Any association failing to comply with the provisions of this section shall forfeit its charter rights. Sec. 1862. — Every person who shall wilfully or knowingly subscribe, or make or cause to be made, any false statement or false entries in any books of any association organized for the purposes set forth in section one (i) of this act [1853], or exhibit false papers with the intent to deceive anv person authorized to examine into the affairs of such association, or shall make, state or publish any false statement of the financial condition of such association, shall be deemed guilty of a felony ; and upon conviction thereof shall be fined not exceeding ten thousand (10,000) dollars and be imprisoned in the state penitentiary not less than one (1) nor more than five (5) years. Sec. 1863. — The person or persons appointed under the laws of this state to make an examination of corporations, firms or individuals doing a banking business shall make an examination and report of every association organized under the laws of this state for the purposes named in section one (1) of this act [1853], as often as shall be deemed necessary and proper and at least once a year, and the rights, powers, duties, privileges and compensation of such person or persons in connection with such examinations, shall be the same as is or may provided by law with reference to examinations of banks and cor- porations, firms or individuals transacting a banking business ; and such asso- ciation shall pay the same fees for such examinations as is or may be pro- vided by law in case of the examinations of banks. Sec 1864. — Whenever it shall appear to the auditor of public accounts, state treasurer, attorney general or any two of them, from any examination or report provided for by this act, that' any building, homestead or other associa- tion organized under the laws of this state for the purposes set forth in section one (1) of this act [1853], is conducting its business in an unsafe or unauthor- ized manner, or is jeopardizing the interests of its members, or that it is unsafe for such association to transact business, they shall communicate such facts to the attorney general, who shall thereupon apply to the supreme court or to the district court of the county where such association is located, or to a judge of either of said courts, for the appointment of a receiver to take charge of and wind up the business of such association ; and if such fact or facts be made to appear, it shall be sufficient to authorize the appointment of a receiver and the making of such orders and decrees in such cases as equity may require. Sec 1865.— It shall be unlawful for any corporation hereafter organized under the laws of this state to use the words -'loan and building association" or " building and loan association " as a part of its corporate name unless it shall have complied substantially with the requirements of this act ; and every such corporation using such words unlawfully as- part of its corporate name shall be fined, at the discretion of the court, in any sum not exceeding twenty- 788 APPENDIX IV. five (25) dollars for each day it shall so unlawfully use such words as part of its corporate name. Sec. i860. — Any association now organized in conformity to existing laws of this state for the purposes set forth in section one (I) of this act [1853], which shall voluntarily comply with all the requirements of this act, shall be entitled to all the benefits and privileges herein granted; any such association now organized shall be required to comply with the provisions of this act in the following particulars : It shall, within ninety days after this act shall have become a law, file with the auditor of public accounts a certified copy of its articles of incorporation, constitution and by-laws, shall make and publish reports in full compliance with section ten (10) hereof [1861], shall be subject to examination in all respects as provided in section twelve (12) hereof [1863], and its affairs may be wound up in the manner provided in section (13) of this act [1864], and before any amendment to either its articles of incorporation, constitution or by-laws, hereafter made, shall become operative, a copy of such amendment shall be filed with the auditor of public accounts ; and the auditor, together with the state treasurer and attorney general, shall examine the same, and if they or any two of them shall find that such amendment does not introduce an}' unjust or inequitable feature or provision, they or any two of them shall issue their certificate of approval and such amendment shall become valid ; but if they or any two of them withhold such certificate, such amendment shall be of no effect. Sec. 1867. — Every corporation, company or association contemplating doing business in this state and having for a part of its title or name the words " loan and building association," " building and loan association," " savings and loan association," or " co-operative bank, saving and investment com- pany," and every corporation, company or association whose stock is pay- able by an accumulating fund in regular or stated periodical instalments, and every corporation, company, or association doing a business in a form and character similar to that authorized to be done by section one (1) of this act [1853], shall, if organized or incorporated in any county, state, or territory other than the state of Nebraska, be known in this act as a foreign building and loan association. Sec. 1868. — It shall not be lawful for any foreign building and loan asso- ciation, directly or indirectly, to transact any business in this state without first procuring a certificate of approval and authorization from the auditor of public accounts, state treasurer, and attorney general, or any two of them. Before obtaining such certificate such foreign building and loan association shall furnish the auditor with a statement sworn to by the president or secre- tary of the association, which statement shall show : The name and locality of the association and itemized account of its actual financial condition and the amount of its property and liabilities, the amount and number of shares subscribed, the amount which has been paid in on such shares, the number of shares redeemed, the estimated cash value of each share of its stock, and all such other information touching its affairs as said officers, or any two of them, may require. Such foreign building and loan association shall also file with the auditor of public accounts a certified copy of the laws of the state, territory or government under which it is incorporated, and of its charter or articles of incorporation and of the constitution and by-laws and all amend- ments thereto, and shall appoint an attorney in each county in which it trans- acts or solicits business who shall be a resident of such county, and shall file with the auditor of public accounts a written instrument, duly signed and sealed, authorizing such attorney of such associations to acknowledge service of process in behalf of such association, consenting that service of process, le or final, upon such attorney shall be taken and held as valid as if served upon the association according tothe laws of this or any other state, and waiving all clai r right oi error by reason of such acknowledgment oi i' e. If after examination of such statements and certified copies of in truments, and after said association shall have complied with the require- men ict as to the appointment of an attorney or attorneys, the auditor ." 1 ounts, -late treasurer and attorney general, or any two of them, shall he satisfied that such association is solvent and that the capital and in- nenl are secure, and thai the laws, charters, articles of incorporation, ■ n and l>v laws governing it afford as ample protection to the int. lembei as is afforded by the laws of this state to members of : incorporated undei the laws of the state oi Nebraska for itioned in ection one [363] of this act, then the auditor of publ treasurer and atto r genei al, or any two "i them, 01 iation a certificate oi approval authorizing it to transact GENERAL LEGISLATION. 789 business till the 31st day of January of the ensuing year, in those counties of this state in which it shall nave appointed a resident attorney as above pro- vided. SEC. [869, — The statements required of foreign building and loan associa- tions shall be renewed annually in January in such maimer as required by this act and shall be made at such other times as the auditor of public ac- counts, state treasurer, and attorney general, or any two of them, may deem it expedient to demand the same, and the auditor of public account-, state treasurer and attorney general, or any two of them, may at any time revoke the certificate of approval and authorization oi any such association for cause. SEC. 1870. — Any person, agent or company, doing business or attempting to do business in this state for any foreign building and loan association which shall not at the time be the holder of a valid certificate oi approval and authorization, as provided for in section seventeen (17) of this act [1868], shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined in any sum not exceeding one thousand (r.ooo) dollars, or imprisoned in the county jail not more than thirty days, or both, at the discretion of the court. NEVADA. GENERAL STATUTES OF 1885. Section 948. — Corporations for the purpose of aggregating the funds and savings of the members thereof, and others, and preserving and safely invest- ing the same for their common benefit, may be formed according to the provisions of this act, and such corporations, and the members and stock- holders thereof, shall be subject to all the conditions and liabilities herein imposed, and to none other. Sec. 949. — Any five or more persons who may desire to form an incor- porated company for the purposes specified in the preceding section, may make, sign and acknowledge, before some officer competent to take the acknowledgment of deeds, and file in the office of the county clerk of the county in which the principal place of business of the company is intended to be located, and a certified copy thereof in the office of the secretary of state, a certificate in writing, in which shall be stated the corporate name of the corporation, the object for which the corporation shall be formed, the time of its existence, not to exceed fifty years, the number of directors and their names, who shall manage the affairs of the company for the first six months, and the name of the city or town and county in which the principal place of business of the company is to be located. Sec. 951. — A copy of any certificate of incorporation filed in pursuance of this act, and certified by the county clerk of the county in which it is filed, or his deputy, or by the secretary of state, shall be received in all courts, actions, proceedings, and places, as presumptive evidence of the facts therein stated. Sec. 950. — When the certificate shall have been filed, the persons who shall have signed and acknowledged the same, and such persons as may there- after become their associates or successors, shall be a body politic and cor- porate, and by their corporate name have succession for the period limited, and power : 1. To sue and be sued in any court. 2. To make and use a common seal, and to alter the same at pleasure. 3. To purchase, hold, sell, convey and release from trust or mortgage, such real or personal estate as hereinafter provided in this act. 4. To appoint such officers, agents and servants as the business of the cor- poration shall require ; to define their powers, prescribe their duties and fix their compensation, and to require of them such security as may be thought proper for the fulfilment of their duties. 5. To loan and invest the funds of the corporation ; to receive deposits of money, and to loan and invest the same ; to collect the same, with interest, and to pay such deposits, without interest, or with so much of the earnings and interest as the by-laws of the corporation may provide. 6. To make by-laws, not inconsistent with the" laws of this state, for the organization of the company and the management of its property the regulation of its affairs, the conditions on which deposits shall be received, the time and manner of dividing the profits, and the time and manner in which any person may become or may cease to be a member of the corporation, and for carry- ing on all kinds of business within the objects and purposes of the company. Sec. 952. — No corporation, formed under this act, shall loan any money 790 APPENDIX IV. without adequate security on real or personal property, except when any such corporation shall, by a by-law to that effect, adopted by a two-thirds vote of all the stock of the company subscribed and taken, authorize the making of loans to persons of reputed solvency, when ordered by a vote of not less than three-fourths of all the directors thereof. Sec. 953. — The corporate powers of the corporation shall be exercised by a board of not less than five directors, residents of this state, and a majority of them citizens of the United States, who shall be holders of stock, each to such amount and under such conditions as the by-laws may prescribe (if a capital is provided for in the certificate of incorporation), or members, each having deposits with the corporation to the amount of at least one hundred dollars (if the company has no capital stock). All directors to hold office after the expiration of the term of the directors named in the certificate of incorpora- tion, shall be annually elected, at such time and place, and in such mode, and upon such notice, as shall be directed by the by-laws of the company. All such elections shall be by ballot, and each stockholder who shall be a mem- ber and shall have signed the by-laws, shall be entitled to such number of votes as shall be fixed by the by-laws, not exceeding one vote for every share of stock held by him ; and the by-laws may provide what qualifications shall entitle a member, not a stockholder, or the members of a corporation having no stock, to a vote ; and the persons receiving the greatest number of votes shall be directors. The president of the corporation, who shall also be the president of the board of directors, shall be chosen by said board from among their own number. When any vacancy shall occur in the board of directors, by death, resignation or otherwise, it shall be filled for the remainder of the term in such manner as may be prescribed by the by-laws of the company. Sec. 954. — If it shou'd happen at any time that an election of directors shall not be made on the day designated by the by-laws of the company, the cor- poration shall not for that reason be dissolved, but it shall be lawful on any other day to hold an election for directors, in such manner as shall be provided for by the by-laws of the company, and the directors shall be continued in office until their successors sha'l be elected. Sec. 955. — The call for the first meeting of the directors shall be signed by one or more persons named directors in "the certificate setting forth the time and place of meeting, which notice shall be delivered personally to each director, or published at least ten days in some newspaper of the county in which is tlie principal place of business of the corporation, or, if no news- paper be published in the county, then in the newspaper nearest thereto. Six - . 956. — A majority of the whole number of directors shall form a board for the transaction of business, and every decision of a majority of the persons duly assembled as a board, or a larger number if the by-laws shall so require, sha'l be valid as a corporate act, Sec. 957.— It shall not be lawful for the corporation or the directors to make any dividend, except from the sur his profits arising from the business of the corporation ; and the directors shall, at such times and in such manner as the by-laws shall prescribe, declare and pay dividends of so much of the profits of the company and of the interest arising from the capital stock and deposits, as may be appropriated for thai purpose by the provisions of the by-laws. And it shall not be lawful lor the corporation or the directors to contract any debt or liability against the corporation for any purpose whatever ; hut the capital stock and the assets of the corpi nation •-hall be security to depositors who are not tockholders, and the by-laws may provide that the same security shall extend to deposits made by stockholders. Sec. 598. — Corporations formed under this act may prescribe by their by-laws tin- time and conditions in which repayment is to be made by depositors, but whenever there is any call by depi >sitors f. u- a repayment of a greater amount than the corporation may have disposable for that purpose, it shall not be ; ill'- dn cMois or officers to make any new loans or investments of IIm- lands of the depositors, or of the earnings thereof, until such excess of call e cea ed ; and the directors of any corporation formed under this act, and In 111' no capital stock, shall retain, on each dividend dav, at least five pei '-nt. oi the net profits of the corporation l<> constitute a reserve fund, wIik ted in the same manner as other funds of the corporation, and hall in- used toward paying any losses which the corporation may 1 11 in the pursuance of its lawful business. And the- corporation may for the disposal of any excess in the reserve fund over on'- hundred thou and dollai 1, and the final disposal, upon the dissolution of 11 rporation, ol the re lerve fund, orof the remainder thereof after payment 1 onment, in the discretion of the court. Si 1 . --. Tin .K I hall lake effect on the first day of April, 1893. Approved March 31, [893. GENERAL LEGISLATION. 799 NEW JERSEY. GENERAL STATUTES, 1895, p. 331. Section i. — Any number of persons, not less than five, may associate and form an incorporated company for the purpose of assisting each other, and all who may afterwards become associated with them in acquiring real estate, mak- ing improvements thereon, and removing incumbrances therefrom, by the payment of periodical instalments ; and for the further purpose of accumulat- ing a fund to be returned to its members who do not obtain advances, lor purposes above mentioned, when the funds of such association shall amount to a certain sum per share, to be specified in the articles of association. Sec. 2. — Any such persons who shall sign a certificate, setting forth that they have formed such an association, under the provisions of this act, and the name adopted for such association, and the city, borough or township where it is to 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 mem- bers, their successors and assigns, shall be a body corporate and politic in law, with all the powers mentioned in the first section of the act entitled, " An act concerning corporations." Sec 3. — 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. Sec 4. — Parents or guardians may take and hold shares in such associa- tions in behalf of their minor children or wards, and trustees in behalf of married women, and may act in such association in behalf of those they rep- resent. Sec 5. — 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 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 centum per annum. Sec. 6. — The funds of every association formed under this act shall be in- vested 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, dwellings and improvements shall be sold to the members of such associations, payable in the shares of the company, or in periodical in- stalments 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 ex- piration of which term the lands, dwellings and improvements so sold and conveyed to the members of such associations, shall become the property of the grantees, discharged from all further payment, and clear of all encum- brance ; or in loans to members on mortgage of real or personal estate, pay- able in shares of said company, or by such periodical instalments ; or in the redemption of shares, or in all or any of these modes. Sec 7. — It shall be lawful for married women and minors to hold shares in any associations formed under this act ; Provided, 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. Sec 8. — 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 ot this state or the United States, and may alter and amend the same, from time to time, in the manner therein provided ; the in- vestments of every such association shall be made either in loans to, or in re- demption of the shares of, or in purchasing lots and erecting dwellings for the members, or in all of said modes, or in such 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 to be usurious. 800 APPENDIX IV. GENERAL STATUTES, 1895, P- 333- Sec. 16. Section 9.— Every company formed under this act shall furnish to the secre- tary of state, if required, an annual statement of the business and condition of the company, which shall be duly attested, under oath or affirmation, by the proper officers of said company. Sec. 10. — Any company formed in pursuance of this act shall have power to dispose of or sell any lands and tenements toothers than those constituting the said company, on terms according to or not inconsistent with the consti- tution of such company ; and the purchasers of said tenements so sold or dis- posed ot shall not thereby be constituted members of any such company formed as aforesaid. Sec. 11. — The original associates, or those formed into companies 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. Sec. 12.— All deeds of conveyance of lands or tenements, granted by any company formed in pursuance of said act, shall be held to be valid and bind- ing, with all the restrictive clauses as against nuisances, or what may be deemed nuisances by the constitutions of any companies so formed, as afore- said, unless the same are in violation of the constitution of this state or the laws thereof, or of the United States. Sec. 13. — All matters not herein provided for shall be regulated by the con- stitution and by-laws of said associations, respectively. Sec. 14. — The legislature may at any time alter, amend or repeal the charter of any association created under this act. Sec. 15. — Companies organized under this act may divide or partition the lands by them owned among their members by lot in such way as to them may seem most advantageous, and all conveyances made in pursuance of such allotment, shall, for all purposes, be valid and effectual. GENERAL STATUTES, 1895, p. 333. Section 7 iS. — 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 transaction of their future business under the provisions of the act to which this is a supplement [act of April 9, 1875, pages 331 and 332, revision of 1895], 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 advertise- ment snail 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 as- sembled they shall have power, by a two-thirds vote of the stock 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. Sec. [9. — Nothing in the act to which this is a supplement [act of April 9, [875, pages 331 and 332, revision of [895] shall be construed to prevent any lation, formed under the provisions of said act, from taking a premium for priority of loan or acquisition of real estate, or discount on the redemption of shares ; and that no premium or discount so taken for such purposes shall be deemed to be usurious. GENERAL STATUTES, [895, p. 334. Section 19. — Any a sociation which now is or hereafter may become in- 1 undei tne provisions ol the act to which this is a further supple- ol Vpril o, [875, pages 92 and 93, revision of 1877], may issue snares ock ni dm 'lent series to mature and terminate in such maimer as maybe [nated in and by the constitution or by-laws of such association or any ndmenl law 1 ullv made thereto. ». — All shan "i tock heretofore < sued indifferent series by any n according t" the provisions of its constitution or by-laws, hall be as valid and effei 1 1 ■ . 1 1 I" all intents and purposes as if this act had been in force prior to I ling of such shares. ■I When n titution "> !>v-laws of any such association maki no provi ion for the manner in which the same may be amended, such GENERAL LEGISLATION. 801 association may amend its constitution or by-laws at any regular meeting of the association by a vote of two-thirds of its members present at such meet- ing ; Provided, that the proposed amendment shall have been submitted in writing and entered upon the minutes of said association at least four weeks before a vote shall be taken thereon. GENERAL STATUTES, 1895, p. 334. Preamble. — Whereas, doubts having arisen as to the legal right of asso- ciations formed or incorporated under or by virtue of the above mentioned act [act of April 9, 1875, pages 331 and 332, revision of 1895], and the several supplements thereto, to issue new or a series of shares under their original acts of incorporation ; and whereas, a number of said associations have issued new or a series of shares, believing that they had a legal right so to do ; now, in order to remove all doubts on the subject, and to legalize the same and the issuing of certificates of stock therefor, and to hereafter authorize the forming of such new series. Sec. 25. — All new or series of shares heretofore issued by any associa- tion formed or incorporated under and by virtue of the act to which this is a supplement [act of April 9, 1875, pages 331 and 332, revision of 1895], and the several supplements thereto, be and the same are hereby confirmed and made valid both in law and equity, notwithstanding the issue of said new series may have increased the number of shares of said association beyond the limit fixed in its certificate of incorporation. Sec. 26. — The board of directors of all associations heretofore incorporated or which may be hereafter incorporated under and by virtue of the above named act and the several supplements thereto, are hereby empowered to authorize the formation of a new or a series of shares upon the same terms and conditions the original shares of stock were issued, whenever at least one hundred shares shall have been subscribed, and to issue certificates of stock for the shares taken in said new series, notwithstanding the issue of said new series may increase the number of shares of said association beyond the limit fixed in its certificate of incorporation. Sec. 27. — Whenever a new series has been or shall be formed under this supplement the relative value of the shares of the respective series shall be kept separate and distinct, and the value thereof reported in an annual state- ment to the shareholders. GENERAL STATUTES, 1895, p. 335. Section 31. — Any number of persons not less than seven may associate them- selves together for the purpose of enabling occupants of lands and other per- sons, to purchase the land or to borrow money thereon of said association by mortgage or otherwise, on the terms and conditions and subject to the liabil- ities prescribed in this act ; the aggregate amount of the capital stock of any such company shall not be less than one hundred thousand dollars, the whole amount of which as fixed, shall be subscribed for, and fifty per centum there- of actually paid in, before such company shall commence business. Sec. 32. — The persons so associating shall, under their hands and seals, make a certificate which shall specify the following matters : 1. The name they have assumed to designate such company, and to be used in its business and dealings ; 2. The amount of the capital stock as fixed by them, and the number and par value of the shares ; 3. The names and residences of the shareholders, and the number of shares held by each ; 4. The period at which said company shall commence and terminate ; which certificate shall be acknowledged or proved as required of deeds of real estate, and recorded in the office of the secretary of state, and upon being so recorded said association shall be a body corporate, entitled to all the rights and privileges, and subject to all the liabilities under the laws of this state ; and said certificate or a copy thereof duly certified by said secretary of state shall be evidence in all courts and places. Sec. 33. — Any association created under this act shall have full power and lawful authority to lend money and to secure the payment thereof and of in- terest thereon, in monthly or other periodical instalments extending over any number of months that may be agreed upon, giving credit at the end of every year during the existence of a loan, for all payments made and received on account of the principal ; and interest shall be chargeable on the amount of 802 APPENDIX IV. such principal remaining unpaid at the beginning of such year at the legal rate per annum, but shall be payable monthly, or at such other periods as may be agreed on, and no*interest received from any borrower by reason of such payments shall be deemed or taken to be usurious ; Provided, that the excess shall in no case be greater than three-quarters of one per centum per annum. Sec. 34. — Any association created under this act shall have the further law- ful power and authority to undertake, for a consideration and upon terms to be agreed upon by the parties, to cancel the indebtedness of the borrower and to surrender all evidences thereof in case the borrower shall die before he or she shall have paid his or her indebtedness in full ; Provided, that the instalment of principal that would have fallen due next after the day of the death of the borrower, and all other charges due, by agreement, between the parties, shall be first paid in full to the lender by the personal representatives of the decedent Sec. 35 — The business of said association shall be conducted by a board of directors of not less than seven in number, who shall be stockholders, and shall be elected annually, at a stockholder's meeting to be provided for in the by-laws of the association, and the board of directors shall elect from their number a president, and shall provide for the election and appointment of such other officers and agents as may be necessary, GENERAL STATUTE 1895, P- 334- Sectiox. 23. — It shall be lawful for any association incorporated under the provisions of the act to which this is a supplement [act of April 9, 1875, pages 331 and 332, revision of 1877], or otherwise lawfully existing in this state, to change the name set forth in its original certificate of incorporation, by a two- thirds vote of the board of directors of such association ; Provided, that a certificate under the hands of the president and the secretary of such associa- tion, setting forth such proposed new name, and that the same was adopted by a two-thirds vote of the board of directors of such association, at a meeting regularly held on a date specified in said certificate, shall be delivered to the clerk of the county where such association is or shall be located, to be by him filed and recorded. Sec. 24. — The name so certified to have been adopted shall, from the time of filing such certificate of change, be the true and proper corporate title of such association instead of the name set forth in the original certificate of incorporation ; and all deeds, mortgages, contracts, actions, judgments, trans- act ions and proceedings whatsoever heretofore or hereafter made, received, entered into, carried on or done by said association before the adoption or certification as aforesaid of such change of name, but wherein the said associa- tion shall have been called by the name so subsequently adopted, are hereby declared to be as good, valid and effectual in law as though said association were called therein by the name set forth in its original certificate of incor- poration. Chapter 251. SECTION i. — Every * * * loan and building corporation or association organized under the laws of other states or foreign governments, an applica- lion for authority to transact business in this state, shall file in the department Me aduly authenticated copy of its charter <>r certificate of organization or mi orporafion, and a report of its condition at the close of business on the thirty-firs! day oi December last preceding, in such form as may be prescribed by the board of bank commissioners, constituted by ''An act concerning anks," approved April twenty-first, one thousand eight hundred and seventy-six, which shall be verified by the affidavits of the president or vice- and the treasurer or cashier or secretary of such corporation, and it hall he the duty of the secretary of slate to furnish blank forms for the rl required, and the said board shall call for like reports at such other times ;, may seem to them expedient. Sec. 2. — If it shall appear by the report aforesaid that such corporation is - ai tually paid in, well invested and unimpaired capital stock of idn d thousand dollars, it may be admitted to transact business inth to rtificate ol authority to be issued by the secretary of under the direction ol the said hoard, which certificate shall only be d when ui h corporation shall have complied with the further require- ment- ol thi GENERAL LEGISLATION. 803 Sec. 3. — The bank commissioners, before directing the issue of the certificate of authority as aforesaid, shall require every such corporation to deposit with the secretary of state such securities as they may prescribe, amounting to at least thirty thousand dollars, which securities shall be held by the secretary of state in trust, for the benefit of the creditors of such corporation within this state, and the bank commissioners shall have authority to order a change of such securities or any part thereof at any time, and no change or transfer of the same shall be made without their assent ; such deposit shall be maintained intact in the full sum of thirty thousand dollars at all times, but the cor] "ra- tion shall be at liberty to receive the dividends or interest on the securities deposited ; Provided, that if any such corporation shall have and keep a deposit of at least one hundred thousand dollars with any department or officer of the state where organized, it may be admitted to the state without making the deposit herein required. Sec. 4. — Every such corporation shall file a like report in January, annually, and if such corporation shall fail to file such annual report prior to the fifteenth day of February, or to furnish such additional reports or information as maybe called for by the bank commissioners, within five days after notice to do so, it shall be liable in a penalty of two hundred and fifty dollars and costs of action, to be sued for and collected in the name and for the benefit of the state. Sec 5. — Every such corporation shall pay for filing a certified copy of its charter or certificate of organization or incorporation, twenty dollars; for filing original and annual reports, twenty dollars ; for certificate of authority, annually, two hundred and fifty dollars ; for certificate for each agency, five dollars, and shall defray all expenses incurred in making any examination of its affairs as herein provided for ; and the bank commissioners may maintain an action, in the name of the state, against such corporation, for the rec< very of such expenses, in any court of competent jurisdiction. Sec. 6. — If any such corporation or association itself, or by agents, attorneys, solicitors, surveyors, canvassers, collectors or other representatives of whatever designation, or any agent, attorney, solicitor, surveyor, canvasser, collector, or other representative, or any individual or firm, whether on behalf of such corporation or not, shall solicit, negotiate or in anywise transact any business in this state, except in the enforcement of contracts by legal process, without having complied with the requirements of this act, they shall be liable in a penalty of two hundred and fifty dollars and all costs of suit, to be sued for and collected on complaint, in the name and for the benefit of the state, by the bank commissioners ; the first process against any corporation or person complained of may be by capias ad respondendum, and the person or persons against whom judgment may be obtained shall be committed to any county jail until such penalty and costs are paid, and the necessary, expenses incurred by the bank commissioners in carrying out the provisions of this act, when not otherwise provided for, shall be paid by them out of the fees and taxes col- lected as herein provided for. Sec 7. — The bank commissioners shall have authority themselves, or by such person or persons as they may designate, to examine the affairs of any such corporation whenever they may deem it expedient, and it shall be the duty of the officers and employees of every such corporation to exhibit its books, securi- ties, records and accounts for such examination, and to otherwise facilitate the same so far as it may be in their power to do, and the bank commissioners, or any examiner appointed by them, shall have power to examine, under oath or affirmation, the officers and employees of any such corporation relative to its business and affairs, and for that purpose any such examiner shall have power to administer oaths and affirmations. Sec 8. — Whenever it shall appear, as the result of examination or otherwise, that the affairs of any such corporation are in an unsound condition because of illegal or unsafe investments, or that its liabilities exceed its assets, or that it is transacting business without authority, or in violation of law, or for any other reason which may seem to them satisfactory, the bank commissioners shall have power to cancel the authority of any such corporation of another state to transact business in this state, and as to such corporations of this state it shall be the duty of the attorney general, on notice by the bank commis- sioners, to apply forthwith, by petition or bill of complaint or information, to the chancellor for an injunction restraining such corporation from the trans- action of further business, or the transfer of any portion of its assets in any manner whatsoever, and for such other relief and assistance as may be appropriate to the case, and the chancellor, being satisfied of the sufficiency of such application, or that the interests of the people so require, may order an 804 APPENDIX IV. injunction, and make other appropriate orders in a summary way, and there- after proceed in said cause according to law and the practice of the court of chancery. Sec. io. — In all suits or actions brought in any court of this state against any such corporation, not organized under the laws of this state, process served upon the secretary of state shall be good and valid to all intents and purposes, and on service of such process in duplicate it shall be the duty of the secretary of state to notify such corporation immediately. Sec. u_ — The board of bank commissioners shall make annual report to the legislature, which shall embrace a statement of proceedings taken under this act and a summary of the annual report made by each corporation. GENERAL STATUTES 1895, p. 336. Section 36. — Every mutual loan, homestead and building association organ- ized under the laws of this state, or doing business therein, shall furnish, through its secretary or other appropriate agent, to the chief of the bureau of statistics of labor and industries an annual statement of its business and con- dition, according to the form required, and on blanks furnished by said chief, which said statement shall be duly attested, under oath or affirmation, by the treasurer and an auditing committee of the stockholders or board of directors of said association ; and the said board of directors are authorized to appro- priate from the current income of said association a sufficient remuneration to the secretary thereof for preparing the statement aforesaid. Sec. 37. — On any failure to make such statement, the said chief, or his au- thorized agent, with the approval of the governor, may make an investigation of the books, securities and accounts of any delinquent association, which books, securities and accounts shall at all times be open to the inspection of the said chief or his duly authorized agent, as aforesaid. Sec. 38. — It shall be the duty of said chief of the bureau of statistics of labor and industries to publish annually a concise report on the standing and con- dition of all the said associations doing business in this state, and to furnish each of said associations with one or more copies of such reports. ACTS 1896, p. 167. Section i.— Any association or person which has heretofore organized and done business as a company or association under the provisions of "An act incorporating homestead and building companies," approved February 25th, [852, and the supplements thereto, and which has filed a certificate of organ- ization, constitution, or any paper in the nature thereof, under said act, and which may have purchased lands and real estate in the name of said associa- tion or company, and which owns the said land and real estate, such persons and their successors shall have power to sell or dispose of any lands or real estate or any part thereof heretofore purchased or acquired by them in the name of such company or association to any person or persons other than those constituting the said company or association, and to give good and suf- ficient deed or deeds of conveyance therefor, and the purchaser or purchasers oi -Hi h lands or re. tl estate or any part thereof, shall not thereby be consti- members of such company or association so formed as aforesaid. SEC. 2. -Any such sale of the lands of such company or association must be approved and ratified by the vote of at least two-thirds of the stock present at eting of the association or company specially called to consider such d ale of the lands and real estate or pari thereof; notice of such ing must be given by advertisement for four weeks successively at least li week in a newspaper published and circulating in the city or w li company or association is located, to which advertisement attended the names and office of the president and secretary, and notice hall itate the time, place and purpose for which such meeting is called, and al by mailing, with the postage prepaid, a written or printed ■■I aid noli,,- to every stockholder whose name and address as such ■ on the booh oi aid company or association ; in the event of such ■ ratified and approved as aforesaid the presiding officer of such ociation shall execute the t\^ct\ or deeds, and the secretary hall eal ol the association or company thereto and shall attest the Appi oved and enforced March 26th, i8(/>. GENERAL LEGISLATION. 805 NEW MEXICO. LAWS OF i886-'87.— Chapter ix. Section i (as amended by chapter 108, laws of 1889). Whenever any num- ber of persons, not less than eight, may desire to become incorporated as a mutual building and loan association, for the purpose of building and im- proving homesteads, and loaning money to the members thereof, they shall make a statement to that effect, under their hands and seals, duly acknowl- edged before some officer in the manner provided for the acknowledgment of deeds, setting forth the name of the proposed corporation, the name ol the city or town and county in which the corporation is to he located ; the amount of capital stock ; and the number of shares into winch it is divided, and the par value thereof; the number of shares subscribed for, being not less than two hundred, and that the entrance fees thereon of not less than twenty-five cents for each share subscribed have been paid in, same not to apply as instal- ments in stock, the number and names of the directors who are to manage its affairs for the first six months, which number shall not be less than six ; the number of years, not more than forty, for which the incorporation is to con- tinue, and the purpose for which it was formed. Said statement shall he tiled in the office of the secretary of the territory, and a copy thereof, duly certified by the secretary, filed in the office of the recorder of deeds in the county where the business of such corporation is to be carried on. Upon the filing with the secretary of the territory and recorder of deeds the statement above provided, the said corporation shall be deemed fully organized, and shall be a body corporate and politic for the period for which it is organized ; may sue and be sued ; may have a common seal which it may alter or renew at pleasure; and shall possess all other powers incident to do business. Sec. 2 (as amended, acts 1895, p. 38). — Any such association, at any annual election, may elect a board of directors, a certain number of whom, to be designated by the by-laws, shall serve for one, two and three years respect- ively, and at each annual election thereafter such association shall elect directors, who shall hold office for the term of three years, to fill vacancies caused by retiring members of the board. In case of a vacancy occurring such vacancy shall be filled by the board for the unexpired term only. Sec. 3 (as amended by chapter 108, laws of 1889). — The shares of stock of all corporations hereafter incorporated under the provisions of this act, shall be not less than two hundred dollars each. The shares of any such corpora- tion heretofore or hereafter organized 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 payable in such periodical instalments and such time or times as shall be determined by the by-laws ; but no periodical payment of instalments shall 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 by-laws, and the by-laws may prescribe the form and manner of enforcing such lien. Such lien shall be prior to all liens by attachment or otherwise. That new shares of stock may be issued in lieu of snares withdrawn or forfeited and the stock may be issued on one or succes- sive series, as may be prescribed in the by-laws and in such amount (not exceeding the total capital stock) as the board of directors may determine. Any stockholder wishing to withdraw from the said corporation, shall have power to do so by giving notice, at a stated meeting of the board of directors hereinafter provided for, of his or her intention to withdraw, when he or she shall be entitled to receive at the next stated meeting of said board the amount paid for dues and such interest thereon or so much of the profits thereon as the by-laws may determine, less all fines and other charges ; Pro- vided, that at no time shall more than one-half of the funds in the treasury of the corporation be applicable to the demands of withdrawing stockholders without the consent of the board of directors, and no stockholder shall be entitled to withdraw whose stock is held in pledge for security. Upon the death of a stockholder, his or her legal representatives shall be entitled to withdraw his or her shares of stock upon the same terms and conditions as other withdrawing stockholders except that no fines 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 payment of the dues on the stock. 52 806 APPENDIX IV. Sec. 4. — Married women may become subscribers to the capital stock of such corporation, and hold, control, and transfer their stock in all respects as femmes soles, 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 stock by guardian or trustee, and such guardian or trustee may withdraw the stock of such minor as provided in section three of this act. Sec. 5 (as amended by chapter 108, laws of 1889). — Every such corporation shall lend its funds on real estate security or its own stock, and upon the terms and conditions and in the manner which may be specified by its by- laws. Such corporation may, however, employ a portion of its capital stock, not exceeding fifty thousand dollars in amount at any one time, in the pur- chase of real estate and the erection of buildings thereon for rent or other- wise. It may also use such portion of its capital as may be necessary to pur- chase at any sale judicial, public or private, any real estate upon which such corporation may have or hold any mortgage, lien or other incumbrance or in which it may have an interest, and the real estate so purchased, it may sell, convey, lease or mortgage at pleasure to any person or persons whatsoever. Sec. 6. — The board of directors 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 who shall bid the highest premium for the preference or priority of loan shall be entitled to receive a loan to any amount equal to the number of shares of stock held by such shareholder ; Provided, a shareholder may borrow such fractional part of a share as the by-laws may provide. Good and ample security shall be given by the borrower to secure the repayment of the loan, which security shall be unincumbered except by prior loans of the corporation. In case the borrower shall neglect to offer security or shall offer security that is not approved by the board of directors, by such times as the by-laws may provide, he or she shall be charged one. month's interest, together with any expense incurred, and the money may be reloaned at the next stated meeting. In case of non-payment of instalments of interest and fines by borrowing stock- holders, for the space of six months, payment of principal and interest and fines, without deducting the premium paid or interest thereon, may be enforced by proceeding on the securities, according to the conditions and power of sale contained in the mortgage, or by suit in equity to foreclose the same. No loan shall be made by such corporation except to its own members, unless it shall happen at any time that there is no demand by any of its shareholders for the funds ; then such funds may be loaned to others who are not shareholders. Sec. 7 (as amended by chapter 108, laws of 1889). A borrower may replace a loan at any time, andin case of the repayment thereof before the expiration of the eighth year after the organization of the corporation, there shall be refunded to such borrower one-eighth of the premium paid for every year of the eight years then unexpired ; and in case of recovery of loans by process of law or foreclosure under the power of sale in the deed of trust or mortgage the excess recovered beyond the amount required to pay the loan with interest, charges, fines, costs and attorney's fees shall be returned to the bor- rower from whom the money was collected or his or her legal representa- tives ; Provided, that when a borrower shall pay monthly the premium bid for priority of loan, said borrower shall not be entitled to have refunded to him any portion of the premium so paid. Sei . 8 (as amended by chapter 10S, laws of 1889). Every such corporation shall terminate, except for the purpose of settling its affairs, whenever its Shares in ea< h and every series (hereof have been redeemed by loans or advance 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, which said by-laws and all amend- ment: of the same shall be filed in the office oi the secretary of the territory and the re< 1 irder oi deeds in the county where the business < if such c< irpora- tion is 1 arried on within thirty days after adoption. No members of such cor- poration hall be allowed to vote when in arrears for interest, dues or tines or upon any question affecting the claim of such corporation against him or Sec. 9 (as amended by 1 hapteno8, laws of 1889). All corporations hereto- fore incorporated undei the laws of the territory of New Mexico for the pur- 1 umulating and loaning funds to its members, or thai have been so nid loaning funds to its members as building and loan associa- tion ized and confirmed as legal and valid corporations from ncorporation ; all contracts made between them and their GENERAL LEGISLATION. 807 members, all loans made, at whatsover premium, discount or interest, and all security taken for such loans are hereby declared legal, valid and binding on all parties concerned or affected thereby. No interest or premium paid on a I nan of any corporation organized under the provisions of this act, no premium or interest paid or agreed to be raid on a loan made by any building and loan association heretofore organized for the purpose of accumulating and loaning funds to its members, no lines or charges assessed under the by-laws of such corporation, shall be deemed usurious or subject to the provisions of cha; ter 2, sections ! 732 to 1739, of the compiled laws of the territory of New Mexico, and all such interest and premium incorporated in notes given to such cor- poration, and all tines and charges assessed against its members in accordance with its by-laws, may be collected according to law. SEC. n (added by chapter 10S, laws of [889). The secretary of every asso- ciation incorporated or doing business with [within] this territory shall, within twenty days after the close of each fiscal year of such association, file with the secretary of the territory of New Mexico a statement under oath of the receipts and expenditures of such association for such year, its assets and liabilities, the number of shares of its capital stock issued, withdrawn and in force in each series of stock during such year, also the number of shares of stock loaned upon each series of stock. Such statement shall also be verified under oath bv at least three members of such association not officers thereof. Sec. 12 (added by chapter 108, laws of 18891. It shall be the duty of the secretary of the territory whenever five or more stockholders of any such association request in a statement of facts, made and sworn to by the same, or whenever he shall deem it expedient so to do in person or by one or more persons to be appointed by him for that purpose, not officers or agents of or in any manner interested in any such association doing business in this ter- ritory, except as stockholders, to examine into the affairs of any such associa- tion incorporated in this territory or doing business by its agents in this ter- ritory, and it shall be the duty of the officers or agents of any such association doing business in this territory to cause their books to be opened for the inspection of the secretary of the territory or the person or persons so appointed, and otherwise facilitate such examination so far as it may be in their power to do ; and for that purpose the secretary, or person or persons so appointed by him, shall have the power to examine under oath the officers and agents of such association relative to the business of any such association ; and when the secretary of the territory shall deem it for the best interests of the public so to do he shall publish the result of any such investigation in one or more newspapers of general circulation published in this territory, and annually on or before the first day of January in each year the secretary of the territory shall report to the governor the financial condition of all such asso- ciations doing business in this territory ; Provided, that said association shall not be subject to any expense in any manner by reason of such examination or publication. Sec. 13 (added by chanter 108, laws of 1889). And whenever it shall appear to the said secretary of the territory, from such examination, that the assets of such association, incorporated or doing business in this state [territory], are insufficient to justify the continuance in business of any such association, he shall communicate the fact to the attorney general, whose duty if shall then become to apply to the district court of the county in which the principal office of said association shall be located for an order requiring it to show cause why the business of such association shall not be closed, and the court shall there- upon proceed to hear the allegations and proofs of the respective parties, either in open court or upon a reference to a master in chancery, and in case it shall appear to the satisfaction of the said courts that the assets and funds of said association are not sufficient as aforesaid, or that the interest of the public requires, the said court shall decree a dissolution of the said ass< - lion and a distribution of its effects. Sec. 14 (added by chapter 108, laws of iSSqi. Any such association may allow reasonable compensation to its auditing committees for their services as such, and may, for the legitimate purposes of such association, on a vote of a majority of all its directors, borrow money in anticipation of payment of dues. ACTS 1897, p. 28. Sec. 1. — All corporations organized under the laws of this territory shall file in the office of the secretary of the territory of Xew Mexico, a certificate in writing, as now provided" by law. For the filing of such certificate the 808 APPENDIX IV. secretary of the territory shall collect at the time of said filing, the following fees : For corporations organized for the construction and operation of railroads, under the railroad incorporation act, $00.00 ; for corporations organized for mining purposes, $25.00; for corporations organized for manufacturing pur- poses, for the construction of wagon roads, irrigating ditches, and the coloni- zation and improvement of lands in connection therewith and for other indus- trial purposes, where the capital stock is $10,000 or less, $5.00 ; $20,000 or less, S 10.000 ; $30,000 or less, $15,000; $40,000 or less, $20.00; $50,000 or less, $25.00; to $100,000, $35.00 ; $100,000 or over, $50.00; building and loan asso- ciations, $25.00 ; for all corporations organized for colleges, seminaries, churches, libraries, or any benevolent, charitable or scientific purposes, the sum of Si. 00. Sec. 2. — Every company or corporation iucorporated under the laws of any foreign state or kingdom, or any state or territory of the United States beyond the limits of this territory, and hereafter doing business which by law requires the filing of a certificate or articles of incorporation in the office of the ter- ritorial secretary of this territory, shall pay the same fees as heretofore pro- vided to be paid by domestic corporations of a like class. NEW YORK- REVISED STATUTES (9th ed.), 1896, p. 1028. Section I. — This chapter shall be known as the banking law, and shall be applicable to all corporations and individuals specified in the next section. Sec. 2. * * * The term, building and mutual loan corporations or associations, when soused, means a corporation formed for the purpose of accumulating a fund for the purchase of real property, 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 property, making improve- ments thereon, or removing incumbrances therefrom, or of accumulating a fund to be returned to its members in specified cases. The term, co-operative loan association, when so used, means a corpora- tion formed for the purpose of encouraging industry, frugality, home-building and the saving of money by its members, the accumulation of savings, the loaning of such accumulations to its members, and the repayment to each member of his savings when they have accumulated to a certain sum, or at any time when he shall desire the same, or the association shall desire to repay the same. The term, building and mutual loan corporations or associations, and co- operative loan associations, shall include every corporation, company or asso- ciation doing business in this state, and having for a part of its title or name the words building association, building and loan association, savings and loan association, savings association or co-operative bank, and every corpora- tion, company or association whose stock is wholly or in part payable by a cumulative fund in regular or peridiocal instalments, or which is doing business in the form and of a character similar to that authorized by Articles 5 and 6 of this chapter, organized or incorporated in any state or country [DE OF THIS STATE. SE( . J. - There shall continue to be a banking department charged with the execution of the laws relating to the corporations and individuals to which this chanter is applicable. The chief officer of such department shall continue to be the superintendent thereof, to be known as the superintendent of banks. * * * Si < . 4. — The secretary of state shall provide the superintendent of banks with an off] ial eal. Kvcry paper executed by him as such superintendent in in! iuance Oi any authority conferred on him by law and scaled with his ' • a] "i offii e, hall be received in evidence, and may be recorded in the proper ding offii es in the same manner and with the like effect as a deed regu- kn ly a< knowledged or proven. , -The superintendent of banks shall employ from time to time such l( taminers as he may need to discharge in a proper manner the impi ed upon him by law. * * * He shall appoint one of his clerks i ':i deputy, * * * 6.— The trustees of other officers having bylaw the custody of the GENERAL LEGISLATION. 809 public buildings at the state capital, shall assign to the superintendent suitable rooms therein lor conducting the business of the bank department. * * * Sec. 7.— All the expenses incurred in and about the conduct of the business of the department, including the salary of the superintendent and clerks shall be charged to and paid by the corporations and individuals required to report to the superintendent under the provisions of this chapter in such proportions as the superintendent shall deem just and reasonable. The expenses incurred and services performed on account of any such corporation or individual shall be charged to and paid by the cor] oration or individual for whom they were incurred or performed. If any corporation or individual shall not, after due notice, pay any such charges, the superintend- ent may apply the proceeds of the sale or of the dividends on any stock or the interest on any bonds and mortgages in his hands deposited by such corpora- tion or individual to the payment of such charges, with interest at the rate of six per cent. The moneys so applied, and all moneys received by him in payment of such charges, shall be deposited and paid by him into the treasury ot the slate, to reimburse all sums advanced from the treasury for such expenses, except moneys received from any corporation or individual banker lor expenses in- curred or services performed on account of any such corporation or individual, which moneys shall be applied by the superintendent in payment of such ex- penses and a verified account thereof included in his annual report. If any such corporation or individual shall fail to pay such charges as herein required, and there are no stocks, bonds or mortgages in the department, the dividends or interest on which can be applied in payment thereof, the super- intendent shall report to the attorney general the failure of any such corpora- tion or individual to pay such charges, and the attorney general shall there- upon bring an action in the name of the people for the recovery of such charges. Sec. 8. — Every corporation and individual banker specified in section 2 of this chapter shall be subject to the inspection and supervision of the super- intendent of banks. He shall, either personally or by some competent person or persons to be appointed by him, to be known as examiners, visit and exam- ine every such corporation and individual banker, other than savings banks, at least once in each year, and savings banks once in two years, On every such examination inquiry shall be made as to the condition and resources of the corporation, the mode of conducting and managing its affairs, the action of its directors, the investment of its funds, the safety and prudence of its management, the security afforded to those by whom its engagements are held, and whether the requirements of its charter and of law have been com- plied with in the administration of its affairs ; and as to such other matters as the superintendent may prescribe. He shall have power in like manner to examine every corporation and indi- vidual banker specified in section 2 whenever in his judgment its condition and management is such as to render an examination of its affairs nec- essary and expedient. The superintendent and every such examiner shall have power to admin- ister an oath to any person whose testimony may be required on any such examination, and to compel the appearance and attendance of any such person for the purpose of any such examination. If the examination shall be made by the superintendent, or by one or more of the regular clerks in the department, no charge shall be made except for necessary travelling and other actual expenses. Sec. 11. — Every examiner appointed by the superintendent shall, before entering upon the duties of his appointment, take and file in the office of the clerk of the county where he resides, the constitutional oath of office. * * * Sec. 13. — No such corporation shall commence its corporate business until its president and cashier or treasurer or secretary, or its two principal officers, by whatever name known, shall have made and subscribed an affidavit stating that the whole of its capital stock, or such portion thereof as by law shall be required to be paid or secured before the commencement of it- operations, has been actually paid or secured to be paid, according to law. Such affidavit maybe made before any officer authorized to administer oaths in the county where the corporation has its principal place of business, and shall be filed in the clerk's office of such county. Every such corporation shall cease to be a corporation if the affidavit above required shall not be made and filed within one year from the time its charter shall be granted. 810 APPENDIX IV. Sec. 14. — Every such corporation, except banks, savings banks and domestic corporations specified in Articles 5, 6 and 7 of this chapter, engaged in re- ceiving deposits of money in trust in this state, and required to make a report of its affairs to the superintendent of banks, shall, if it has not already done so, within six months from the passage of this chapter ; and every such cor- poration hereafter proposing to engage in such business in this state shall, before engaging in such business, transfer and assign to the superintendent registered public stocks or bonds of the United States, or of this state, or of any city, county, town, village or free school district in this state, authorized by the legislature to be issued, to the amount in value, and to be at all times so maintained by the corporation, of ten per cent, on its paid-up capital-stock, but not less in any case than one hundred thousand dollars in cities the popu- lation of which exceeds five hundred thousand inhabitants, and not less than fifty thousand dollars in cities containing more than one hundred thousand inhabitants and less than five hundred thousand inhabitants, and not less than thirty thousand dollars in cities containing more than twenty-five thousand inhabitants and less than one hundred thousand inhabitants, and not less than twenty thousand dollars in cities or towns of less than twenty-five thousand inhabitants, the number of inhabitants in each city or town to be ascertained by the last Federal census or state enumeration. Such stocks must be reg- istered in the name of the superintendent, officially, as held in trust under an J pursuant to this chapter, and the same shall be held by the superintendent in trust, as security for the depositors with and creditors of such corporation, and subject to sale and transfer, and to the disposal of the proceeds thereof by the superintendent, only on the order of competent jurisdiction. Until the order of such court, authorizing such sale or transfer or other dis- position thereof, the superintendent shall pay over to such corporation the in- terest which may be received on such securities. Should any corporation, at any time, have deposited with the superintendent more than the amount hereby required, the excess may be refunded. With the approval of the super- intendent, such a deposit may be made by the corporation, either wholly or in part, in bonds and mortgages satisfactory to the superintendent on im- proved, unincumbered, productive real property in this state, worth at least seventy-five per centum more than the amount loaned thereon. In the case of any foreign corporation (including building and loan assso- ciations organized or incorporated in any state or country outside of this state, as defined in section two of this chapter) doing business in this state, it shall deposit with the superintendent, in trust, as security for the depositors with and creditors of said corporation in this state one hundred thousand dollars in securities enumerated in this section. If any foreign corporation doing business in this state shall refuse or neglect to make the deposit herein required with the superintendent, the fact shall be reported by the superintendent to the attorney general, who shall forthwith take such proceeding as may be necessary to enjoin and restrain such corpo- ration from transacting any business in this state, and the court to which such application shall be made shall be authorized to make such order or decree, and to issue such process in the premises to enforce compliance by the corpo- ration with the provisions of this chapter, or to restrain the transaction of business by it in this state as it may deem proper. ******** Sec. 16. — Whenever the superintendent shall deem it proper, a copy of any report made by any examiner shall be published in the state paper and in at least une daily newspaper in the city of New York, and in one newspaper published in the county where the principal place of business of such corpora- individual is located. SEC. 17.— Whenever the superintendent shall have reason to believe that the capital stock of any corporation or individual banker, subject to the pro- vision, oi tins chapter, is reduced by impairment or otherwise below the mi required bv law, or by its certificate or articles of association, he shall re ii' h corporation or individual banker to make good the deficiency. He may examine or cause to be examined any such corporation to ascertain the amount ol such impairment 01 reduction of capital, and whether the de- ha 1 "-in made good as required by him. The dire< tors of every such corporation upon which such requisition shall have been made hall immediately give notice oi such requisition to each holdei ol the corpoi ition, and oi the amount of the assessment which he mi 1 pay foi th 1 urpo e ol making good such deficiency, by a written or printed io mailed to uch stockholder at his place of residence, or served GENERAL LEGISLATION. 811 personally upon him. If any stockholder shall refuse or neglect to pay the assessment specified in such notice within sixty days from the date thereof, the directors of such corporation shall have the right to sell to the highest bidder at public auction the stock of such stockholder, after giving previous notice of such sale for two weeks in a newspaper of general circulation published in the place or county where such corporation i> located ; hut such stock shall not be sold for a smaller sum than the valuation put on it by the superintendent in his determination and certificate ; and the necessary ( of the sale shall be paid out of the avails of the stock sold. If any such corporation or individual banker shall neglect for sixty days after the superintendent shall have required such deticiency to be made good, to comply with such request, the superintendent shall report the fact to the attorney-general, who shall institute such action or proceeding against such corporation or individual banker as is now authorized in the case of insolvent corporations. Sec. 18. — If any such corporation or individual banker shall refuse to submit its books, papers and concerns to the inspection of any examiner, or if any officer thereof shall refuse to submit to be examined upon oath touching the concerns of such corporation or individual banker, or if it shall he found to have violated its charter, or any law of the state binding upon it. the superin- tendent may report the fact to the attorney general, who shall institute such action or proceeding against such corporation or individual banker as is au- thorized in case of insolvent corporations. If it shall appear to the superintendent that any such corporation or banker has violated its charter or any law of this state, or is conducting business in an unsafe or unauthorized manner, he shall, by an order under his hand and official seal, addressed to such corporation or banker, direct a discontinuance of such illegal or unsafe practices, and conformity with the requirements of its charter, and with safety and security in its transactions ; and whenever it shall appear to the superintendent that it is unsafe and inexpedient for such corporation or banker to continue business, he shall communicate the facts to the attorney general, who shall thereupon institute such proceedings against the corporation or banker as are authorized in the case of insolvent corporations, or such other proceedings as the nature of the case may require. Sec. 19. — The creditors and shareholders of any such corporation whose debts or shares shall amount to one thousand dollars may make application to the supreme court by a verified petition setting forth facts showing that an examination of the affairs of the corporation should be made, and the court mav thereupon, in its discretion, order such an examination to be made by a referee for the purpose of ascertaining the safety of the investments and the prudence of the management of the corporation. The result of every such examination, together with the opinion of the referee thereon, shall be published in such manner as the court shall direct. The court shall make such order in respect to the expenses of the examination and publication as it mav deem proper. Sec. 20.— Every corporation and individual banker subject to the provisions of this chapter shall make a written report to the superintendent of banks, in such form and containing such matters as he shall prescribe. * : If a * * * co-operative loan association, or a building and mutual loan corpora- tion, * * * such reports shall be made annually on or before February first in each vear, and shall contain a statement of its condition on the first day of January preceding. The superintendent may, for good cause shown, ex- tend the time for making any such report not exceeding thirty days. Every such report shall be verified by the oath of the president and cashier or treasurer of such corporation or by such individual banker to the effect that the same is true and correct in all respects. * * * Sec. 2\— If anv bank or individual banker shall fail to make such report * * * or if anv savings bank or trust company shall fail to make such report * * * Every other corporation subject to the provisions of this chapter which shall fail to make such report within the time herein required or to include therein any matter required by the superintendent to be stated shall forfeit to the peonle" the sum often dollars for evervdav for which such report shall be delayed or withheld, and for every day that any such omitted matter may re- main, unreported. The moneys forfeited by this section, when recovered, shall be paid into 812 APPENDIX IV. the state treasury to be used to defray the miscellaneous expenses of the de- partment * * * * * * * * Sec. 23.— The superintendent shall report annually to the legislature, at the commencement of its first session : 1. A summary of the state and condition of every corporation and individual banker required to report to him and from which reports have been received the preceding year, at the several dates to which such reports refer, with an abstract of the "whole amount of capital returned by them, the whole amount of their debts and liabilities, specifying particularly the amount of circulating notes outstanding, if any, and the total amount of means and resources, spec- ifying the amount of specie held by them at the times of their several re- turns, and such other information in relation to such corporations and bankers as, in his judgment, may be useful. Such corporations shall be divided into classes so as to correspond with the designations thereof in section 2 of this chapter. * * * Such report may be divided into parts, and the part or parts containing the reports of corporations other than banks may be made on or before the first day of March in each year. Sec. 26. — Interest unpaid, although due or accrued on debts owing to the cor- poration or banker, shall not be included in the calculation of its profits pre- vious to a dividend. * * * The surplus profits, from which alone a dividend can be made, shall be as- certained by charging in the account of profit and loss and deducting from the actual profits : 1. All expenses paid or incurred, both ordinary and extraordinary, attend- ing the management of its affairs and transaction of its business. 2. The interest paid, or then due and accrued, on debts owing by it. 3. All losses sustained by it. In the computation of such losses, all debts owing to it shall be included which shall have remained due, without prosecu- tion, and upon which no interest shall have been paid for more than one year, or on which judgment shall have been recovered that shall have remained for more than two years unsatisfied, and on which no interest shall have been paid during that period. ******** Sec. 27. — All losses sustained by any corporation or banker subject to this chapter, in excess of its undivided profits then realized and possessed, shall be charged as a reduction of its capital stock, and no dividend shall thereafter be made on its snares of stock until the deficit of capital so created shall be made good. ******** Sec. 29. — Any corporation or banker to which this chapter is applicable may make application to the superintendent of banks for leave to change its place of business to another place in the same or another county. If the proposed place is within the limits of the town, village or city in which the business is i ai Tied on, such change may be made upon the written approval of the super- intendent ; if beyond such limits, notice of intention to make such application, signed by the two principal officers of the corporation or individual bankers, shall be published once a week for two weeks in a newspaper published in the ij Albany and in a newspaper published in the county in which such place m 1 lo< ated, to be designated by the superintendent of banks. The application shall State the reasons for such proposed change, and be signed by a majority of the board of directors of Hie corporation and (except in the case of corporations enumerated in Articles 5 and oof this chapter, and by Chapter \22 of the laws of [8v llif banker. [f the uperintendeni shall be satisfied that there is no reasonable objection hang of lo< ation he shall make a certificate authorizing such change, which hall be filed in the office of tin- superintendent, and a certified copy thereol with the clerk oi the county in which the place of business of the cor- located, and with the clerk of the county to which its ol ^1 in' 1 is changed, if in another county, and published once in each GENERAL LEGISLATION. 813 week for two successive weeks in the newspapers in which the notice of application was published. When the requirements of this section shall have been fully complied with, the corporation or banker may, upon or after the day specified in the certificate, remove its property and effects to the location designated in the certificate; and thereafter its sole business location shall be the location so specified ; and it shall have all the rights and powers in such new location to which it was entitled at its former location ; but no such change of location shall in any manner lessen or impair any liability of the corporation or banker incurred or existing at the time such change was made. *Sec. 30. — No corporation to which this chapter is applicable shall be incorpo- rated hereunder, or transact any business in this. state other than such as relates to its formation, without the written approval of the superintendent of banks and without his written certificate stating that it has complied with the provisions of this chapter and with all the requirements of law, and that it is authorized to transact within this state the business specified therein, and that such business can be safely intrusted to it ; which certificate shall be recorded in the office of the superintendent in a book to be kept by him for that pur- pose, and a certified copy thereof filed in the office of the clerk of the county where the corporation is to have its principal business office. Sec 31. — No foreign corporation incorporated for the purpose of carrying on the business specified in articles 5, 6 and 7 of this chapter shall transact busi- ness in this state without the written permission of the superintendent of banks, and a written certificate from him stating that such corporation has complied with all of the provisions of this chapter applicable to it, and with all the re- quirements of law, and that it is authorized to transact the business within this state specified therein, and that such business may safely be intrusted to it. Such permission and certificate shall continue in force only for the period of one year from the date thereof, but may be renewed by the superintendent from time to time for a like period if satisfied that the corporation has com- plied with all of the provisions of this chapter, and with the requirements of law and that such business can be safely intrusted to it. Sec. 32. — No foreign corporation, company or association to which this chapter is applicable, shall transact any business in this state until it has ex- ecuted and filed with the superintendent of banks a written instrument ap- pointing such superintendent its true and lawful attorney, upon whom all process in any action or proceeding by any resident of the state against it may be served with the same effect as if it existed in this state and had been lawfully served with process therein. Service in favor of a resident of this state upon such attorney shall be deemed a personal service upon such corporation, company or association. The superintendent of banks shall forthwith for- ward a copy of every process, served upon him under the provisions of this section by mail, prepared (prepaid) and directed to the secretary of such corporation, company or association at its last known postoffice address. For each copy of process the superintendent shall collect the sum of two dol- lars, which shall be paid by the plaintiff or moving party at the time of such service, to be recovered by him as a part of his taxable disbursements if he succeeds in the suit or proceeding. The term process in this section includes any writ, summons, petition or order whereby any suit, action or proceeding shall be commenced by a resident of the state. Sec. 34. — Any two or more corporations, other than savings banks, organ- ized under any one article of this chapter, or organized under laws of this si ate for the purposes, or either of them, mentioned in any one article of this chap- ter, are hereby authorized to merge one or more of said corporations into an- other in the manner following : The respective boards of directors of such corporations may enter into and make an agreement, under their respective corporate seals, for the merger of one or more of said corporations into an- other of them, prescribing the terms and conditions thereof and the mode of carrying the same into effect, which agreement shall be subject to the ap- proval of the superintendent of banks. Sec 35. — Such agreement shall be submitted to the stockholders of each of such corporations at a meeting thereof to be called upon notice of at least two weeks, specifying the time, place and object thereof, addressed to each stockholder at his last known postoffice address and deposited in the post- office, postage prepaid, and published for at least two succe^ive weeks in one of the newspapers in each of the counties el" this state in which either of such corporations shall have its principal place of business, and if such agreement shall be approved at each of such meetings of the respective stockholders sepa- 814 APPENDIX IV. rately by the vote or ballot of the stockholders owning at least two-thirds of the stock, the same shall be the agreement of such corporations. A sworn copy of the proceedings of such meetings, made by the secretaries thereof, res ectively, shall be presumptive evidence of the holding and action of such meetings. Such agreement and verified copy of proceedings of such meetings shah be made in duplicate and tiled in the office of the superintendent of banks and in the office of the clerk of the county in which the principal place of business of the corporation into which such corporation or corporations shall be merged is located, and thereupon such corporations shall be merged as specified in such agreement, and the provisions of such agreement shall be carried into effect as therein provided ; and it shall be lawful for said corporation into which the others shall have been merged to require the return of the original cer- tificate of stock held by each stockholder in each or either of the com anies, and in lieu thereof to issue new certificates for such number of shares of its own stock as under the agreement of merger the said stockholder may be entitled to receive. Sec. 36. — If any stockholder not voting in favor of such agreement of merger shall, at such meeting or within twenty days thereafter, object to such merger and demand payment for his stock, or in the case of building and mutual loan associations or co-operative loan associations, if such stockholder be a borrower, liquidation of his indebtedness and cancellation of his stock, such stockholder, if the merger takes effect at any time thereafter, may, at any time within sixty days after such merger, apply to the supreme court at any special term thereof held in the district in which the county is situated in which such corporation into which the other or others may be merged may have its principal place of business, upon at least eight days' notice to said corporation, for the appointment of three persons to appraise the value of his stock, or the amount of said indebtedness, if any, and the court shall appoint such appraisers and designate the time and place of their Inst meet- ing, with such directions in regard to their proceedings as shall be ceemed proper, and also direct the time and manner in which payment of Mich stock to such stockholder or liquidation of such indebtedness by him and cancella- tion of his stock shall be made. The court may fill any vacancies in the board of appraisers occurring by refusal or neglect to hold such office. The ap- praisers shall meet at the time and place designated and after being duly sworn shall honestly and faithfully discharge their duties and estimate and certify the value of such stock, an 1 the amount of such indebtedness, if any, at the time of such decision, and deliver one copy to such corporation and another to such stockholder if demanded ; the charges and expenses of the appraisers shall be paid by the corporation. When the corporation shall have paid the appraised value of such stock, or if such stockholder be a bor- rower as aforesaid when he shall have paid the amount of his indebtedness as fixed by such appraisal, as directed by the court, said stock shall be can- celled and such stockholder shall cease to be a member of said corporation or to have any interest in such stock and in the corporate property, and such stock may be held and disposed of by the corporation for its own benefit ; and if such stockholder be a borrower as aforesaid, proper instruments of acquit- tance shall be duly executed and delivered to him by the cor- oration and thereupon he shall be discharged from all further liability to the corporation. Si 1 $7, —Upon the merger of any corporation in the manner herein pro- vided, all and singular the rights, franchises and interests of the said corpora- tion so merged in and to every species of property, real, personal and mixed, and things in action thereunto belonging, shall be deemed to be transferred led in such corporation into which it has been merged, without any ! or transfer and said last named corporation shall hold and enjoy Hi'- ame and all rights of property, franchises and interest in the same man- nei and to the same extent as if the said corporation so merged should have mi thetitleand transact the businessof such cornoration; and tin: Mile and nal < tate .i. 1 1 uired by the said corporation so merged shall nol be deemed to revert by means of such merger or anything relating 18. -Tli'- rightsof creditors of any corporation that shall be so merged shall nol in any manm 1 l»- impaired In- any such merger, nor shall any liabil- 1 foi the payment ol any money due or to become due, or any claim 01 demand, in any manner, or for any cause existing against Mich cor- poration, 01 again t any stockholder thereof, be in any manner released or impaired, bul m h < on oration into " hii h the othei 01 others sha'l be merged 1 obligation and liabilities and be he'd liable to av and di chargi all uch debts and liabilities of the merged corporation in the same GENERAL LEGISLATION. 815 manner as if such corporation into which the other shall become merged had itself incurred the obligation or liability, and the stockholders of the respect- ive corporations so entering into such agreement shall continue subject to all the liabilities, claims and demands existing against them as such at or before such merger, and no suit, action or other proceeding then pending before any court or tribunal in which any corporation that may be merged is a party shall be deemed tohaveabated or discontinued by reason of any such merger, but the same may be prosecuted to final judgment in the same manner as if the said corporation had not entered into the said agreement, 01 thi said last named corporation may be substituted in the place of any corporation so merged as aforesaid, by order of the court in which such action, suit or pro- ceeding may be pending. REVISED STATUTES (9th ed.), 1896, p. 1108. ARTICLE V. Section' 170. — Any fifteen or more persons of full age, and residents of state of New York, may form an association as provided in this act. All associa- tions formed under the provisions hereof shall be known as co-O] erative savings and loan associations ; and the name of every association so formed shall contain as a part thereof the words "co-operative savings and loan asso- ciation." Sec. 171. — The object and purpose of such association shall be to encourage industry, frugality, home-building and savings among its members ; the ac- cumulation of savings, the loaning of such accumulations to its members and the repayment to each member of his savings when they have accumulated to a certain sum, or at any time when he shall desire the same, or the asso- ciation shall desire to repay the same. Sec 172. — Said association shall become incorporated by the said fifteen or more persons making, signing and acknowledging, in the manner and form prescribed for the acknowledgment of deeds in this state, a certificate, \\ Ik 1 e- m shall be stated the name of said association ; that the association is formed under and for the purpose prescribed in this act ; the town, village or city where the association is located within this state. When made as aforesaid said certificate shall be filed and recorded in the office of the superintendent of banks, and upon said certificate being so filed and recorded, the super- intendent of banks shall, upon the payment of a fee of one dollar therefor, issue a certificate, in proper and suitable form, declaring the facts contained in said original certificate, and the filing and recording thereof in his office, and which latter certificate shall thereupon be recorded in the county clerk's office of the county where said association is located ; and upon the same being recorded, the persons named in the certificate first above mentioned, their associates and successors, shall become a corporate body, with power to adort by-laws relating to the manner of conducting their business not incon- sistent with the provisions of this act. A copy of which by-laws and all sub- sequent amendments thereof shall be filed with the superintendent of banks within thirty days of their adoption. Sec. 173. — The officers of the association shall consist of a board of direc- tors of not less than thirteen members, including therein a president, vice- president, secretary and treasurer. Said last named officers shall be elected annually by the shareholders, or by and from the board of directors, and the other members of the board, or not less than one-third thereof, shall be elected annually, as the by-laws shall determine. Other officers may be author- ized by the by-laws, subject to the restrictions hereinafter contained. The duties and compensations of the officers, their terms of office, the time 1 f their election, the manner of filling vacancies, the time of the periodical meetings of the officers and shareholders, the manner of calling special meetings, and the manner of voting, shall be determined by the by-laws, except that the board of directors shall fix each year the compensation" of the secretary and treas- urer, unless otherwise determined by the by-laws ; and provided, further, that no officer, agent or other person shall receive compensation by salary, lees, ex- penses or otherwise for soliciting the sale of shares of the association ti 1 any person or persons. All officers named in this act shall hold office until their successors are duly elected and assume the duties of their offices. No asso- ciation shall expire from neglect to elect officers at the time prescribed in its by-laws. Sec. 174. — The capital of said association shall consist of the accumulated savings of its members which it holds, and shall be divided into shares of a 816 APPENDIX IV. matured value not less than fifty dollars nor more than two hundred and fifty- dollars, as shall be fixed by the by-laws. The shares shall be issued in series, or at any time, as the by-laws shall determine. No shares of a prior series shall be issued after the issuing of shares in a new series when issued upon the serial plan, except additional shares to a borrowing member to com- plete a loan. Shares which have not been pledged as a security for the pay- ment of a loan shall be called " free shares." Shares that have been so pledged shall be called "pledged shares." Each association shall determine by its by-laws the number of shares that may be held by one person. Sec. 175. — Regular payments made to the association upon shares shall be called " dues." At or before each stated meeting of the board of directors, or at any stated meeting for receiving dues, each shareholder shall pay to the board, or a committee thereof, or some officer ot the association, as designated by the by-laws, upon each share held by him, such amount of dues as the by-laws re- quire until the share of stock reaches its matured value, or is withdrawn, cancelled or forfeited. Payment of dues on shares in each series shall com- mence from the time that shares began to be issued in such series, when issued upon the serial plan, and, when not issued in series, from the date of issuing. The association shall have the power to impose and collect a fine from each shareholder for every neglect or refusal to make his payment of dues, interest or premiums when due, in such sums and in such manner as its by-laws determine. The association shall also have power to charge an en- trance fee upon each share issued, not exceeding twenty-five cents on each share, or, in lieu thereof, a membership fee not exceeding one dollar. Pay- ments of dues, interest or premium may be made in advance, but no associa- tion shall allow interest on such advance payments at a greater rate than six per centum per annum, nor for a longer period than one year. Sec. 176. — The accumulations upon free shares may be withdrawn, and the shares cancelled, after one month's written notice of such intention, filed with the secretary at or before a stated meeting of the board, but the directors may waive such one month's notice. If filed before such meeting the one month's notice shall not be deemed to have commenced until the first regular meeting after the filing The withdrawing shareholder shall be paid the amount of the withdrawal value of his accumulations, as determined under the by-laws at the last distribution of profits before the notice of withdrawal, together with all dues paid since such distribution, and with or without such interest on the value of the shares at the time of the last distribution, and on the dues there- after paid, as the by-laws shall determine, less any fines unpaid and a propor- tionate share of any unadjusted loss ; Ptovided, that at no time shall more than one-half the receipts of the association, and when the association is indebted upon matured shares no more than one-third, shall be applicable to the pay- ment of withdrawing shareholders, without the consent of the board of direc- tors ; and when the demands of the withdrawing shareholders exceed the money applicable to their payment, they shall be paid in the order in which their notices of withdrawal were filed with the secretary. The board of direc- toi - may, at their discretion, under rules made by them, retire the free shares at any time alter four years from the date of their issue, by enforcing withdraw- als of the ^aiiie ; Provided, that the shareholders, whose shares are to be re- tired, shall be determined by lot, and that they shall be paid the full value of their shares, less all fines and proportionate part of any unadjusted loss. SEi . 177. — When each free share reaches its matured value all payments of 'hereon sh.ill cease, and the holder thereof shall be paid out of the funds of the association, the matured value thereof with such rate of interest as shall bedetermined by the by-laws, from the time the board of directors shall de- 1 have matured until paid ; but at no time shall more than hirdofthe receipts of the association be applicable to the payment of mi' in '1 shares, without the consent of the board of directors. The order of : the matured shares shall be determined by the by-laws. Sec. r78 A.I each stated meeting of the board or a committee thereof, or othei as fixed by the by-laws for the purpose of making loans, they shall bers of the association desiring to borrow all accumulations ap- plicable to thai 1 hi po e; the '.uiir shall be loaned in sums corresponding with ili'- value of a matured share, or a multiple thereof or the fractional part eof. 11 there shall be re than "in- member desiring to borrow, the ri j^ht to a loan shall be determined by the open bidding of a premium upon lans following, which each association shall determine for lav . namely : The I I hi," with or without "rebates," as the by-laws shall deter- mine ; that is, the premium shall be bid in the form of a certain sum per GENERAL LEGISLATION. 817 share, which shall be paid in cash or deducted from the loan made to the suc- cessful bidder. 2. The " instalment plan," that is, the premium shall be bid in the form of a certain sum per share, which the successful bidder will pay at each regular payment of interest, in addition to the interest which the association requires during the continuance of his loan. 3. The "premium interest plan ;" that is, the premium shall be bid in the form of the rate of interest the successful bidder will pay upon his loan during the continuance thereof ; the association in this plan shall determine the minimum rate of interest at which the bidding shall begin. But such minimum the rate shall not exceed the legal rate of interest. In all these plans the member bidding the highest premium shall be entitled to the loan upon giving the security required therefor, including the interest and premium ; the interest and premiums shall be payable from the date of bidding off the loan, unless otherwise ordered by the by-laws, and in case the sale takes place at an adjourned or special meeting, the same shall be payable from the last preceding regular meeting for the loaning of money unless the by-laws otherwise provide. Requiring and receiving such interest and premiums or any other moneys which the association may require under the provisions of this act, shall not be deemed a violation of the usury law. No member or members shall borrow a larger sum than shall be equal to the matured value of the shares held by him or them, nor shall the association take security upon real estate located more than fifty miles from their principal office for the transaction of their business. A borrowing member for each share or fractional part thereof borrowed upon, shall in addition to the dues on his shares pay interest and premium, if any, on his loan at such times as the by-laws shall prescribe, until the shares borrowed upon shall reach their matured value or the loan is repaid ; and when such matured value is reached the shares shall cancel the loan upon them and the proper surrenders and acquittances be made. Sec. 179. — For every loan made, except as hereinafter provided in this sec- tion, a bond secured by a first mortgage on real estate, or a second mortgage when the first mortgage was given to and is held by the association, or when said second mortgage is given in a sum sufficient to cover any first mortgage that may be a lien on the property in addition to the sum advanced by the asso- ciation, shall be given, accompanied by a transfer and pledge to the association of the shares borrowed upon and all accumulations that have or shall accrue thereon, as collateral security for the repayment of the loan ; or, in lieu of the mortgage, the borrower, or another, may transfer and pledge to the asso- ciation for the payment of the loan, free shares, the withdrawal value of which under the by-laws at the time of such borrowing shall exceed the amount borrowed and interest thereon for six months, and all fines that could accrue in case the borrower should default in the payment of the dues upon the shares borrowed upon, but an association may provide by its by-laws that it will not make stock loans. If the borrower neglects to offer security satis- factory to the board of directors, within the time provided by the by-laws, his right to the loan shall be forfeited and he shall be charged with interest and premium, if any, for one month, and all necessary expenses incurred, if any, under the by-laws in reference to the proposed loan. All bonds and mort- gages given to the association shall be deemed conditioned upon the perform- ance of the provisions of this act relating to the payment of loans, premiums, interest and fines thereon, and the by-laws of the" association, although the same may not be fully expressed therein. A borrower may repay a loan, and all arrears of interest, premium, if an}', and fines thereon (or one or more shares thereof), at any stated meeting or at anytime (but the by-laws may otherwise provide) ; when not made at a stated meeting, he shall pay interest up to the first stated meeting after such payment, or he may, by a proper notice, and directions as to the application, have the withdrawal or holding value of the shares borrowed upon, applied in payment or part payment, as the by-laws shall determine. Should there at any time be money in the treasury not called for by the borrowing or withdrawing members, the board of directors may make temporary loans to members out of the same, at such rate of interest not exceeding six per cent., and under such provisions and restrictions as the by-laws may prescribe. Such temporary loans shall not run more than ninety days and shall be secured by the personal note of the borrower, and also by a pledge of shares to the association, the withdrawal value of which shares shall be at least ten per centum more than the amount of the loan and the interest thereon to its maturity. It at any time there is money in the treasury as above in excess of the amount needed to meet the 818 APPENDIX IV. demand for such temporary loans, it may be invested in the same kind of securi- ties and under the same restrictions as allowed to savings banks by section 116 of this chapter. Sec. 180. — Whenever any member shall be six months in arrears in the payment of his dues upon free shares, the secretary shall give him notice thereof in writing, and a statement of his arrearages by mailing the same to him at the last postoffice address given by him to the association, and if he shall not pay the same within two months thereafter, the board of directors may, at their option, declare his shares forfeited ; and at the time of such forfeiture the withdrawal value thereof shall be determined and stated, and the defaulting member shall be entitled to withdraw the same without interest, within one year, upon such notice as shall be required of a withdrawing shareholder, and upon failure to so withdraw the same, then, and in that case, it may revert to the association. Sec. 181. — Whenever a borrowing shareholder shall be in arrears in the payment of his dues, interest or premium two months, the whole loan shall become due at the option of the board of directors, and they may proceed to enforce collection upon the securities held by the association. The with- drawal value at the time of the commencement of the action, of all shares pledged as collateral security for the loan, shall be applied upon the loan and arrearages of interest, premium and fines thereon, and the shares deemed sur- rendered to the association. Sec. 182. — Any association may purchase at any sale, public or * judg- ment, lien or other incumbrance, or in which it may have an interest ; and may sell, convey, lease or mortgage the same at pleasure to any person or persons : it may also hold and own real estate for the purpose of occupying the same with its own business office. Sec. 183. — Any association organized in pursuance of the provisions of this act may borrow money for the purpose of making loans or paying with- drawals, not exceeding, however, two thousand dollars, so long as its accu- mulated capital shall not exceed twenty thousand dollars, and when its accumulated capital exceeds that sum, not exceeding ten per cent, thereof. No money borrowed shall be for a longer term than one year. Any asso- ciation having a surplus in its treasury for which there is no demand for loans, withdrawing stockholders, matured or paid-up stock, may loan the same to another association, organized under the provisions of this act, sub- ject to the provisions of this section, on the part of the borrowing associa- tion. No association shall borrow or make loans in this section authorized, except by a majority vote of all the members of its board of directors. The vote to be recorded by ayes and nays in its regular minutes. Sec. 184. — Profits and losses shall be ascertained at least annually, and shall be distributed to all shares outstanding at the time of such distribution, in the manner provided by the by-laws of the association. At each periodical dis- tribution of profits, the board of directors may reserve and carry as undivided profits, in the nature of a contingent fund, any sum from the net profits that m their discretion seems wise. Sec. 185. — No transfer of shares shall be binding upon the association until the same have been made upon the books of the association ; and the trans- feree thereof shall take the same charged with all the liabilities and condi- tions attaching thereto in the hands of the one transferring the same. The association may require a " transfer fee," not exceeding twenty-five cents per share, or, in lieu thereof, a total fee not exceeding one dollar on each transfer. Six. [86. — The board of directors shall have the power to appoint and remove, at pleasure, an attornev-at-law for the association. The by-laws of the association may provide for the election of auditors, and prescribe their duties and compensation, and shall provide in what manner the by-laws them- selves may be amended. At the time of the adoption of by-laws on the forma- tion of an association, only those members who have joined in the certificate of incorporation are entitled to vote, and each incorporator shall have only ote, SEC, [87. — Any person of full age and sound mind may become a member of the 1 01 iation by taking one or more shares therein and subscribing to the bv laws, and annexing to his signature his postoffice address ; and when- liis postoffice address changed he shall give written notice thereof to the secretary of the association ; and for the purpose of giving any member notice, by mail, tin- last postoffice address given by him shall be liginal : "private, any real estate upon which it may have a mortgage," omitted by lake. GENERAL LEGISLATION. 819 deemed the proper one. A minor may hold shares in the name of a parent, guardian or next friend, as trustee for him, but the association shall not be responsible to said infant for any moneys received by said trustees on account of said shares from the association. All accumulations upon shares in said association held by any person shall be exempt from execution and proceed- ings supplementary thereto to the amount of six hundred dollars ; and the association itself shall be deemed an institution for savings, and not taxable under any tax law which shall exempt savings banks or institutions for sav- ings from taxation, ami shall not be subject to the provisions of Chapter 143 of the laws of [886, nor shall any law passed hereafter, taxing corporations in any form, be deemed to include associations formed under this act, unless they are specifically named in such law. Sec. 188. — Every association organized under the provisions of this act or under the provisions of Chapter 122 of the laws of 1851 and the acts amenda- tory thereof, or under Chapter $16 of the laws of 1887,^01- under Articles 5 and 6 of Chapter 6S9 of the laws of 1892, shall, annually, on or before the thirtieth day of January, make a full report in writing of the affairs and condition of such corporation on the thirty-first day of December of the next preceding year to the superintendent of banks, in such form and by such officers of the corporation as the said superintendent may designate. Every payment made to an officer or agent of the association, by authority of the association, or by virtue of any provision of its by-laws or articles of association, shall, for the purposes of this section, be deemed a payment to the association and ac- counted for by it. Such report shall be verified by the oath of the officers making the same, and shall include the receipts of such association from all sources, including membership or share fees, and all other compensation paid to officers or agents by members or persons expecting to become mem- bers. Such report shall also include all expenditures made by such associa- tion, and for what purpose expended. Every association shall make any further reports which said superintendent of banks shall require, and in such form and as to such matters relating to the condition and conducting of the business of the association, as such superintendent shall designate. Any wil- ful and false swearing in making and verifying any such report shall be deemed perjury. Sec. 189. — If any such association shall fail to furnish to the superintendent of banks any report required by this act at the time so required, it shall for- feit the sum of ten dollars per day for every day such report shall be delayed or withheld ; and the superintendent of banks may maintain an action in his name of office to recover such penalty and the same shall be paid into the treasury of the state, and applied to the expense of the said department ; or report the facts to the attorney-general, who may bring an action for recovery in the name of the people of the state of New York ; Provided, however, that the superintendent may, for good cause shown, extend the time within which such report is to be filed not exceeding twenty days. He shall also annually publish a full report of the condition of all associations formed under the pro- visions of this act, or under the provisions of any act repealed by this act. Sec. 190. — All associations organized under the provisions of this act or under the acts specified in Section 188 of this article, shall, at all times, be subject to visitation and examination by the superintendent of banks, his deputies or duly authorized agents ; and he shall examine each of said asso- ciations at least once in each year. It shall also be the duty of said superin- tendent, by himself, his deputies or duly authorized agents to make examina- tion of the affairs of any of said associations whenever, in the judgment or discretion of said superintendent, the annual or any other report made to said department as required in this act shall, in any manner, indicate or reveal that its business is being conducted in a manner not authorized by its articles of association or by-law's or by the laws of the state of New York under which it is organized or in an irregular or unsafe manner, and when any association shall fail wholly to make the reports required by the provisions of this act, all expenses incurred in making such examination or investigation herein authorized shall be paid from the funds provided by Section 25 of this act, except the annual examination herein provided for and also excepting exami- nations made by reason of the business being conducted in a manner not authorized by articles of association or in violation of law or in an irregular or unsafe manner as hereinbefore provided ; but no charge shall be made there- for when the examination is made by said superintendent personally or bv one of the salaried employees of his department, except for travelling or other necessary expenses, but when made by some person dulv appointed bv said superintendent other than a salaried "officer of his department, the amount 820 APPENDIX IV. charged snail not exceed the sum of ten dollars per day for the time actually expended in making the examination and reports of same and in getting to and from place of examination and the actual necessary expenses incurred. Sec. 191. — Each association shall at least annually publish and deliver to each shareholder on application a complete and detailed statement of the financial situation and the business conducted since the issuing of its last prior statement. Sec. 192. — Chapter 122 of the laws of 1851, Chapter 564 of the laws of 1875, Chapter 96 of the laws of 1878, and Chapter 556 of the laws of 1887, and Article 6 of Chapter 689 of the laws of 1892 are hereby repealed, except as to associa- tions not organized under either of said acts, but such associations shall be subject to the provisions of Sections 188, 189, 190 and 194 of this act. Sec. 193. — Any association now existing and heretofore incorporated under the provisions of Chapter 122 of the laws of 1851, and of the acts amendatory thereof, or Chapter 556 of the laws of 1887, and Articles 5 and 6 of Chapter 689 of the laws of 1892, may become entitled to the benefits of this act and re-in- corporate under the provisions in the following manner : First. Upon a majority vote of all the directors so requesting, the presi- dent and secretary of the association shall call a special meeting of the share- holders to consider and determine the question whether the association shall re-incorporate under the provisions of this act. Such notice shall specify the object of such meeting, and be mailed, postage prepaid, not less than thirty days prior to the date fixed for the meeting, to every shareholder at his last postoffice address known to the association. Second. At such meeting a majority vote of those in attendance shall decide all questions considered at the meeting, the vote being by member or by shares, according to the rule already existing in the association. The meeting may be adjourned from time to time if deemed advisable. Third. If the shareholders decide not to re-incorporate, another meeting for such purpose shall not be called until one year has passed. Fourth. If the shareholders decide to re-incorporate, they shall proceed to adopt by-laws for the association when re-incorporated, the voting thereon to be the same as provided in the foregoing subdivision two, and such by- laws shall be in conformity with the provisions of this act. Fifth. The shareholders having decided to re-incorporate, and having adopted by-laws, shall next designate the fifteen or more persons who may make and file the certificate, and have the certificate recorded, as provided in the third [172] section of this act. Sixth. Upon the said fifteen or more persons complying with the provi- sions (if said Section 3 [172], and filing said by-laws with the superintendent of banks, the association shall become fully incorporated under this act. All obligations in favor of the old association at the time of such change shall belong to the new association, and be enforceable by it and in its name as fully and completely as the old association might have enforced them if no change had been made, and all demands, claims and rights of action against the old corporation may beenforced against the new corporation as fully and completely as though no change had been made. Skc. 104. — Superintendent of banks is hereby empowered to levy an assess- ment upon each association incorporated hereunder or under chapter 122 of the laws of [851 and acts amendatory thereof, or chapter 556 of thelawsof iSNjand articles 5 and 6 of chapter 689 of the laws of 1892, for the purpose of defraying the necessary expenses of his department in the supervision of said associa- , examination and publication of reports as follows, vi/. : Said assessment shall be levied upon said associations in proportion to their assets as shown by the lasl t receding annual report, and said associations shall pay the same within ten davs after notice is given by said superintendent ; and in no event shall any portion of said expen 1 I"- borne by the state. 105. -Whenever refereni e is made in anv of the statutes of the state of New York to article 5 or 6, and to articles 5and6ol chapter689of the laws ol r8Q2, the said reference shall be construed to mean and refer to this article 5 substituted in place of said articles 5 and f>. (This at 1 tool; effect May 15, [894.) \ ( rs [898.— Chapter 348. SECTION 195a, \ CO-operative savings and loan association, or a building and loan assoi iation. Incorporated under and doing business pursuant to the li of thi tate, ma deposits and the income derived therefrom in th< .iiue n which savin-shank-, are, by section one hundred and GENERAL LEGISLATION. 821 sixteen of this chapter, authorized to invest their deposits and the income derived therefrom. In force April 20, 1898. LAWS OF 1851.— Chapter 122.* Section i. — Any number of persons, not less than nine, may associate and form an incorporated company for the purpose of accumulating a fund for the purchase of real estate, the erection of buildings, or the making of other im- provements on lands, or to pay off incumbrances thereon, or to aid its members in acquiring real estate, making improvements thereon, and re-mov- ing incumbrances therefrom ; and for the further purpose of accumulating a fund to be returned to its members, who do not obtain advances as above mentioned, when the funds of such association shall amount to a certain sum per share, to be specified in the articles of association. Sec. 2. — Such persons shall severally subscribe articles of association, in which shall be set forth the name of the corporation, the time of its regular meetings, and how special meetings may be called, and what shall constitute a quorum to transact business at meetings ; the qualification 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 advances shall be made, and fees to be paid on the transfer of shares ; the fines and penalties for non-payment of dues or fees, or other violation of the article of associa- tion ; the manner of redemption of shares by advances made thereon, the mortgages security to be taken on such advances, and how the same may be redeemed or changed ; the manner of the transfer or withdrawal of shares ; the manner of investing funds not required for advances on shares ; the quali- fications 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 alter- ing or amending the articles of association, and such other provisions as shall be necessary for the convenient and effective transaction of the business there- of ; provided that the same shall not, in any respect, contravene the constitu- tion or laws of this state. Sec. 3. — A true copy of such articles, signed by the officers of the associa- tion, together with a statement showing when the association was organized, and the place of the transaction of its business and the names of the officers and trustees at the time of the making of such statement, which shall be verified by oath or affirmation before any officer 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 as aforesaid, and such other persons as shall become members of such association and their successors, shall be a body corporate by the name specified in such articles of association, and shall possess the powers and privileges, and be subject to the provisions of title third of chapter 18 of the first part of the revised statutes, so far as those provisions are consistent with the provisions of this act, and thev shall by their corporate name be capable in law of purchasing, holding and conveving any real and personal estate whatever, which may be neces- sary to enable such company to carry on their operation named in such certi- ficate. Sec. 4. — It shall be lawful for the trustees to call in and demand from the stockholders, respectively, all such sums of money by them subscribed, at such times and in such payments or instalments as the articles of association shall prescribe, under the 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 news- paper nearest the place where the business of the company shall be carried on as aforesaid. Sec. 5.— All corporations formed under this act shall have power to borrow money for temporary purposes not inconsistent 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. Sec. 6.— Parents and guardians may take and hold shares in such associa- * Applies only to associations incorporated prior to June 17, 1892. 822 APPENDIX IV. tion in behalf and for the use of their minor children 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. Married women may take and hold shares in such associations, provided the cost of such shares be defrayed from their personal earnings, the personal earin^s of their children voluntarily bestowed for this purpose, or from pro- pert v'bequeathed or given to them by persons other than their husbands. Sec. j_ — The trustees of any association formed under the provisions of this act may, from time to time, declare dividends from the earnings of the asso- ciationpayable in such manner as may be provided in the articles of associa- tion ; but no dividend shall be declared except from the earnings of the asso- ciation, and if the trustees of any such association shall declare and pay any dividend 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 asso- ciation then existing 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 certifi- cate of his objection in writing with the clerk of the company, and with the clerk of the county, he shall be exempt from the said liability. But no trustee who shall be present at any meeting when such dividend is declared, shall be exempt from such liability unless he shall then and there object to the decla- ration or payment of such dividend, and shall also procure his objection to be noted in the book of minutes of such association. No holder of redeemed shares shall claim to be exempt from making the monthly or other stated payments provided in the artictes 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 imposition of fines for the non-payment of dues or fees, or other violation of the articles of association, nor "shall the making of any monthly payment required by the articles of association, or of any premium for loans made to members, be deemed a violation of the provisions of any statute against usury. Sec. io. — Each association formed under the provisions of this act shall, at the close of its first year"s operations, and annually at the same period in each year thereafter, publish in at least two newspapers published in the place where their 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 oaths of its president and secretary, show- ing the actual financial condition of the association, and the amount of its property and liabilities, specifying the same particularly. SEC. ii. — All the shareholders of any association formed under this act, shall be individually liable to the creditors of said association, to an amount equal to the amount of stock held by them respectively, for all debts con- tracted by such association. The directors or other officers of every associa- tion formed under this act, shall be personally liable for any fraudulent use, disposition or investment of any moneys or property belonging to such asso- ciation, or for any loss which shall be incurred by any investment made by such directors or other officers other than such as are mentioned in and author- ized by this act ; but no director or other officer of any such association shall be liable as aforesaid except he authorized, sanctioned, approved or made such fraudulent use, disposition or investment as aforesaid. Sec. 12. — No person holding stock in any such company, or as executor, administrator, guardian or trustee, and no person holding such stock as col- lateral ecurity, shall be personally subjeel to any liability as stockholder of company, but the person pledging such stock shall be considered as tiei ime, and shall be liable as a stockholder accordingly; and the e i it- and funds in the hands ol such executor, administrator, guardian or trustee shall be liable ill like manner and to the same extent as the testator or n the ward or person interested in such trust fund would have been ii he had been living and competent to .1.1, and hold the same stock in his own n • Every such exe< utor, administrator, guardian or trustee shall rep- tocl in in hands at all meetings of the company, and tccordingly as a stockholder ; and every person who shall pledge 1 afon aid may neverthele 1 represent the same at all such meet- 1 rote accordingly a-, a stockholder. GENERAL LEGISLATION. 823 Sec. 14. — In case it shall happen at any time that an election of officers shall not be 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 nol be dissolved ; but it shall be lawful on any other day to hold an election for trus- tees in such manner as shall he provided for byfhe said by-laws ; and all at is of trustees shall be valid and binding as against such company until their suc- cessors shall be elected. SEC. 15. — The legislature may at any time alter, amend or repeal this act, or may annul or repeal any incorporation formed or created under this act ; but such amendment or repeal shall not nor shall the dissolution of any such company take away or impair any remedy given against any such corpora- tion, its stockholders or officers for any liability which shall have been pre- viously incurred. Sec. 16. — 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 which may be deemed sufficient and proper for the purposes of the corporation. But before any corporation shall be entitled to dimmish the amount of iis capital stock, if the amount of its debts and liabilities shall ex- ceed the amount of capital to which it is proposed to be reduced, such amount of debts and liabilities shall be satisfied and reduced so as not to exceed such diminished amount of capital. See Sections 44,45, Stock Corporation Law. Sec. 17. — Whenever any company shall desire to call a meeting of the stockholders for the purpose of increasing or diminishing the amount of its capital stock, it shall be the duty of the trustees topublish'a notice signed by at k-ast a majority of them in a newspaper in the county, it any shall he pub- lished therein, at least three successive weeks, and to deposit a written or printed copy thereof in the postofhee addressed to each stockholder at his usual place of residence, at least three weeks previous to the day fixed upon for holding such meeting, specifying the object of the meeting, the time and place when and where such meeting shall beheld, 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 dim- inution of the amount of its capital stock. Sec. 18. — If, at any time and place specified in the notice provided 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 corporation, they shall organize by choosing one of the trustees chairman of the meeting and also a suitable person for secretary, and proceed to a vote of those present in person or by proxy ; and if, on canvassing the votes, it shall appear that a sufficient number of votes has been given in favor of increasing or diminishing the amount of capital, a certificate of the pro- ceedings showing a compliance with the provisions of this act; the amount of capital actually paid in, the whole amount of debts and liabilities of the company, and the amount to which the capital stock shall be increased or diminished, shall be made out, signed and verified by the affidavit of the chair- man and be countersigned by the secretary ; and 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 in- creased or diminished to the amount specified in such certificate. Sec. 19. — The shares held by the members of all associations incorporated under the provisions of this act shall be exempt from sale on execution for debt, to an extent not exceeding six hundred dollars in such shares at their par value. Sec. 20. — \ T o loan made by any such association to any of its members may exceed in amount the par value of the capital stock for which such member may have subscribed. Sec. 21.— The copy of any certificate of incorporation filed in pursuance of this act, certified by the county cleric or his deputy to be a true copy, and of the whole of such certificate, shall be received in all courts and places as pre- sumptive legal evidence of the acts therein stated. LAWS OF 1887— Chapter 556.* Section I. — Any fifteen or more persons, being of full age, may form an association as provided in this act. All associations formed under the pro- visions hereof shall be known as co-operative savings and loan associations ; * Only twenty-four associations are operating under this law; and these were organized prior to June 17, 1S92. 824 APPENDIX IV. and the name of every association, as formed, shall contain, as a part thereof, the words Co-operative Savings and Loan Association. Sec. 2. — The object and purpose of such associations shall be to encourage industry, frugality, home building and savings among its members ; the ac- cumulation of savings, the loaning of such accumulations to its members, and the repavment to each member of his savings when they have accumulated to a certain sum, or at any time when he shall desire the same, or the associa- tion shall desire to repay the same. Sec. 3. — Said association shall become incorporated by the said fifteen or more persons making, signing and acknowledging, in the manner and form prescribed for the acknowledgment of deeds in this state, a certificate, where- in shall be stated the name of said association ; that the association is formed under and for the purposes prescribed in this act ; the town, village or city where the association is located within this state ; and the limit of the number of shares of stock it shall have outstanding at any one time. When made as aforesaid, said certificate shall be filed and recorded in the office of the secre- tary of state, and upon said certificate being so filed and recorded, the secre- tary of state shall issue a certificate in proper and suitable form, declaring the facts contained in said original certificate, and the filing and recording thereof in his office, and which latter certificate shall thereupon be recorded in the county clerk's office of the county where said association is located ; and upon the same being so recorded, the persons named in the certificate first above mentioned, their associates and successors, shall become a corpo- rate body. Sec. 4. — The officers of the association shall consist of a president, vice-pres- ident, treasurer and secretary, who shall be ex officio members of the board of directors,which shall consist'of nine members, exclusive of said ex-officio mem- bers. Other officers may be authorized by the by-laws. The duties and com- pensation of the officers, their terms of office, the time of their election, and time of periodical meetings of the officers and shareholders, shall be determined by the by-laws ; except that the board of directors shall determine each year the compensation of the treasurer and secretary. Special meetings of the officers and shareholders shall be called and held as provided by the by-laws. Each shareholder shall be entitled to one vote, at all meetings of the share- holders, for each share owned by him or held by him as trustee, not in arrears for dues. All officers shall hold office until their successors are duly elected and assume the duties of their office. No association shall expire from neglect on its part to elect officers at the time prescribed by the by-laws. Sec. 5. — The capital of said association shall consist of the accumulated sav- ings of its members, which it holds, and shall not exceed at any time one million dollars, and shall be divided into shares of the matured value of two hundred dollars each. The total number of shares outstanding at any time shall not exceed ten thousand. The shares shall be issued in yearly or half- yearly series, in such amounts in each series, and at such times as shall be de- termined by the by-laws of the association. No share of a prior series shall be issued after the issuing of shares in a new series. Shares which have not been pledged as a collateral security for the repayment of a loan shall be called unpledged shares. Shares that have been so pledged shall be called pledged shares. No person shall hold more than ten unpledged shares in any one series, nor more than twenty pledged shares in one series. Sice. 6. — Savings paid to the association upon shares shall be called dues. At or before each staled monthly or semi-monthly meeting of the board of directors, each shareholder shall pay to the board or a committee thereof, one dollar dues upon each share of stock held by him until the share reaches the value of two hundred dollars, or is withdrawn, cancelled or forfeited. Pay- ment "i dues on shares of each series shall commence from its issue. The :i 1 1< iation shall have power to impose and collect a fine, not exceeding ten per cent, for each month in arrears, for every dollar of dues or interest which a shareholder shall refuse or neglect to pay at the time it isdue. They shall also power lo charge an entrance fee, of not exceeding twenty-five cents on every share of stock issued by the association. Sec 7. — The accumulations upon unpledged shares may be withdrawn and cancelled aftei one month's written notice of such intention filed with th( '< retary al 01 before a slated monthly meeting of the board. If tiled before BUCh meeting, the one month's notice shall not be deemed to have iem '--I until the in t regular meeting after the tiling. The withdrawing Idei hall be paid the amount ol the withdrawal value of his accumu- latii rmined under the by-laws, al the last distribution of profits be- fore the notice of withdrawal, together with all dues paid since such distribu- GENERAL LEGISLATION. 825 tion, and such interest on the value of the shares at the time of the last dis- tribution and on the dues thereafter paid, as the by-laws shall determine, less any fines unpaid, and the proportionate share of any unadjusted loss ; Provided, that at no time shall more than one-half the receipts of the association, and when the association is indebted upon matured shares, no more than one- third shall be applicable to the payment of withdrawing shareholders, with- out the consent of the board of directors; and when the demands of with- drawing shareholders exceed the moneys applicable to their payment, they shall be paid in the order in which their notices of withdrawal" were tiled with the secretary. The board of directors may, at their discretion, under rules made by them, retire the unpledged shares of any series at any time after four years from the date of their issue, by enforcing withdrawals of same ; Provided, that the shareholders whose shares are to be retired shall be determined by lot, and that they shall be paid the lull value of their shares, less all fines and proportionate part of any unadjusted loss. Sec. 8. — When each unpledged share of a given series reaches the value of two hundred dollars, all payment of dues thereon shall cease, and the holder thereof shall be paid out of the funds of the association two hundred dollars therefor with such rate of interest as shall be determined by the by-laws, from the time the board of directors shall declare such shares to have ma- tured, until paid ; but at no time shall more than one-third of the receipts of the association be applicable to the payment of matured shares, without the consent of the board of directors. The order of payment of the matured shares shall be determined by the board of directors. Sec. 9. — At each monthly stated meeting, immediately following the receipt of dues and interest, the board of directors shall offer to members of the association desiring to borrow, all accumulations applicable to that pur- pose ; the same shall be loaned in sums of two hundred dollars, the value of a matured share, or a multiple thereof, or the fractional parts of one-fourth or one-half thereof. If there shall be more than one member desiring to borrow, their right to a loan shall be determined by an open bidding of a premium per share ; the member bidding the highest premium shall be en- titled to the loan, upon giving proper security. From the sum loaned shall be deducted at the time of loaning the amount of the premium bid. The re- ceiving of such premium or interest paid on the loan shall not be deemed a violation of the usury laws. No member or members can borrow a larger sum than shall be equal to the matured value of the shares held by him or them. A borrowing member, for each share or fractional part thereof borrowed upon, shall, in addition to the dues on his shares, pay monthly interest on his loan at the rate of six per cent, per annum, or such lower rate as the by-laws shall name, until the shares borrowed upon reach the matured value of two hundred dollars each, or the loan is repaid, and when such matured value is reached the share shall cancel the loan upon it, and the proper surrenders and acquittances be made. Sec. 10. — For every loan made, a bond secured by a first mortgage upon unincumbered real estate shall be given, accompanied by a transfer and pledge to the association of the shares borrowed upon, and all accumulations that have or shall accrue thereon, as a collateral security for the repayment of the loan ; or in lieu of the mortgage, the borrower, or another, may trans- fer and pledge to the association, for the payment of the loan, unpledged shares, the withdrawal value of which under the by-laws, at the time of such borrowing, shall exceed the amount borrowed and interest thereon for six months. If the borrower neglects to offer security satisfactory to the board of directors, within the time provided by the by-laws, his right to the loan shall be forfeited, and he shall be charged with one month's interest, and all neces- sary expenses incurred, if any, under the by-laws, in reference to his proposed loan. All bonds and mortgages given to the association shall be deemed con- ditioned upon the performance of the provisions of this act relating to the repayment of loans and interest thereon and the by-laws of the association, although the same may not be fully expressed therein. A borrower may re- pay a loan, and all arrears of interest and fines thereon, or one share thereof, that is, the sum of two hundred dollars, at any stated monthly meeting, or at any other time, but when not made at a stated meeting, he shall pay interest up to the first monthlv meeting after such payment. He may repay his loan in full, thereby relieving his shares from liability upon the pledge thereof, made to the association, or he may, by a proper notice and direction as to the application, have the withdrawal value of the shares borrowed upon applied in payment or part payment of his loan. Sec. 11. — Whenever any member shall be six months in arrears in the pay- 826 APPENDIX IV. ment of his dues upon unpledged shares, the secretary shall give him notice thereof in writing, and a statement of his arrearages, by mailing the same to him at the last postoffice address given by him to the association, and if he shall not pay the same at the next or second stated monthly meeting there- after, the board of directors may, at their option, declare his shares forfeited ; and at the time of such forfeiture, the withdrawal value thereof shall be deter- mined and stated, and the defaulting member shall be entitled to withdraw the same without interest, within one year upon such notice as shall be required of a withdrawing shareholder. Sec. 12. — Whenever a borrowing member shall be six months in arrears in the payment of his dues and interest, or either, the whole loan shall become due at the option of the board of directors ; and they may proceed to enforce collection upon the securities held by the association. The withdrawal value at the time of the commencement of the action, of all shares pledged as col- lateral security for the loan, shall be applied upon the loan and arrearages of interest and fines thereon, and the shares deemed surrendered to the associa- tion. Sec. 13. — Any association may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien or other incumbrance, or in which it may have any interest ; and may sell, convey, lease or mortgage the same at pleasure to any person or persons. Sec. 14. — Any association organized in pursuance of the provisions of this act, may borrow money for the purpose of making loans or paying with- drawals, not exceeding however two thousand dollars, so long as its accu- mulated capital does not exceed ten thousand dollars : and not exceeding six thousand dollars, so long as its accumulated capital shall be over ten thousand, and does not exceed sixty thousand dollars ; and whenever its accumulated capital exceeds sixty thousand dollars, it may borrow money for the pur- poses aforesaid not exceeding ten per cent, of its accumulated capital. No money borrowed shall be for a longer term than one year. Any association having a surplus in its treasury, for which there is no demand for loans, with- drawing shareholders or matured stock, may loan the same to another asso- ciation, organized under the provisions of this act, subject to the provisions of this section, on the part of the borrowing association. No association shall borrow or make loans herein authorized, except by a two-thirds vote of its board of directors. The vote to be recorded by ayes and nays in its regular minutes. Sec. 15. — Profits and losses shall be distributed at least annually, and always before issuing a new series of stock to the shares then outstanding. Profits and losses shall be distributed to all shares, in all series outstanding at the time of such distribution, in proportion to their holding value, as distinguished from their withdrawing value, except that in addition thereto a distribution of not exceeding the amount of the entrance fee, in the discretion of the board of directors, may be made to each share outstanding in the last series issued prior to the distribution. At each periodical distribution of profits, the board of directors may reserve and carry as undistributed profits, in the nature of a guaranty fund, any sum from the" net profits that in their discretion seems wise, to be applied upon any future losses that may occur from any cause whal i iever. SEC. [6. — No transfers of shares shall be binding upon the association until the same have been made upon the books of the association ; and the trans- feree thereol h; 11 take the same, charged with all the liabilities and condi- tions attaching thereto in the hands of the one transferring the same. The iation 111. iv require a "transfer fee," not exceeding twenty-five cents per share. Sec. 17.— Tin tion, as soon as duly incorporated, shall possess power lo .( '!o| : by-laws, noi inconsistent with the provisions of this act, regulating the due conduct of the business of the association, defining the duties of and committees, times of meetings, mode of determining and declar- ing 1 in- withdrawing value oi hares, and in relation to all other matters hav- ing i' conducl "i the business, although not specifically men- tioned in Hi act. rhe board of directors shall have power to appoint and ire, an atti irney for the association. Vny person ol full age and sound mind may become a member of the a iociation by taking one or more shares therein, and subscribing the by* to his signature his postoffice address; .iud whenever re changed, he shall give written notice thereof ociation: and for the purpose of giving any mem- bei tiotio bj mail, the la 1 postoffice address given by him shall be deemed GENERAL LEGISLATION. 827 the proper one. A minor may hold shares in the name of a parent, guardian, or next friend, as trustee for him. All accumulations upon shares in said association held by any person shall be exempt from execution and proceed- ings supplementary thereto, to the amount of six hundred dollars ; and Ihe association itself shall be deemed an institution for savings, and not taxable under any corporation tax law which shall exempt savings banks or institu- tions for savings from taxation. SEC. 22. — Any association now existing and heretofore incorporated under the provisions of said chapter \22 of the laws of 1851, may be entitled to the benefits of this act, on the majority vote of the shareholders of said associa- tion, directing the making and tiling of the certificate mentioned in the third section of this act, and conforming the transaction of their business to the pro- visions of this act. Sec. 23. — Associations organized under this act shall not be subject to the provisions of chapter 143 of the laws of 1886. BANKING LAWS OF 1892, AS AMENDED, ACTS 1898.— Chapter 193. ARTICLE VI. INCORPORATION OF BUILDING AND LOT ASSOCIATIONS. Sec. 196. — Five or more persons may become a corporation for the purpose of accumulating a fund for the purchase of real property, to pay off incum- brances thereon, to aid its members in acquiring a building lot or lots, and making improvements thereon in a manner and form specified in the certifi- cate of incorporation, or for all or any of such purposes, by making, acknowl- edging and filing a certificate of incorporation setting forth : 1. The name of the corporation. 2. The location of its principal business office. 3. When its regular meetings shall be held and how special meetings may be called. 4. What shall be a quorum to transact business at its meetings. k. How members shall be admitted, and their qualifications. 6. What officers, directors or attorneys of the corporation there shall be and how and when chosen. 7. The duties of such officers, directors or attorneys, and how removed or suspended trom office. 8. The names of the persons who shall be such officers and directors for its first year and until others are chosen or appointed in their places. 9. The amount of each share and how ascertained. 10. The monthly or weekly dues per share. 11. The fees to be paid on the transfer of shares. 12. The penalties for non-payment of dues or fees, or other violation of the provisions of the certificate. 13. The qualification of voters at its meetings and the mode of voting. 14. The manner of dividing land and selecting or alloting the lots. 15. The manner of altering or amending the certificate of incorporation. 16. Such other provisions not inconsistent with law as shall be necessary for the convenient and effective transaction of its business. Such certificate must be approved by the superintendent of banks and filed in the office of the clerk of the county in which such corporation shall have its principal business office, and a certified copy thereof shall be filed in the office of the superintendent of banks. Thereupon the persons who have sub- scribed such certificate and such other persons as shall become members of the corporation and their successors shall be a corporation by the name spec- ified in such certificate. Sec ic/m. — The directors of evervsuch corporation may call in and demand from the members and stockholders thereof, all sums of money by them sub- scribed, at such times and in such payments or instalments as the certificate of incorporation shall prescribe, under the penalty of forfeiting the shares of stock subscribed for and all previous payments made thereon, if payment shall not be made by the member or stockholder within sixty days after a personal demand made or notice requiring such payment shall have been published for six successive weeks in the newspaper nearest to the principal place of business of the corporation. But no corporation organized under this article shall purchase or deal in or take security upon real estate situate more than fifty miles from its principal office for the transaction of its business. 828 APPENDIX IV. Sec. 196&. — Every such corporation shall have power to borrow money for temporary purposes not inconsistent with the objects of its organization, but no such loan shall have a longer duration than three years, nor shall its indebtedness for money so borrowed exceed at any one time one-fourth of the aggregate amount of its shares and parts of shares and the income thereof actually paid in and received. Sec. 196c. — Dividends declared from the earnings of the corporation shall be payable in such manner as may be provided in the certificate of incorpora- tion. Sec. ioorf. — No holder of shares shall be exempt from making the monthly or other stated payments provided in the certificate of incorporation on the ground that by reason of losses or otherwise, the corporation has continued longer than was originally anticipated, whereby the payments made on such shares have amounted to more than the amount originally intended, with legal interest thereon. The imposition of fines for non-payment of dues or fees or for other violation of the certificate of incorporation, or the making of any monthly payment required by the certificate of incorporation, shall not be deemed a violation of the provisions of any statute against usury. Sec. 196c — A stockholder of such corporation shall be liable to the creditors for the amount unpaid on the stock held or subscribed for by him. The directors or other officers of every such corporation shall be personally liable for any fraudulent use, disposition or investment of any moneys or property belonging to it, or for any loss which shall be incurred by any investment made by any such directors or officers other than such as are mentioned in and authorized by this article ; but no director or other officer shall be so liable unless he authorized, sanctioned, approved of or made such fraudulent use, disposition or investment. Sec. 196/. — The shares held by the members and stockholders of every such corporation shall be exempt from sale on execution for debt to an extent not exceeding six hundred dollars in such shares at their par value. Sec. igbg. — On the first day of January of each year every such corporation shall make a written report to the superintendent of banks, in such form and containing such matters as he shall prescribe. Such reports shall give the condition of such corporation at the close of business on the thirty-first day of December in each year ; and such corporation shall also make reports to the superintendent of banks whenever required by him and as of the day desig- nated by him. Sec. 196/2. — A corporation organized under this article shall be subject to the inspection and supervision of the superintendent of banks. He shall either personally or by some competent person to be appointed by him visit and examine such corporation at least once in each year and whenever, in his judgment, its condition and management is such as to render an examina- tion of its affairs necessary and expedient. The superintendent, and every such person appointed to make such examination, shall have power to administer an oath to any person whose testimony may be required on such examination, and to compel the appearance and attendance of any such per- son for the purpose of any such examination. If the examination shall be made by the superintendent, or by one or more of the regular clerks in the banking department, no charge shall be made except for necessary travelling and other actual expenses. When it shall appear to the superintendent from an examination made or reported to him, or irom a report made by any such corporation pursuant to the provisions of this article, that it has committed any violation of its charter or of law, or is conducting its business and affairs in an unsafe or unauthorized manner, he shall by an order under his hand and Official seal direct a discontinuance of such illegal, unsafe or unauthorized practices and strict conformity with the requirements of the lawand with safety and security in its transactions. If any such corporation shall refuse or neglect to make any report required by law or to comply with any iui h order, oi ii it shall appear to the superintendent that it is unsafe 01 inexpedient for it to continue to transact business, the superintendent shall reporl the facts in writing t<> the attorney general, who may thereupon bring an a< tion or institute proceedings for the dissolution of the corporation. li from any Hi li examination or report the superintendent shall conclude that any in h corporation is insolvent because of the value of the assets of said ration being insufficient to pay and discharge the amount due to the toi 1 thereof, including the amounl paid in by the stockholders thereof for and on account of the purchase of 01 subscriptions for the capital stock of such corporation without any scaling thereof, or is in an unsafe condition to trans- iisiness, he may forthwith take possession of its property and business GENERAL LEGISLATION. 829 and retain such possession until the termination of the action or proceeding instituted by the attorney-general. In force March 31, 1898. ARTICLE VI.* Sf.ction 180.— Fifteen or more persons may become a corporation for the purpose of encouraging industry, frugality, home building and savings among its members, the accumulation of savings, the loaning of such savings to its members, and the repayment to each member of his savings when they have accumulated to a certain sum, or at any time when he shall desire the' same, or the corporation shall desire to repay the same, or for any or all of such purposes, by making, acknowledging and filing a certificate, stating the name of the corporation, which shall contain as a part thereof the words "co-opera- tive savings and loan association," the purpose or purposes for which it is formed, the town, city or village where its principal place of business is located within this state, and the minimum number of shares of stock it shall have outstanding at anyone time. Such certificate must be approved by the superintendent of banks and filed and recorded in his office, and a certified copy thereof filed in the office of the clerk of the county where its principal business office is to be located, and upon the filing of such certificate and the certified copy thereof, the persons named therein, their associates and successors, shall become and be a cor- poration by the name specified therein. R. S., 1592, L. 1887, ch. 556, §§ 1, 2, 3. Sec. 181. — The officers of the corporation shall be a president, vice-president, treasurer and secretary, who shall be cx-officio members of the board of directors, which shall consist of nine members, exclusive of such cx-officio members, and such other officers as may be authorized by the by-laws. By- laws shall be adopted prescribing the terms of office, duties and compensation of the officers, the time of their election and of periodical meetings of the officers and shareholders, how special meetings may be called, regulating the due conduct of the business of the corporation, defining the duties of its officers and committees, the mode of determining and declaring the with- drawing value of shares, and making such other regulations in regard to the transaction of the business of the corporation as are not inconsistent with law. The board of directors shall each year determine the compensation of the treasurer and secretary, and they may appoint and remove at pleasure an attorn ev for the corporation. R. S., 1592, L. 1887, ch. 556, § 4. Id., 1595, L. 1887, ch. 556, § 17. Sec. 182. — The capital of every such corporation shall consist of the accumu- lated savings of its members, which it holds, and shall not exceed at any time one million dollars ; and shall be divided into shares of the matured value of two hundred dollars each. The total number of shares outstanding at any time shall not exceed ten thou- sand. The shares shall be issued in yearly or half-yearly series in such amounts in each series and at such times as shall be prescribed by the by-laws. No shares of a prior series shall be issued after the issuing or shares in a new series. Shares which have not been pledged as a collateral security for the repayment of a loan shall be called unpledged shares. Shares which have been so pledged shall be called pledged shares. No person shall hold more than ten unpledged or twenty pledged shares in any one series. Each share- holder shall be entitled to one vote at all meetings of the shareholders for each share owned by him or held bv him as trustee, not in arrears for dues. R. S., 1592, L. 1887, ch.556, §§ 4, 5. Sec. 183. — Savings paid to the corporation upon shares shall be called dues. At or before each stated monthly or semi-monthly meeting of the board of directors, each shareholder shall pay to the board or a committee thereof, one dollar dues upon each share of stock held by him until the share reaches the value of two hundred dollars, or is withdrawn, cancelled or forfeited. Pay- ment of dues on shares of each series shall commence from its issue. Fines may be imposed and collected, not exceeding ten per cent, for each month in arrears, for every dollar of dues or interest which a shareholder shall refuse * Applies only to corporations organized prior to May 15, 1894. 830 APPENDIX IV. or neglect to pay at the time it is due. An entrance fee may also be charged not exceeding twenty-rive cents on every share of stock issued by the cor- poration. R. S., 1593, L. 1887, ch. 556, § 6. Sec. 184. — The accumulations upon unpledged shares mny be withdrawn and the shares cancelled, after one month's written notice of such intention filed with the secretary at or before a stated monthly meeting of the board. If tiled before such meeting, the one month's notice shall not be deemed to have commenced until the first regular meeting afcer filing. The withdraw- ing shareholder shall be paid the amount of the withdrawal value of his accumulations as determined under the by-laws at the last distribution of profits before the notice of withdrawal, together with all dues paid since such distribution, and such interest on the value of the shares at the time of the last distribution and on the dues thereafter paid as the by-laws shall deter- mine less any fines unpaid and a proportionate share of any unadjusted loss ; but not more than one-half of the receipts of the corporation, and when the corporation is indebted on matured shares, not more than one-third of such receipts shall be applicable to the payment of withdrawing shareholders without the consent of the board of directors. When the demands of with- drawing shareholders exceed the moneys applicable to their payment, they shall be paid in the order in which their notices of withdrawal were filed with the secretary. The board of directors may, in their discretion, under rules made by them, retire the unpledged shares of any series at any time after four years from the date of their issue by enforcing withdrawals of the same ; but the shareholders whose shares are to be retired shall be determined by lot. and they shall be paid the full value of their shares, less all fines and proportionate part of any unadjusted loss. R. S., 1593, L. 1887, ch. 556, § 7. Sec. 185. — When each unpledged share of a given series reaches the value of two hundred dollars, all payments of dues thereon shall cease, and the holder thereof shall be paid out of the funds of the corporation, two hundred dollars therefor, with such rate of interest as shall be determined by the by-laws from the time the board of directors shall have declared such shares to be matured until paid ; but at no time shall more than one-third of the receipts of the cor- poration be applicable to the payment of matured shares without the consent of the board of directors. The order of the payment of matured shares shall be determined by the board of directors. R. S., 1593, L. 1887, ch. 556, § 8. Sec. 186. — At each monthly stated meeting, immediately following the re- ceipt of dues and interest, the board of directors shall offer to members of the corporation, desiring to borrow, all accumulations applicable to that purpose, in sums of two hundred dollars, the value of a matured share, or a multiple thereof, or the fractional parts of one-fourth or one-half thereof. If more than one member desires to borrow, the right to the loan shall be determined by an open bidding of a premium per share, and the member bidding the highest premium shall be entitled to the loan upon giving proper security ; and the amount of the premium paid shall he deducted from the sum loaned at the time of loaning, and the receipt thereof shall not be deemed a violation of the usury laws. \ T o member can borrow a larger sum than shall be equal to the matured value of the shares held by him. A borrowing member, for line 01 fractional part thereof borrowed upon, shall, in addition to the dues on his shares, pay monthly interest on his loan at the rate of six per 1 1 .11 1 or such lower rate as the by-laws shall name, until the shares borrqwi d upon reach the matured value ol" two hundred dollars each, or the loan is repaid ; and when such matured value is reached, the loan upon it shall be paid out of the share, and the proper surrender and acquittance be made. R, s., [593, L. 1887, ch 556, §9. Si c. [87.— Every loan made shall be secured by a bond and a first mortgage upon 1 in in. umbered real property, with a transfer and pledge to the corpora- tion ol thi borrowed upon, and all accumulations that have or shall accrui thereon; but in lieu ol the mortgage, the borrower, or another, may to the corporation, f 01 the payment of the loan, unpledged . the withdrawal value ol whi< h, under the by-laws, at the time ol such lex the amounl borrowed and interest thereon for six GENERAL LEGISLATION. 831 months. The right to the loan shall be forfeited if the borrower neglects to offer security satisfactory - to the board of directors within the time provided by the by-laws, and he shall be charged with one month's interest and all nec- essary expenses incurred, if any, under the by-laws, in reference lo his pro- posed loan. All bonds and mortgages given to the corpi nation shall be deemed Conditioned upon the performance of the provisions of this chapter relating to the repayment of loans and interest thereon, and the by-laws of the corpora- tion, although not fully expressed therein. A borrower may repay the loan and all arrears of interest and lines theron, or one share thereof, at any slated monthly meeting, or at any other time, but when not made at a stated meeting he shall pay interest up to the first monthly meeting after such payment. He may repayhis loan in full and release the shares from liability upon the pledge thereof, or he may, by a proper notice and direction as to the application, have the withdrawal value of the shares borrowed upon applied in payment or part payment of his loan. R. S., 1594, L. 1887, ch. 556, § 10. Sec. 188. — Whin any member shall be six months in arrears in thepay r ment of dues upon unpledged shares, the secretary shall give him notice thereof in writing, a statement of his arrearages, by mailing the same to him at the last postoffice address given by him to the corporation, and if he shall not pay the same on or before the second stated monthly meeting thereafter, the board of directors may, at their discretion, declare his shares forfeited ; ami at the time of such forfeiture, the withdrawal value thereof shall be determined and stated, and the defaulting member shall be entitled to withdraw the same without interest within one year, upon such notice as shall be required of a withdrawing shareholder. If a borrowing member shall be six months in arrears in the payment of his dues and interest, or either, the whole loan shall become due at the option of the board of directors, and they may proceed to enforce the collection upon the securities held by the corporation. The with- drawal value at the time of the commencement of the action, of all shares pledged as collateral security for the loan, shall be applied upon the loan and arrearages of interest and fines thereon, and the shares deemed surrendered to the corporation. R. S., 1594, L. 1887, ch. 556, §§ 11, 12. Sec. 189. — Any such corporation may purchase at any sale, public or private, any real property upon which it may have a mortgage, judgment, lien or any other incumbrance, or in which it may have any interest, and may sell, con- vey, lease or mortgage the same at pleasure to any person or persons. It may also borrow money, but not for a longer period than one year, for the purpose of making loans or paying withdrawals, not exceeding two thousand dollars, when its accumulated capital is less than ten thousand dollars ; and not exceed- ing six thousand dollars when its accumulated capital shall be ten thousand dol- lars and over, and not more than sixty thousand dollars ; and if its accumulated capital exceeds sixty thousand dollars, it may borrow money for such purposes not exceeding ten per cent, of its accumulated capital. If any such corporation has a surplus in its treasury for which there is no demand for loans, withdrawing shareholders or matured stock, it may loan the same to any other corporation organized under the provisions of this article, subject to the provisions of this section on the part of the borrowing corporation. No corporation shall borrow or make loans authorized by this section except by a two-thirds vote of its board of directors, which shall be re- corded by ayes and nays in its regular minutes. "R. S., 1594, L. 1887, ch. 556, § 13. Id., 1595, L. 1887, ch. 556, § 14. Sec. 190. — Profits and losses shall be distributed at least annually and always before issuing a new series of stock to all shares in all series outstanding at the time of such distribution, in proportion to their holding value as distinguished from their withdrawing value, except that, in addition thereto, a distribution of not exceeding the amount of the entrance fee, in the discretion of the board of directors, may be made to each share outstanding in the last series issued prior to the distribution. At each periodical distribution of profits, the board of directors may reserve and carry as undistributed profits, in the nature of a guaranty fund, any sum from the net profits that in their discretion seems wise, to be applied upon any future losses that may occur from any cause what- ever. R. S., 1594, L. 1887, ch. 556, § 15. 832 APPENDIX IV. Sec. 191. — Any person of full age and sound mind may become a member of the corporation by taking one or more shares therein and subscribing the by-laws, and annexing to the signature his post-office address ; and when he desires his post-office address changed, he shall give written notice thereof to the secretary of the corporation ; and for the purpose of giving any member notice by mail, the last post-office address given by him shall oe deemed the proper one. A minor may hold shares in the name of a parent, guardian or next friend as trustee for him. No transfer of shares shall be binding upon the corporation until the same has been made upon its books ; and the transferee thereof shall take the same charged with all the liabilities and conditions attaching thereto in the hands of the person transferring the same ; and the corporation may require a transfer fee not exceeding twenty-five cents per share. All accumulations upon shares held by any person shall be exempt from execution and proceedings supplementary thereto to the amount of six hundred dollars ; and the corporation shall be deemed an institution for savings and not taxable under any corporation tax law, which shall exempt savings banks or institutions for savings from taxation ; and no such corporation shall be liable to pay any tax upon its organization or as a condition thereof. R. S., 159=;, L. 1837, ch. 556, §§ 16, 18. Id., 1596, L. 1887, ch. 556, § 23. REPORTS. ACTS 1898,— Chapter 333. Section 20. — Every corporation and individual banker subject to the pro- visions of this chapter shall make a written report to the superintendent of banks, in such form and containing such matters as he shall prescribe. In the case of a bank or individual banker, the superintendent shall, at least once in every three months, designate some day therein in respect to which the report shall be made. If a savings bank, trust company or safe deposit com- pany, such report shall be made semi-annually on or before the twentieth day of January and July in each year, and shall contain a statement of its condition on the mornings of the first days of January and July preceding. If a savings bank, such report shall state the amount loaned upon bond and mortgage, together with a list of such bonds and mortgages and the location of the mortgaged premises, as have not been previously reported, and also a list of such "previously reported as have been since paid wholly or in part, or have been foreclosed, and the amount of such payments respectively ; the cost, par value and estimated market value of all stock investments, designating each particular kind of stock ; the amount loaned upon the pledge of securities, with a statement of the securities held as collateral for such loans ; the amount invested in real estate, giving the cost of the same, the amount of cash on hand and on deposit in banks or trust companies, and the amount deposited in each ; and such other information as the superintendent may require. Such report shall also state all the liabilities of such savings corporation on the morning of the said first day of January and July; the amount due to depositors, which shall include any dividend to be credited to them for the six months ending on that day, and any other debts or claims against such cor- poration which are or may be a charge upon its assets. Such report shall also state the amount deposited during the year previous, and the amount with- drawn during the same period; the whole amount of interest or profits ived 1 (reamed and the amount of dividends credited to depositors, together with the amount of each semi-annual credit of interest, and the amount of thai may have been credited at other than semi-annual periods, the numbei oi accounts opened or reopened, the number closed during the year, and the number of open accounts at the end of flic year, and such other information as may be required by the superintendent. If a trust company or depo 11 company, such report shall contain such particulars as the super- intended may prescribe. If a co-operative loan association, or a building and mutual loan corporation or a mortgage, loan or investment corpotation, such 1 shall be made annually on or before February first in each year, ana shall contain n statement 0) its condition on the first iy of January preceding. The mperintendeni may, foi good cause shown, extend the time for making any men reporl not exceeding thirty days. Every such report shall lie verified by the oath ol the pre idenl and ca hier or treasurer of such corporation or by Buch individual banker, to the effect that the same is true and correct in all cts to the In I oi In , knowledge and belief and that the usual business of GENERAL LEGISLATION. S. ,:) such corporation or banker has been transacted at the location required by this Chapter, and not elsewhere. The superintendent shall serve a notice designating the day in each quarter when a report shall be made upon each bank and individual banker required to report to him by delivering the same to some officer or clerk thereof at their respective places of business or by depositing the same in the post-office inclosed in a postpaid wrapper and properly directed to each of them, or some officer thereof, at their places of business respectively. In force April 20, 180S. NORTH CAROLINA. CODE OF 1883. Section 2204.— It shall be lawful for any individuals or persons in 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 asso- ciations, and being so associated shall, on complying with 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 presiding and other officers, may enact by-laws for the reg- ulation 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 corporation, and shall exercise all and singular the powers incident to bodies politic or corporate ; Provided, that before 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 such clerk, and shall pay a tax of "twenty-five dollars to said clerk, which tax shall be paid over by the clerk to the treasurer of the county, to the use of the school fund of the county. Sec. 2295. — Any addition, alteration or amendment of the articles of asso- ciation of any such corporation shall be signed, certified and recorded as is provided in the preceding section of this chapter. Sec. 2296. — Any corporation created under and by virtue 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 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. Sec. 2297. — 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 en- force the payment of all instalments and other dues due to said corporations from the members or stockholders by such fines and forfeitures as the cor- poration may, from time to time, provide in the by-laws or articles of associa- tion of such corporation. Sec. 2298. — Any person applying for membership or stock in any such cor- poration after the end of a month from the date of its incorporation, may be required to pay, on subscribing, such sums or assessments as may from time to time be fixed, and assessed in manner as may be provided by said corpora- tion, in order to place such new member or stockholder 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 authorized and empowered to establish one or more addi- tional class or classes of shares, under such rules, regulations and restrictions for issuing, paying and redeeming the same as to them shall appear expedient and proper, not inconsistent with this chapter, or laws of this state. Sec. 2299 (as amended Acts 1895, p. 468).— It shall be lawful for any such corporation at anytime 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 sum which he would be entitled to receive upon the dissolu- tion 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 payment of said sum of money, to receive from such member 834 APPENDIX IV. security as is hereinafter mentioned for the payment of such members to said corporation 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 of money so paid or advanced to such member at such times, and under and subject to such fines and penalties for non-payment thereof as may be prescribed by the articles of association of such corpora- tion. Sec. 2300. — The payment of the unpaid instalments 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 in- curred in respect thereof by any such member, shall be secured to such cor- poration by way of mortgage on real or leasehold property, or by hypotheca- tion of stock of such corporation held by such member as may be provided in the articles of association of any such corporation ; Provided, in case of hypoth- ecation 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 hypothecation. Sec. 23001? (added by chapter 434, public laws of 1893). — Every non-res- ident building and loan association doing business in this state shall appoint a general agent or attorney, who shall be a citizen and resident of this state, and file a certificate of such appointment with the auditor of state, and copies of such certificates of appointment, certified by the said auditor, shall be received as sufficient evidences of such appointment before any court in this state, and such certificate shall contain a stipulation agreeing that so long as there may be any liability on the part of the applicant under any contract entered into in pursuance of any law of this state, process may be served in the ab- sence of the principal upon such general agent or attorney ; Provided, that service may be made upon the auditor of state, and it shall be his duty in such case to transmit at once a copy of the process to the home office of the asso- ciation. Sec. 23006 (added by chapter 434, public laws of 1893). — Every associa- tion doing business under this chapter shall file in the office of the auditor of state, on or before the first day of March in each year, in such form as he shall prescribe, a statement of the business standing and financial condition of the applicant on the preceding thirty-first day of December, signed and sworn to by said principal or by the chief managing agent, attorney or officer thereof before the auditor of state, or before a commissioner of affidavits for North Carolina, or before some notary public. Sec. 2300c (added by chapter 434, public laws of 18931. — Every associa- tion doing business under this act shall file in the office of the auditor of state a copy of the charter, articles of association, or other statement, showing the mode in which the applicant proposes to do business. Sec. 2300c/ (added by chapter 434, public laws of 1893). — It shall be the duty of the auditor of state to receive and thoroughly examine each annual statement required by this act, and if made in compliance with the require- ments of this act to publish an abstract of the same in one of the newspapers of the state, to be selected by the general agent or attorney making such state- ment, and at the expense of his principal. The auditor of state shall be en- titled to a fee of five dollars, to be paid by the association filing such state- ment. SEC. 2300c (added by chapter 434, public laws of 1893). — If the auditor of state shall become satisfied at any time that any statements made by any asso- ciation licensed under this act shall be untrue, or in case a general agent shall fail or refuse to obey the provisions of this act, the auditor of state shall notify the state treasurer of such default, and the state treasurer shall thereupon have er to revoke and cancel such license. SEC. -'300/ 'added by chapter 434, public laws of 1893). — It shall be the duty of any person having in his possession or control any books, accounts or papersol any as ociation licensed under this act to exhibit the same to the auditor of stale on demand, and on refusing so to do, or knowingly or wilfully making any false statement in regard to the same, such persons shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be lined or im- led, or both, at the discretion oi the court Sec. 23001* added by chapter 434, public laws of 1893). — Every general agent oi attorney who shall fail 01 refuse to perform any dutv required of him by this act shall forfeit and pay to the auditor of state fifty dollars for every kIu ial, to be ret overed before any justice of the peace- at the suit of the :,aid auditoi , -•300/1 (added by chapter 434, public laws of 1893).— Any person who GENERAL LEGISLATION. 835 shall solicit or transact any business for or concerning any association not duly licensed as in this act provided shall be guilty oFa misdemeanor, and upon conviction thereof shall be lined or imprisoned, or both, in the discre- tion of the court. ACTS 1895, p. 468. Section 2300 (i).— That every building and loan association doing business in this state shall be authorized to issue as many classes or series and kinds of stock including instalment and paid-up stock as maybe provided for in its charter or by-laws. Sec. 2300 (j ).— That any member of such association who shall borrow from it shall have the right at any time to pay off and discharge his loan by paving the amount received by him including the cost and expenses ol making the loan if the same shall have been deducted therefrom with interest at the rate of six per cent, per annum on the whole sum received by him to the date of settlement and all premiums, fines and dues then remaining unpaid. Upon such settlement he shall be credited with only the withdrawal value as fixed by the charter or by-laws of such association of his shares of stock which have not been transferred or assigned to the association by way of or in lieu of premium on the loan. That in case of default by a stockholder who has borrowed from the association and a foreclosure of his mortgage, the amount of his indebtedness to such association shall be ascertained in the manner provided by this act. Sec. 2300 (k). — That in the settlement provided for in the foregoing sections no account shall be taken of the premiums paid by the borrowing member, but the same shall be deemed the consideration of his being allowed to antic- ipate the ultimate or par value of his stock by his present use and possession thereof in preference to the other stockholders. Sec. 2300 (1). — That every such association shall have power to charge its shareholders upon the loans to them premiums thereon to be in gross or by instalments or on its stock or by requiring them to carry additional shares of stock as may be provided in its charter and by-laws. Sec. 2300 (m). — That nothing herein contained shall prevent the associa- tions from contracting with its borrowing members for the restoration or re- instatement of their stock upon such terms as may be agreed upon. Sec. 2300 (n). — That any contract made by any foreign association with any citizen of this state shall be deemed and considered a North Carolina contract and shall be [so] constructed [construed] by all the courts of this state according to the laws thereof. Sec. 2300 (o). — Every such association may borrow money for the purpose of making loans and advances to its members. Sec. 2300 ( p i. — That all laws and clauses of laws in conflict with this act are hereby repealed only so far as they are in conflict therewith. Sec. 2300 (q). — If at any time the state auditor shall have good reason to think that the standing and responsibility of any building and loan associa- tion or company doing this business in this state of a doubtful character it shall be his duty to examine and investigate everything relating to the business of such company and to that end he is hereby authorized to appoint a suitable and competent person to make such investigation who shall file with the auditor a full report of his rinding in such case. Sec. 2300 (r). — The expenses and cost of examination provided for in the preceding section shall be defrayed by the company or association subjected to investigation and each company or association doing business in this state shall stipulate in writing to be filed with the state auditor that it will pay all reasonable cost and expenses of such examination when it shall become nec- essary. Sec. 2300 (s). — It shall be unlawful for any person to solicit business or act as agent for any building and loan association or company in the state without having procured from the state auditor a certificate that such associa- tion or company for which he offers to act is duly licensed by the state to do business for the current year in which such person solicits business or offers to act as agent. The state auditor shall be entitled to a fee of fifty cents for issuing each such certificate to be paid by the company for which the same is issued. Any person violating this section shall be guilty of a misdemeanor. PUBLIC LAWS, 1893— Chapter 294. Sec. 30. * * * Every building and loan association conducting busi- ness in the state shall pay annually to the state treasurer a tax according to 836 APPENDIX IV. the paid-in capital as follows : A paid-in capital of two hundred thousand dollars ($200,000) or more, one hundred dollars ($100) ; on paid-in capital of fiftv thousand dollars .850,000) and less than two hundred thousand dallars (Sjoo.ooo), fifty dollars 1850); on a paid-in capital of twenty-five thousand dollars 1825,060) and less than fifty thousand dollars (850,000), twenty-five dollar-- ($25) ; on a paid-in capital of five thousand dollars (85,000) and less than twenty-five thousand dollars (825.0001, ten dollars ($10) ; on a paid-in capital of less than five thousand dollars (.85,000), five dollars ($5) ; Provided, that no counties or corporation shall be aliowed to add any additional tax, license or other fee. Any building and loan association which does business in this state without paying such tax shall be guilty of a misdemeanor. Chapter 434. Section 2. — No building and loan association shall be required to pay any tax or license except such as are specified in the "act to raise revenue" [chapter 294, public laws of 1893], passed at this session of the general assembly. NORTH DAKOTA. REVISED CODE, 1895. Section 3203. — Any ten or more persons may form a corporation for the purpose of doing business as a building and loan association in the manner provided in this chapter and, except as otherwise provided, the provisions of articles 1 to 11 inclusive of Chapter II. shall be applicable to such corpora- tion. Such corporation may do business outside of this state if it shall have expressed its intention so to do in its articles of incorporation. Sec. 3204. — The capital stock of any such corporation formed pursuant to this chapter shall be paid in at such times, and in such amounts and at such places as the by-laws shall appoint ; 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 by-laws, and the by-laws may prescribe the form and manner of enforcing such hen ; new shares of stock may be issued in lieu of the shares withdrawn or forfeited. The stock may be issued in one or more successive series in such amounts as the board of directors or stockholders may determine, and any stockholder wishing to withdraw from the corporation shall have power to do so by giving thirty days' notice of his in- tention to withdraw, when he shall be entitled to receive the amount paid in by him and such proportion of the profit as the by-laws may determine, less all fines and other charges ; Provided, that at no time shall there be more than one-half of the funds in the treasury of the corporation 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 for security. Upon the death of the stockholder, his legal representative shall be entitled to receive the full amount paid in by him and legal interest thereon after deducting all charges that may be due on stock. No fine shall be charged to a deceased member's account after his decease, unless the legal representative of such decedent assume the future payment on the stock. Sec. 3205. — The officers shall hold stated meetings at which the money in the treasury, if equal to the amounl of one share in stock in such corporation, 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 entitled to receive a loan of (he amount of the par value of one share of stock for each share of stock held by him. SEC. 3206. — For every loan made a note secured by first mortgage of real ill be given, accompanied by transfer and pledge of the shares of the borrower. The shares so pledged shall be held by the corporation as collateral For the performance of the conditions of such note and 1 I note and mortgage tiall recite the number of shares pledged and the amount oi money advanced t hereon, and shall he conditioned for the eni of the dues on such shares and the interest and premium upon the loan, together with all lines and payments in arrears until such shares reach the nit i mate par value of the share "i to< I "i the corporation, or the loan is otherwise cancelled land di charged ; Provided, that the shares without other may in disi retion ■ >! the dir< ctoi i be pledged as security for loans n amounl not exceeding their value as adjusted at the last adjustment and valuation ol Bhares before the time of the loan. If the borrower neg- GENERAL LEGISLATION. 837 lects to offer security satisfactory to the directors within the time prescribed by the by-laws his right to the loan shall be forfeited and he shall be i barged with one month's interest and one month's premium at the rate bid by him, together with all expenses, if any, incurred ; and the money appropriated for such loan may be reloaned at the next or any subsequent meeting. SEC. 3207.— A borrower may repay a loan at any time upon application to the corporation, whereupon, on settlement of his account, he shall he charged with the full amount oi the original loan together with all instal- ments of interest, premiums and lines in arrears, and shall be given credil for the withdrawing value of his shares pledged and transferred as security, and the balance shall be received by the corporation in full satisfaction and discharge of such loan ; Provided, that a borrower desiring to retain Ins shares and membership may, at his option, repay his loan without claiming credil for such shares, whereupon the shares shall be retransferred to him, and shall be free from any claim by reason of such cancelled loan. If, however, the by-laws of the corporation prescribe a different manner and different terms upon which a loan may be repaid the repayment can only be made in ac- cordance with such by-laws. Sec. 1208.— No premiums, fines or interest on premiums that may accrue to the corporation according to the provisions of this chapter shall be deemed usurious. Sec. 3209.— Every corporation may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment hen or other incumbrance or ground rent or in which it may have any interest and may sell, convey, lease or mortgage at pleasure real estate so purchased. Sec. 3210.— Such corporation may, in its by-laws, fix a per cent, premium at less than which it will not be obliged to accept loans. Sec 321 1. — Not less than 83 per cent, of all monthly dues collected from the shareholders of such corporation shall be put into a fund to be known as the loan fund, no part of which shall be used bv the corporation for the pur- pose of paying its expenses, or the expense of carrying on its business, ex- cepting interest, taxes and insurance. Sec. 3212.— Any funds of such corporation, which shall remain unloaned for a period of more than thirty days and for which there is no sufficient demand, may be loaned or invested by the corporation under the provisions of its by- laws at any rate of interest allowed by law upon any security approved and accepted by the board of directors. Sec. 3213.— Such corporation shall have power to borrow money under such restrictions and regulations as its by-laws may provide. Sec. 3214.— The board of directors of such corporation shall have power in its discretion to retire the unpledged shares of stock of such corporation at any time after the third year from the date of the issue of such stock and to enforce the withdrawal of the same in such manner and under such regula- tions as it may deem best for the interest of the corporation. It shall deter- mine bv lot or in any other impartial manner which shares shall be thus re- tired, but no unmatured stock shall be retired while any matured stock re- mains in force. Sec. 3215. — The by-laws of such corporation may provide for the voluntary withdrawal and cancellation at or before maturity of shares of stock not bor- rowed on ; Provided, that such withdrawal and cancellation shall be pro rata among the shares of the same series of stock. Sec. 3216— All building and loan associations doing business in this state shall annually make a true and correct statement, verified by the oath of its president or secretary, setting forth its actual financial condition on the 30th day of June of the current year, which shall be forwarded to the state exam- iner not later than the first day of August of the same year and shall contain the following information : 1. The amount of authorized capital and the par value of each share of stock. 2. The number of shares sold during the year. 3. The number of shares cancelled and withdrawn during the year. 4. The number of shares in force at the end of the year. 5. A detailed statement of the receipts and disbursements during the year. 6. A detailed statement of the assets and liabilities at the end of the year. Such report shall also show the total amount received as dues on stock under each separate class or kind or stock and all deductions therefrom or expenses, withdrawals, cancellations, forfeitures, refunded or otherwise, and the amounts, if any, of profits credited to stock or subject to such credit, the number of shares in force of each issue or series and the amount expended 54 838 APPENDIX IV. during the year in payment of salaries of officers, clerks, agents and all other employees, the amount expended for travelling expenses, rent, postage, including telegraph and express charges, printing, books and stationery, office supplies, office furniture, advertising, commissions paid agents or other persons and all other items of expense. In addition such annual report shall contain a statement of the business of the corporation for the preceding year, showing the amount of resources included in mortgage loans, the amount of loans on stock of the association, the amount of loans on other securities specifying the kind of such securities, the amount of unpaid dues, fines, premiums and interest, the amount due from agents, the amount due from banks, the amount invested in real estate and obtained on foreclosure, the amount invested in furniture and fixtures, the amount of cash on hand and the amount of all other resources of the associa- tion not enumerated heretofore ; and shall state as its liabilities the amount received from stock subscriptions, the amount due from stock delinquent in each class or kind of stock and the unpaid fines on such stock, the amount of undivided profits at the beginning of the year, the amount received as interest, premiums, fees, fines or other sources as profits during the year, the amount of such interest and interest delinquent at the end of the year, the amount of all bills payable and the amount of all other liabilities at the close of the year. Within thirty days from the filing of the report a statement of the assets and liabilities shall be published at least once in some newspaper in the city or town in which the association has its principal place of business. All state- ments herein required to be made shall be uniform and in accordance with a form to be prescribed by the state examiner, and shall correctly show the proportion which the entire expenses of the association for the term reported bear to its gross earnings for the term. All reports required of building and loan associations organized under the laws of this state are also required of all foreign building and loan associations doing business in this state, and all the provisions of this chapter relating to such reports, the filing thereof and the fees therefor shall apply to such foreign building and loan associations. Sec. 3217. — If any such association shall fail to furnish to the state examiner the report required by this chapter at the time required, it shall forfeit the sum of twenty-five dollars for every day such report shall be delayed or withheld and the attorney-general on the application of the state examiner shall bring an action to recover such penalty. After receiving such annual report the state examiner, if satisfied that such corporation has complied with all the provisions of this chapter and is entitled to do business in this state, shall issue his certificate, stating the compliance to such provisions, and that such cor- poration is entitled to do business in this state, which certificate shall be in force for the period of one year, unless sooner rescinded as provided in this chapter. The state examiner shall also issue such certificate to a domestic corporation, which commenced business at some intervening period in any year which has complied with the law in regard to its articles of incorporation and in all other respects except the filing of such report. Sec 3218. — It shall be the duly of the state examiner as often as he may deem necessary and at least once in each year to examine every building and loan association incorporated under the laws of this state, and for that purpose he shall have and exercise over such corporation, its business, officers, direc- tors and employees all the power and authority conferred upon him by the laws of this state over banks and other moneyed corporations ; Provided, that he shall not have the power to suspend the operation of any such corporation, except in the manner provided in this chapter. The state examiner shall the upervision and control over the business within this state of foreign • 1 "i like kind, doing business in this state. Upon the completion of any examination of any association made by the stale examiner, or under his direc lion, the .iss,„ iation so examined shall pay to (he examiner a fee to be determined as follows, viz. : For the first one hundred thousand dollars of I ten dollars and for each additional one hundred thousand dollai ■ ol assets, or major portion thereof, an additional lee of five dollars. SEC. ;.'ii|. If it -hall appeal I" the state examiner from any examination made by him. or from the annual report aforesaid, that any such corporation < d undei the laws of this state is violating the law, or that it is conduct- ing bu m 11 afe, unauthorized or dishonest manner, he shall, by an ordei iinif 1 in hand and seal of office addressed to such corporation, direct < ompliam e with the requirements of the law. And whenever such corpora- tion hall refu e 01 neglect to make such report or aco tunl as may be lawfully comply with such order as aforesaid, the state examiner shall file a statement in writing with the attorney general, setting forth the facts GENEKAL LEGISLATION. 839 or particulars in which such alleged violation or refusal consists, which state- ment shall be prima facie evidence of such violation or refusal, whereupon the attorney general shall institute such proceedings against such corpora tion as are provided by law in the case oi insolvent corporations, or such other proceedings as the occasion may require. Skc. 3220. — No foreign building and loan association or corporation shall do business in this slate, until : 1. It shall have first complied with the provisions of sections 3261 and 3263. 2. It shall have obtained from the state examiner a certificate, authorizing it to do business in this stale. Upon application by any foreign building and loan corporation or associa- tion to do business in this state, and thereafter whenever the state examiner shall deem it prudent for the public interest, he shall examine into its financial condition and method of doing business, and for that purpose, if he deems it necessary, he may visit such corporation, or cause the same to be visited by a competent person appointed by him, and he may demand from such corpora- tion or association in advance, his lees and necessary expenses lor making such examination and may refuse to make the same or to issue any certificate unless such fees and expenses are paid, and if a certificate lias already been issued may rescind the same. For the purpose of making such examination the person making the sameshall have free access to all the books and pai ers of the corporation that relate to its business and to the books and pa] ers Kepi by any of its agents, and may summon as witnesses and examine under oath the directors, officers, agents and trustees of any such corporation and any other person in relation to its affairs, transactions and condition. Sec. 3221. — If he is satisfied from such examination that such corporation is solvent and its method of doing business is such as is likely to be beneficial to all of its members alike, he shall issue a certificate, authorizing it to do business in this state, if one is not already in force, which certificate shall be in force, for one year, or until the time required for the filing of the annual report, unless sooner rescinded. Sec. 3222. — If the state examiner is of the opinion upon examination or other evidence that a foreign building and loan association doing business in this state is in an unsound condition, or if it has failed to comply with the law, or if it, its officers or agents, refuse to submit to examination, or to perform any legal obligation in relation thereto, he shall revoke or suspend its cer- tificate of authority and shall cause notification thereof to be published three times, once in each week, for three successive weeks, in some newspaper published at the seat of government and shall mail a copy to such association or corporation at its home office, and no new business shall thereafter be d< me by it, or its agents in this state while such default or disability continues, nor until its authority to do business is restored by the examiner. Sec. 3223. — Any officer, director or agent of any foreign building and loan association, or any person whatever, who shall in this state solicit subscrip- tions to the stock of such association, or who shall sell or issue, or knowingly cause to be sold or issued to a resident of this state any stock of such associa- tion, while such association shall not hold the certificate of the state examiner, authorizing it to do business in this state as herein described, or before such association has complied with all the provisions of this chapter, or when such association shall have been notified that its authority to do business in this state has been revoked, as hereinbefore provided, shall be guilty of a mis- demeanor and upon conviction thereof shall be punished by fine of not less than $100, nor more than $500, or by imprisonment of not less than ten days nor more than six months, or by both such line and imprisonment in the discretion of the court. Sec. 3224. — Any officer, director or agent of any building and loan associa- tion incorporated under the laws of this state, or any other person whatever, who shall sell or issue, or knowingly cause to be sold or issued t<> any person any stock of such association, while such association shall nol have a certifi- cate of the state examiner authorizing it to do business as herein prescribed shall be guilty of a misdemeanor and upon conviction thereof shall be punished by fine of not less than one hundred dollars and not more than live hundred dollars, or by imprisonment of not less than ten days nor more than six months, or by both such fine and imprisonment in the discretion of the court. Sec 3225. — All corporations heretofore organized in this state and doing business as building and loan associations shall comply with and be subject to all the provisions of this chapter and shall be entitled to all the privileges and benefits thereof without reincorporating. 840 APPENDIX IV. Sec. 3261. — Xo foreign corporation, association or joint stock company, except an insurance company, shall transact any business within this state, or acquire, hold or dispose of property, real or personal, within this state, until such corporation shall have filed in the office of the secretary ©f state a duly authenticated copy of its charter or articles of incorporation and shall have complied with the provisions of this chapter; Provided, that the provisions of this chapter shall not apply to corporations created for religious or charitable purposes solely. Sec. 3262. — Such charter or articles of incorporation shall be recorded in a book to be kept by the secretary of this state for that purpose. Sec. 3263. — Such corporation, association or joint stock company shall by duly executed instrument filed in the office of the secretary of state consti- tute and appoint the secretary of state and his successors its true and lawful attorney upon whom all process in any action or proceeding against it may be served, and therein shall agree that any process which may be served upon its said attorney shall be of the same force and validity as if served upon it personally in this state and that such appointment shall continue in force irrevocable so long as any liability of incorporation, association or joint stock company remains outstanding in this state. Service upon such attorney shall be deemed service upon the corporation, association or joint stock com- pany. Whenever process against any foreign corporation, association or joint stock company, doing business in this state, shall be served upon the secretary of state he shall forthwith mail a copy of such process, postage pre- paid, and directed to such corporation, association or joint stock company, at its principal place of business, or if it is a corporation, association or joint stock company of a foreign country, to its resident manager in the United States, or to such other person as may have been previously designated by it by written notice filed in the office of the secretary of state. As a condition of valid and effectual service the plaintiff should pay to the secretary of state at the time of the service the sum of two dollars which the plaintiff shall recover as taxable costs if he prevails in his action. The secretary of state shall keep a record of all such process which shall show the time and hour of service. OHIO. ACT 1891, p. 469. Section i. — A corporation for the purpose of raising money to be loaned among its members shall be known in this act as a budding and loan associa- tion. Associations organized under the laws of this state shall be known in this act as " domestic ' associations, and those organized under the laws of other states or territories, as "foreign" associations. Associations may be organized and conducted under the general laws of Ohio relating to corpora- tion-, excel t as otherwise provided in this act. SEC. 2. — The capital stock named in the articles of incorporation shall be deemed to refer to the authorized capital, and the organization may be com- Bleted and business commenced when five per cent, thereof is subscribed. •irectors may be elected for any term not less than one year nor longer than three years, but if such term be longer than one year, it shall be so arranged that the term of office of an equal number of directors, as nearly as may be, will expire each year. ;. Su« li corporation shall have power: To receive money on deposit from time to time to the extent necessary to meet the demands made on it by its members and depositors", but shall not pay interest thereon, exceeding the legal rate. To issue stock to members on such terms and conditions as the titution and by-laws may provide; but no person shall vote more than twenl in any such corporation in his own right. To assess and collect from members and depositors such dues, lines, interest and premium on loan made, or other assessments, as may be provided for in the constitu- tion and l>\ laws. Such dues, inies, premiums or other assessments shall not bedeemed u iiry, although in excess of the legal rate of interest. To permit membei 1 to withdraw all or pari of their stock deposits at such times and luch terms as the constitution and by-laws may provide. Any member, however, who withdraws his entire si. ick or whose slock has matured, shall be entitled to receive all dues paid in and dividends declared, less all fines or othei a 1 men! . ind l' a fro rata share of all losses, if any have occurred. icel hare ol itock upon which all payments have been withdrawn, or upon whi( h loan, have been I am vied, and reissue them as new stock. To GENERAL LEGISLATION. 841 issue stock to minors and permit the same to be withdrawn as other stock, and the receipt of such minor shall be a valid acquittance, if his rights have been fully secured to him. To acquire, hold, encumber and convey such real estate and personal properly as may be necessary for the transaction of its business or necessary to enforce or protect its securities. To borrow money, not ex- ceeding twenty per cent, of the assets, and issue its evidences of indebtedness therefor. To make loans to members and depositors on such terms, condi- tions and securities as may be provided in the constitution and by-laws. To cancel such loans and release the securities on such terms as the board of directors may provide. Butanymember may have his loan cancelled upon the following terms, to wit : After the premium for one year has been paid, and also the interest and premium up to the date of cancellation, the borrower shall pay the sum actually borrowed, less the dues paid and dividends credited. He shall pay also any lines or other assessments required by the constitution or by-laws. To accumulate from the earnings and invest as the board of directors may determine, a reserve fund for the payment of contingent losses. To make such annual or semi-annual distributions of the earnings (after paying expenses and setting aside a sum for the reserve fund as hereinafter provided t, as the constitution and by-laws may prescribe. To increase or decrease its authorized capital or the face value of its shares at any time, by a maj( nity V( ite of its board of directors ; and a certificate of such action shall be made by the president and secretary, and duly filed with the secretary of state. To dissolve the corporation when its continuance shall be deemed, by a majority vole of its members, to be no longer desirable, subject, however, to the vested rights of members. To provide, by constitution adopted by its members, and by-laws adopted by its board of directors, for the proper exer- cise of the powers herein granted, and the conduct and management of its affairs. All such other powers as are necessary and proper to enable such corporation to carry out the purpose of its organization. Sec. 4. — The board of directors shall designate a bank or banks in which the treasurer shall deposit all funds in the name of such corporation. Such funds can then be withdrawn only by check signed by the president and financial secretary, or such other officers as the board of directors may des- ignate. The treasurer's bank book shall be open to the inspection of any director at any time. No president or secretary or other officer shall sign any check unless the expenditure has been authorized by the board of directors. All officers of such association who have charge or possession of money, securities or property, shall give b< md before entering upon their duties to the satisfaction of the board of directors, for the faithful performance of the same, and the safekeeping and proper application of all moneys or property coming into their hands. All officers of such corporations on being re-elected to office shall renew their bonds. The bond may be increased or additional sureties required at any time by the board of directors. Directors shall not be eligible as bondsmen, and shall be individually liable for any loss to members, caused by their neglect to comply with the provisions of this section. CONTINGENT FUND. Sec. 5. — The amount .0 be set aside to the fund for contingent losses shall be determined by the board of directors, but in all permanent or perpetual associations, at least five per cent, of the net earnings shall be set aside each year to such fund until it reaches at least five per cent, of the outstanding loans. All losses shall be paid out of such fund until the same is exhausted, and whenever the amount in said fund falls below five per cent, of the loans as aforesaid, it shall be replenished by annual appropriations of at least five per cent of the net earnings as hereinbefore provided until it again reaches said amount. Sec. 6. — All expenses of such associations shall be paid out of the earnings only, and so much of the earnings as may be necessary shall be set aside each year for such purpose. But charges incident to a loan, if paid by the bor- rower, shall not be deemed a part of the current expenses. A portion of the earnings, to be determined by the board of directors, shall also be reserved annually or semi-annually, for the payment of contingent losses, as provided in section five of this act, and the residue of such earnings shall be trans- ferred as a dividend annually or semi-annually, in such proportion to the credit of all members, as the corporation bv its constitution and by-laws may provide, to be paid to them at such time and in such manner in conformity with this act as the corporation by its constitution and by-laws may provide. All losses shall be assessed in the same proportion and manner on all mem- 842 APPENDIX IV. bers after the amount in the reserve fund has been applied to the payment of the same. Sec. 7. — The shares and loans advanced to its members shall be exempt from taxation, except shares or stock upon which no loans have been made or money advanced by the company, shall be considered and held as credits, and the said members individually 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 in April in each year, and the same shall be assessed at such valuation for taxation and taxes as other property. Sec. 8. — There is hereby established in the department of insurance a bureau to be known as the bureau of building and loan associations, which shall be charged with the execution of the laws of this state relating to building and loan associations. Sec. 9. — The chief officer of said bureau shall be known as the inspector of building and loan associations ; the superintendent of insurance shall, ex officio, be also the inspector of building and loan associations, and as compen- sation for his services as such inspector he shall be entitled to receive the sum of one thousand dollars per annum. Before entering upon his duties, he shall give bond to the state of Ohio in the sum of ten thousand dollars, to be ap- proved by the governor, conditioned for the faithful discharge of his duties, and the bond, with his oath of office and the approval of the governor in- dorsed thereon, shall be filed with the secretary of state. The inspector may appoint a deputy, who shall be authorized to perform the duties attached by law to the office of inspector, during his absence or disability, and shall receive a salary of eighteen hundred dollars per year. He shall also appoint such other clerks or examiners as may be provided for by law. Sec 10. — The adjutant-general shall provide suitable accommodations for the conduct of the business of the bureau in the office of the superintendent of insurance, and furnish the necessary furniture, etc., and the expense for the same shall be paid out of the state "treasury, on the certificate of the in- spector and the warrant of the adjutant-general". Sec. 11.— It shall be the duty of the inspector to see that all the laws of this state relating to building and loan associations are faithfully executed. Sec. 12.-— Foreign building and loan associations doing business in this . shall conduct the same in accordance with the laws of the state govern- ing domestic associations, and no such association shall do any business in this state until it procures from the inspector a certificate of authority to do so. To procure such authority, such association shall comply with the fol- lowing provisions : First. It shall deposit with the inspector one hundred thousand dollars, either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, satisfactory to the inspect 1 >r. Second. It shall file with the inspector a certified copy of its charter, con- stitution and by-laws, and other rules and regulations showing its manner of conducting business, together with a statement such as is required annually from all .1 1 « iations. Third. It shall also file with the inspector a written instrument, duly exe- cuted, agreeing that a summons may issue against ii from any county in this : 1 the sheriff of the county in which the office of inspector is . ite, commanding him to serve the same by certified copy personally upon the inspector or by leaving a copy thereoi at his office. The inspector shall, however, mail a copy oi any papers served on him, postage prepaid, to the i iociation. Si . [3. Whenever such association has complied with the provisions of this act, and tin 01 is satisfied that such association is doing business toll 1 ol this state, and is in sound financial condition, he shall his certificate ol authority to such association to do business in this state. Ann r, upon the filing oi the annual statement herein provided hall be satisfied as aforesaid, he shall issue a renewal oi 1 ol authi M ii v. 1 Such foreign a ociation may collect and use the interest on any o deposited olongasil fulfils its obligations and complies with ion "i thi act. II may also exchange them for other securities of ind i factory to the in pector. I n d { n il made with the inspectoi shall be held as a security dents ol Ihis state against said association, and shall be : f Ol all judgmei n, and subjected to the payment of GENERAL LEGISLATION. 843 the same in the same manner as the property of other non-residents. Should any association cease to do business in this state, the inspector may release securities in his discretion, retaining sufficient to satisfy all outstanding liabilities. Skc. [6. — Every building and loan association doing business in this state shall, annually, at the end of each fiscal year, or within forty clays thereafter, make a full and detailed report in writing of the affairs and business of the association for the preceding year, and showing its financial condition .it the end of said fiscal year. With the lust report made by any association it shall also file a certified copy of its constitution and by-laws or other rules and regulations, showing its manner of doing business. Sec. 17. — The statement shall be in such form and contain such information as may be prescribed by the inspector of building associations. It shall be sworn toby the secretary, and its correctness attested by at least three direc- tors, or an auditing committee appointed by the board. The original shall be filed with the inspector of building associations within forty days alter the close of the fiscal year, and such an abstract thereoi as the inspector may require shall be posted for sixty days in the office or meeting place of such association, and also published in some paper regularly issued in the county in which said association is located. Skc. 18. — The inspector, when he has reason to suspect the correctness of any statement of an association doing business in this state, or that its affairs are in an unsound condition, or that it is not conducting its business in accordance with law, may make or cause to be made by some person by him appointed for that purpose, an examination into the affairs of such associa- tion. The expense of all examinations shall be paid by the associations examined, except that the actual expense of the examination of an association organized under the laws of this state, shall be paid out of the fees paid by such associations to the inspector as hereinbefore provided. Should the inspector, upon examination, find any domestic association con- ducting its business in whole or in part contrary to law, or failing to comply with the law, he shall so notify the board of directors of such association in writing, and if after thirty days, such illegal practices or failure continue, he shall communicate the facts to the attorney-general, who shall cause proceed- ings to be instituted in the proper court to revoke the charter of such associa- tion. Should the inspector find, upon examination that the affairs of any such association are in an unsound condition, and that the interests of the public demand the dissolution of such association, and the winding up of its busi- ness, he shall so report to the attorney-general, who shall institute the proper proceedings for that purpose. Sec. 19. — Such examiners shall have access to and may compel the produc- tion of all the books, papers, securities and moneys, etc., of the association under examination. They shall have power to administer oaths to, and examine the officers and agents of such association as to its affairs. Sec. 20. — When the inspector deems it to the interest of the public, he may publish the results of such examination in some newspaper of general circu- lation in the county in which such association is located, if it be a domestic association, and in some newspaper in the city of Columbus, Ohio, if it be a foreign association. SEC. 21. — Should the inspector find, upon examination, that any foreign association does not conduct its business in accordance with the law, or 1l1.it the affairs of any such association are in an unsound condition, or if such association refuses to permit examination to be made, he may cancel the authority of such association to do business in this state, and cause a notice thereof to be mailed to the home office of the association, and to be published in at least one newspaper published in the city of Columbus. After the pub- lication of such notice, it shall be unlawful for any agent of said association to receive any further stock deposits from members residing in this state, exce t pavments on stock on which a loan has been taken. Sec. 22. — Foreign building and loan associations shall pay to the inspector the foil »wing fees, which shall be paid into the state treasury to wit : For til- ing each application for admission to do business in this state, one hundred dollars. For each certificate of authority and annual renewal ql same, fifty dollars ; both foreign and domestic associations shall pay to the inspector for filing each annual statement as follows : If the assets of the association, as shown by the statement tiled, amount to 8 50,000. 00 or less S3.00 ; it more than $50,000.00 and less than $100,000.00, $5.00 ; if more than S 100.000.00 and less than $250,000.00, $10.00 ; if more than $250,000.00 and less than §500,000.00, 844 APPENDIX IV. $20.00 ; if more than $500,000.00 and less than $1,000,000.00, $30.00 ; and if more than 81,000,000.00, $50.00. For each copy of a paper hied in his oihce, twenty-live cents per folio. For affixing the seal of oftice and certifying any paper, one dollar ; Provided, however, that the inspector may retain from the fees so received by him up to the close of the fiscal year ending November 15, 1892, a sum sufficient to pay the salaries and necessary expenses of the bureau of building and loan associations up to said time, which sum is hereby ap- propriated for that purpose. Sec. 2$. — All securities of cash deposited with the inspector shall be im- mediately deposited with the treasurer of state, who, with his sureties, shall be responsible for the safekeeping thereof. The treasurer shall deliver such securities only upon the written order of the inspector of building associa- tions. Sec. 24. — It shall be unlawful for any building and loan association to do business in this state without having first complied with the provisions of this act, and any association violating any of the provisions of this act, or failing to comply with any of its provisions, shall be fined not less than fifty nor more than one thousand dollars, to be recovered by an action in the name of the state, and on collection paid into the state treasury ; Provided, that build- ing and loan associations organized in other states, having heretofore trans- acted business in this state, which shall not have complied with the provi- sions of this act, shall have the right to close up their business, and fulfil their contracts heretofore entered into with citizens of this state, through their duly authorized agents, without being subject to the penalties prescribed by this act. Sec. 25. — Every president, director, trustee, member of any committee, se- cretary, treasurer, attorney or any other officer at any time created or agent of any such corporation, who embezzles, abstracts or wilfully misapplies any of the monevs, funds or credits of such corporations, or who issues or puts into circulation any warrant or other order, or who assigns, transfers, cancels or delivers up anv note, bond, draft, mortgage, judgment, decree, or any other written instrument belonging to such corporation, or raises money otherwise, or receives money from anv member or oilier person for and in the name of such corporation, "unless duly authorized by the board of directors of such corporation ; or who shall sign the name of any person to any order or war- rant lor the payment of money without proper power of attorney or written order from such person to whose order such warrant or order is made payable ; or any member or members < if the board of directors who shall vote to declare, or any financial or first secretary of such corporation who shall declare or advise the board of directors of such corporation to declare a greater dividend than what has been actually earned by the corporation, for the purpose of de- ceiving the people or defrauding the members of such corporation; or who certifies to or makes any false entry on any book, report or statement of or to such corporation, with intent in either case to deceive, injure or defraud the corporation or anv other company, bodypolitic or corporate, or any individual person, or to deceive jany one appointed to examine the affairs of such cor- poration ; and every person who with like intent aids or abets any president, secretary, treasurer, committee or other officer or person in any violation to this section shall be deemed guilty of a felony, and shall lie imprisoned not k-s^ than one year nor more than' ten years, and shall be liable civilly to the party injured, to the extent of such damage thereby incurred, and suit may ought again t such persons and the sureties on his bond given to such 11 the faithful performance of his duty. Any officer whose duty ii i> failing to make the reports required by this act, and anv officer, employee, or other person, who solicits business for, aids or assists anv building and loan associations to do business contrary to the provisions of this act, or with- out having complied with iis provisions, shall be guilty of a misdemeanor, and on conviction thereof shall be lined not more than five hundred dollars pri med noi more than six months or both. Such fines, when collected, I no into the state treat urj si ' . 26.— The inspector shall keep and preserve in permanent form a full dol his proceedings, including a concise statement of each association ' hall, annually, make a report to the legislature of the gen- icl ind condition of the building and loan associations doing business ite, with such sugge lions as he may deem expedient. Such report elude the information contained in the statements required ol the d in tabulated form. He shall also report the names, ompen ations ol tin- clerks employed by him, the whole amount of the nci derived, and the 1 penses in detail, during the vcar ending on tin- ihirty-fii t daj ol December. GENERAL LEGISLATION. 845 Sec. 27.— Sections 3833, 3834 and 3836 as amended, and supplemental sections 3835«. :Ao/', 3835c, 3835d. 3835«. 3835/. 3«35A r . 3*35''. ^5', and 3835;', of the Revised Statutes as amended, or otherwise, arc hereby repealed. Sec. 28.— This act shall take effect and be in force from and after its passage. 1'assed May I, 1891. ACT 1893, p. 315. Section. i.—Be it enacted by the General Assembly of the Slate of Ohio, That building and loan associations shall be authorized to provide in their constitu- tions and by-laws for the time and terms of the dissolutions of such corpora- tions ; also for the consolidation of two or more of such corporations into one. upon such terms and conditions as may be determined upon by their boards of directors ; also, in the case of dissolution ol such corporation, its board ol direc- tors may, by a majority vote, be authorized to sell and transfer its mortgage se- curities or other property, or both, to another corporation, person or persons, subject alwavs to the vested and accrued rights of the mortgagors. Skc. 2.— This act shall take effect and be in force from and after its pas- sage. Massed April 27, 1893. OKLAHOMA. STATUTES OF 1893, pp. 282-287. Paragraph 1143. — At any time when ten or more persons may desire to form a building and loan association under the provisions of this act, they shall make application to the secretary of the territory in the manner pre- scribed by section 1229 [1152]. The said secretary is hereby fully empowered to grant charters to said associations, provided that no charter granted under or by virtue of the provisions of this act shall be for a longer period than twenty years. Par. 1144. — The capital stock of any corporation created by virtue of this act shall at no time consist of more than two thousand five hundred shares, of two hundred dollars each, or five thousand shares of one hundred dollars each, the instalments on 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 dol- lars on each share. 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 the shares withdrawn or forfeited. The stock may be issued in one or more successive series, in such amount as the board of directors or stock- holders may determine, and any stockholder wishing to withdraw from the said corporation 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 proportion of the profits 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 in 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 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 fines shall be charged to a deceased member's account from or after his or her decease, unless the legal represen- tatives of such decedent assume the future payments of the stock. Par. 1145. — The number, titles, functions and compensation of the officers of any corporation created by virtue of this act, their terms of office, the times of their election, as well as the qualifications of electors, and the votes and maimer of voting, and the periodical meetings of said corporation, and the manner aid terms upon which loans shall be made and repaid shall be de- termined by the by-laws. Par. 1146.— The said officers shall hold stated meetings at which the money in the treasury, if equal to the amount of one share of stock in such corpora- tion, 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 the full amount for each share of stock held by such stockholder; Provided, that good and ample security shall be given by the borrower to secure the repayment of the loan. In case the borrower "shall 846 APPENDIX IV. neglect to offer security that is approved by the board of directors by such time as the by-laws may prescribe, he or she shall be charged with one month's interest at the rate charged by the association on loans, and a fine not to exceed one dollar per share, together with any expenses incurred, and the money shall be resold at the next stated meeting. In case of non-pay- ment of instalments, or interest or premium by borrowing stockholders, for the space of six months, payment of principal and interest, without deducting the premium paid or interest thereon, may be enforced by proceeding on their securities according to law. Par. 1147. — A borrower may repay a loan at anytime by the payment to the corporation of the principal sum borrowed, together with interest, not to exceed twelve per cent, per annum, together with such per cent, of premium per annum as may have been bid for the preferences or priority of such loan and any fines or charges that may be imposed upon such stockholder at the time of such repayment ; or in case the amount of premium bid for he priority of such loan be deducted in advance, and the repayment thereof is made before the expiration of the eighth year after the organization of the corporation, there shall be refunded to such borrower one-eighth of the pre- mium paid for every year of the said eight years unexpired ; Provided, that when the stock is issued in separate series, the time shall be computed from the date of the issuing of the shares of stock on which the loan was made ; Provided further, that when the series of stock has a less period than eight years to complete full payment thereof, there shall be refunded only fro rata for the unexpired term of the series ; And, provided further, when the by-laws of the corporation prescribe a different manner and terms upon which a loan may be repaid, then the repayment can only be made in accordance with the by-laws of such corporation. Par. 1 148. — No premiums, fines, or interest on such premiums that may ac- crue to the said corporation according to the provisions of this act shall be deemed usurious ; and the some [same] may be collected as debts of like amount are now by law collected in this territory. Par. 1140. — No corporation created under this act shall cease or expire from neglect on the part of the corporation 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 and qualified. Par. 1150. — Any building and loan association incorporated by or under the provisions of this act, or any one heretofore or hereafter incorporated, ac- cepting of the provisions of the same, is hereby authorized and empowered to purchase at the sheriff's 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, judgment, lien or other incumbrance, or in which said association may nave 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, con- vey, lease or mortgage at pleasure to any person or persons whatsoever, and all sales of real estate heretofore made bv such association to any person or persons not members of the association so selling are hereby confirmed and made valid. Par i 1 tI.— All mortgages heretofore given to the building and loan asso- ciations organized under Ihe laws of this territory before the passage of this act or subsequent hereto, but such associations subsequently accepting the provisions hereof, be and the same are hereby declared good and valid to all intents and purposes, as though they had been made to corporations under the provisions of this act. PAR i [5Z — The charter of an intended corporation under the provisions of this acl musl be subscribed by ten or more persons, a majority of whom must be citizens of tliis territory, and set forth : 1. 'I'll'- name "I the corporation. 2. 'I'll'- pill i" 1 e Foi which it is formed. 3. The place where its principal office, or the business is to be transacted. 4. The time for which it is to exist. 5. The names and residences of the subscribers, and the number of shares sub' • each. (>. The number of its directors, and the names and residences of those who GENERAL LEGISLATION. 847 are selected as directors, and who shall hold their office until the next annual election or until their successors are elected and qualified. 7. The amount of its capital stock and the number and par value of its shares. Par. 1153. — Notice of the intention to apply for any such charter shall be in- serted into two newspapers of general circulation printed in the proper county for three weeks, setting forth briefly the character and object of t he corporation to be formed, and the intention to make application therefor. The certificate of a corporation under the provisions of this act, shall set forth all that is hereinbefore required to be set forth, the same shall be acknowledged by at least five of the subscribers thereto before a notary public or other officer authorized to administer oaths, and they shall also make and subscribe an oath or affirmation before him, to be indorsed on said certificate that the statements contained therein are true. The said certificate, accompanied with proof of publication of the notice as hereinbefore provided, shall then be produced to the secretary of the territory, who shall examine the same and if he find it to be in proper form, as specified in the foregoing sections, he shall approve thereof, and indorse his approval thereon, and issue letters patent in the usual form incorporating the subscribers and their associates and suc- cessors into a body politic and corporate in deed and in law, by the man- ner chosen ; and and the said certificate shall be recorded in the office of the secretary of the territory, in a book to be by him kept for that purpose, and a certified copy of the said certificate shall be recorded in the office of the register of deeds of the county where the principal business of the association is transacted. Certified copies of the records thereof shall be competent evi- dence for all purposes in the several courts of this territory. Par. 1154. — The by-laws of every corporation created under the provisions of this act, or of those accepting the provisions of the same, shall be deemed and taken as its law, subordinate to this statute. They shall be made by the stockholders or the board of directors, at their annual meeting or at any stated meeting of the board of directors. They shall prescribe the time and place of meeting of the corporation, and the power and duty of its officers, the fines and penalties to be imposed upon delinquents and borrowers for the non-payment of dues, interest and premiums, and such other matters as may be pertinent and necessary for the business to be transacted. Par. 1 155. — The business of every corporation created hereunder, or of those accepting the provisions of the same, shall be managed and conducted by a president, a board of directors or trustees, a secretary and treasurer, and such other officers or agents as the by-laws may provide. The directors or trustees shall be elected annually by the stockholders or members, at the time fixed by the by-laws, and shall hold their office until others are chosen and qualified in their stead ; the manner of such choice, and of the choice or appointment of all other agents or officers, shall be prescribed by the by- laws. The number of directors or trustees shall not be less than five, one of whom shall be chosen president by the directors, or by the members of the corporation, as the by-laws may direct ; the members of said corporation may, at a meeting called for that purpose, determine, fix or change the num- ber of directors or trustees that shall thereafter govern its officers, and a ma- jority of the whole number of such directors or trustees shall be necessary to constitute a quorum. The treasurer shall give bond in such sum, and with such sureties as shall be required by the by-laws, for the faithful discharge of his duties, and he shall keep the moneys of the corporation in a separate bank account, to his credit as treasurer, and if he shall neglect or refuse so to do, he shall be liable to a penalty of fifty dollars for every day he shall fail so to do, to be recovered at the suit of any informer in an action of debt. Par. 1 156. — The directors of such corporation shall procure certificates of evidence of stock, and shall deliver them signed by the president and secre- tary and sealed with the common seal of the corporation to each person or party entitled to receive the same according to the number of shares by him, her or them respectively held, which certificate or evidence of stock shall be transferable at the pleasure of the holder in person or by attorney duly authorized as the by-laws may prescribe, subject, however, to all payments due or to become due thereon, and the assignee or party to whom the same shall have been so transferred shall be a member said corporation, and have 848 APPENDIX IV. and enjoy all the immunities, privileges and franchises, and be subject to all th [e] liabilities, conditions and penalties incident thereto, in the same man- ner as the original subscriber or holder would have been, but no certificate shall be transferred so long as the holder is indebted to said company, unless the board of directors shall consent thereto. Par. i 157. — No person acting as judge or officer for holding an election for any such corporation shall enter upon the duties of his appointment until he take and subscribe an oath or affirmation before a notary public or other person qualified by law to administer oaths, that he will discharge the duties of his office with fidelity, that he will not receive any rate but such as he really believes to be legal, and if any such judge or officer shall knowingly or wil- fully violate his oath or affirmation he shall be subject to all the penalties imposed by law upon the officers of the general election of this territory for violating their duties, and shall be proceeded against in like manner and with like effect. Par. 1 158. — In case of the death, removal or resignation of the president, or any of the directors, secretary, treasurer or other officer of such company, the remaining directors may supply the vacancy thus created until the next general election. Par. 1159. — It shall be lawful for any building and loan association now incorporated under the general laws of this territory and accepting the pro- visions of this act, or that may hereafter be incorporated, in addition to dues and interest to charge and receive the premiums or bonus bid by a stock- holder for preference or priority of right to a loan in periodical instalments, and such premium or bonus so paid in instalments shall not be deemed usuri- ous but shall be taken to be a payment as it falls due, in contradiction [con- tradistinction] to a premium charged and paid in advance, in so far as said premium or bonus so charged and paid, in addition to dues and interest, shall be in excess of two dollars for each periodical payment, the same shall be lawful, any law, usage or custom to the contrary notwithstanding ; Provided, that the certificate of incorporation of each association hereafter to be incor- porated, and the certificate provided in section 1238 [1161], for those heretofore incorporated, shall set forth whether the premium or bonus bid for the prior rights to a loan shall be deducted therefrom in advance or paid in periodical instalments. Par. 1162. — Any company heretofore incorporated under any general law of this territory, or by virtue "of any special charter heretofore granted by the legislature thereof, incorporating any company for the purpose of doing a banking, loan or other business provided for in chapter 18 [chapter 17] ; or any building or loan association heretofore incorporated, and having accepted the provisions of article 16 [article 17] of said chapter, as therein provided, shall be entitled to all the privileges, immunities, franchises and powers men- tioned in said chapter 18 [chapter 17], and the privileges, immunities and powers recited in said article 10 [article 17], upon filing with the secretary of the territory a certificate to be by him recorded, which certificate shall' be under the duly authenticated seal of such corporation, and shall set forth such corporation's acceptance of the provisions of section 957 [932]. Par. 11 63. — Upon the acceptance and approval of said certificate, by the tar\ "i the territory, such corporation shall henceforth be entitled to all the privileges, immunities, franchises and powers conferred by section 957 [932], in the ^anie manner as if incorporated under the provisions thereof. PAR. 1 [64. — And it is further provided, that all the acts of such incorporations n ly done under and by virtue of their then existing charters shall be and are hereby ratified and made legal. ACTS [895, p. 77. ion 1. — Any building and loan association may issue shares of stock in 01 "ii what is known as the perpetual oi permanent plan, when each 1 run from date ol issue ; Provided, thac the by-laws of said associa- tati upon which plan the a ociation issues snares. GENERAL LEGISLATION. 849 Sec. 2. — Any building and loan association may elect directors or trustees for a longer term than one year if such term be set forth in the by-laws : Pro- vided, that no director or trustee shall be elected for a period longer than three years, and the terms of at least two of such directors or trustees shall expire each year. Sec. 3. — Every such corporation may extend the time of its duration so as to make the entire period of its corporate existence not to exceed lifty years by vote ot three-fourths of its stockholders at any meeting called for this purpose, thirty days' notice having first been given each stockholder by postal card or letter and by paying to the territorial secretary a fee of two dollars. Sec. 4. — Every such corporation doing business in the territory 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 secretary setting forth its actual finan- cial condition and the amount of its property and liabilities, under a penalty of two hundred dollars to the territory, to be recovered by civil action for the benefit of the association, against the president, secretary or directors on the relation of any stockholder. It shall also deposit a copy of said statement, verified as aforesaid, in the office of the territorial secretary. Sec. 5. — Every such corporation shall lend its funds only on real estate security, or on the security of its own shares of stock, such loans being made upon the terms and conditions and in the manner which shall be specified by its by-laws. No loans shall be made on shares of stock to an amount exceed- ing the instalments actually paid in on such shares. Such corporation may, however, employ a portion of its capital stock in the purchase of real estate and the erection of buildings thereon, for rent or otherwise. If at any time it shall happen that there is no demand by the shareholders for the funds of such corporation, then such funds may be loaned to others who are not share- holders, at such rate of interest and premium as the directors may fix. No loans shall be made to members or others on personal security or on lease- hold. Sec. 6. — When any unpledged shares of stock shall reach the maturity value thereof, all payments of dues thereon shall cease, and the holders thereof shall be entitled to receive, and shall then be paid out of the fund of such corpora- tion, the maturity value thereof for each share so matured and held ; Provided, however, that if there are not such funds then on hand sufficient and appli- cable to the payment and redemption of said shares, then such shareholders shall be entitled to receive interest on the sum then due them, from the matu- rity of said shares to the date of redemption, at a rate of not less than six nor to exceed eight per cent, interest per annum, as may be provided by the by- laws of said association ; And, provided further, that at no time shall more than half of the funds in the treasury, be applicable to the payment or redemp- tion of such matured shares, unless by consent of the board of directors. Sec. 7. — It shall be lawful for any minor above the age of fourteen, or a married woman to take and hold shares in such corporation, and forsuch cor- poration to pay any minor any money that may be due him in respect to any share, and his receipt therefor shall be valid ; but no minor shall be eligible to hold any office in said corporation. Skc. 8. — As building and loan associations are aggregations of laborers, mechanics, workingmen, working women and tradesmen which start without any paid up capital, and as these members only pay in on their stocks small weekly or monthly assessments, and said assessments are immediately loaned to one of the members of the association for the purpose of furnishing him a home, and he immediately begins to pay taxes on the same, while the associa- tion as a whole pays taxes on the obligation which he gives for said loan, it would be unjust to tax this, same money still a third time ; therefore, the shares iesued by n. building and loan association organized under the laws of this territory, and loaning all its funds to members within the territory, are hereby declared exempt from taxation. Sec. 9. — Any building and loan association which has made and filed its articles of incorporation under the laws of the territory and received its certi- ficate of incorporation, and whose principal place of business is within the territory, shall be entitled to all the benefits of this act and all other acts now in force relating to building and loan associations, and have all the powers, rights and privileges by such acts conferred, upon accepting the same by unanimous vote of its board of directors at a regular meeting thereof, and filing with the secretary of the territory a certificate of such acceptance in writing under the duly authenticated seal of said association, to be by him recorded as provided in paragraph 1 153, of the statutes of 1893. Said certifi- 850 APPENDIX IV. cate shall set forth the mode or plan of said association in charging premiums or bonus for priority of loan, and upon its acceptance and approval by the secretary of the territory, he shall issue his certificate to said corporation reciting the same, and thereafter said association shall be conclusively deemed to have been duly and legally incorporated at and from the time of the issue of its original certificate of incorporation, and the acts of such association not in violation of law are hereby ratified and made legal. Sec. 10. — Sections 18 and 19 of article 17 of chapter 17 of the statutes of 1893 are hereby repealed. Approved and in force March 5th, 1895. OREGON. LAWS OF 1891, p. 131. Section i. — It shall be lawful for co-operative corporations, engaged in the business of loaning their own money only to their own stockholders and only in proportion to the amount of stock held by such stockholders in case there are two or more applicants for the money offered for loan, to make the loan to such stockholder or stockholders as shall offer the highest premium of any nature for such loan, and the giving and receiving of such premium shall not be regarded as contrary to the laws of the state in regard to the rate of interest on money, but only the means of determining which of two or more stock- holders, equally entitled to such loan, shall receive the same. ACTS 1895, p. 103. Section i. — Whenever any number of persons, not less than five, shall desire to incorporate a building and loan or savings and loan association, having for its object the business of receiving and accumulating the contribu- tions or deposits, or both, of its incubus, and lending the same, but only to its members, thej r shall make a written declaration to that effect, such declara- tion shall be signed, sealed and acknowledged in the form now provided by the statutes of this state for the conveyances of real estate, and shall include the following: 1. The name of the association. The name shall not be the same as, nor too closely resemble, that in use by any existing corporation established under the laws Of this state. The words " building and loan association," or " savings and loan association," shall form a part of the name, and no corpo- ration not organized under this act shall be entitled to use a name embodying either said combinations of words ; Provided, that associations now existing may continue their present names. 2. The principal office or place of business of the association, which shall be within this state. 3. The amount of its capital stock and the number of shares into which the same shall be divided; Provided, that no shares shall be of a less par value than one hundred dollars each. 4. The time of its duration. 5. A provision that such association is organized under this act for the pur- poses herein expressed. 6. The names and residences of the persons who shall make, subscribe and acknowledge the said declaration, a majority of whom shall be citizens of ile, and who shall thereafter be called incorporators. SEC. 2. — When so signed, sealed, and acknowledged, the declaration shall be Bled in the office of the secretary of state, who shall file and record the same. Thereupon, the secretary of state shall make and issue a copy of said declaration, with his certificate attached, setting forth the facts of the tiling and recording of such declaration in his office. The copy of the declaration - rtified shall forthwith be recorded in the office of ihe county recorder of con ■' the county where the principal place of business of such cor- poration shall 1" ituated, and in those counties where there is no county re- < older oi con eyances then in the office of Ihe county clerk of such county. Upon compliance with the foregoing requirements, the corporators so execut- ing ration their a sociates, successors and assigns, shall become and 1 1. a corporate body, bearing the name sel f< »rth in such declaration, with powerto ue and be sued, to contract and be contracted will), to have and l corporate eal and to < hange the same al pleasure, to purchase, possess, hold, di pose of or 1 II uch real or personal property as maybe necessary enient to can yon its business, and in the effectual furtherance of GENERAL LEGISLATION. 851 the purposes of such association ; to borrow money for the purpose of making loans and paying withdrawals, and to appoint or elect such directors, officers, and agents as the business of the association may require, and prescribe their duties and fix their compensation. Sec. 3. — The conduct and management of the affairs and business of such association shall be vested in a board of directors, which shall consist of not less than five nor more than ten members. The corporators of the associa- tion shall serve as directors until the first meeting of the stockholders, to be held at the time provided for by this act, or until their successors are elected and qualified, after which the directors shall be elected by the stockholders of the association, who shall he entitled to cast one vote for each director to be elected for each share in good standing in his or her name. The directors, unless it be otherwise provided by the by-laws of the association, shall elect or appoint all the other officers of the association ; not more than four of the officers of any such association incorporated under the laws of this state shall be members of the board of directors of such association. Sec. 4. — Within sixty days alter recording such declaration in the records of the county wherein the principal place of business is situated the incorpo- rators then acting in the capacity of directors shall adopt appropriate by-laws to govern and prescribe the methods and the officers by whom the business of the association shall be conducted. The by-laws shall be in conformity with the provisions of this act and the laws of this state, and at all times during the regular hours of business shall be open to the inspection of the members at its principal place of business. The by-laws, among other things, shall especially provide for the character and methods of conducting the business of the association, with rules governing the admission of members, the sale of its shares, the amount of admission fee, the amount of and the periods when dues shall be paid by the members to the association, the deposition and in- vestment of the funds of the association, including loans, the amount of premiums to be paid for and the rate of interest on loans, the charges of management providing for the annual meeting of the shareholders of the as- sociation, for the election of directors and the appointment of the subordinate officers ; for the adoption, ratification and amendment of the by-laws ; for the method of voting at such annual meeting, and for the periodical investigation of the business and condition of such association. Sec. 5. — At least thirty days prior to any annual or special meeting of any such association, a notice stating the time and place of such meeting shall be deposited in the postoffice at the headquarters of such association, directed to each member at his address as the same appears at the time on the books of the association ; and when so deposited, postage prepaid, shall be deemed a legal and sufficient notice of any such meeting , Provided, also, that notice may be given by weekly publication in a daily newspaper for a period of not less than two weeks. And there shall be attached to and accompany such notice and any proposed amendment or amendments to the articles of asso- ciation or by-laws of such association, and a statement of any officer to be elected at such meeting. All members of such association shall be entitled to vote at such meetings in person or by proxy. Sec. 6. — All the moneys received by the association from whatever source, after deducting the fixed charges for management, shall be loaned to the shareholders of the association, and to them only, and in all cases shall be secured by first mortgage on real estate. The amount of such loan shall in no case exceed fifty (50) per cent, of the appraised value of such real estate. The execution of the mortgage papers shall be accompanied by a transfer pledge of the shares of the borrower to the association. The shares so pledged shall be held by the corporation, on the terms to be prescribed by the by-laws, as collateral security for the performance of the conditions of the mortgage ; Provided, that the shares of the association without other security, may, in the discretion of the directors, be accepted as securities for loans for an amount not exceeding their withdrawal value as provided by this act. The by-laws shall provide for the mode in which applications or bids for loans shall be made and received, and who shall be entitled to preference in allotting the same. All loans shall be made and considered by the directors upon such applications or bids, and in no other way. Every such association shall provide in its by-laws in what manner applications or bids for loans shall be received and who shall be entitled to loans there- under ; such applications or bids shall be opened at stated times, and all the money in the loan fund applicable to loans, shall be loaned upon such ap- plication or bid ; Provided, that the provisions of this section, relating to bidding for loans, shall not apply to associations which fix the rate of in- 852 APPENDIX IV. terest and premium in its by-laws or annually, by resolution of the board of directors, at a rate which will keep the money of such association at all times safely invested and in which the system of bidding is not allowed. The minimum amount and nature of premiums to be bid or asked for loans shall be fixed and described in the by-laws, but the same may from time to time be changed by a two-thirds vote of all the members of the board of directors. Sec. 7. — Any premium which has heretofore or which shall hereafter be taken for loans or fines imposed for the non-payment of dues, made by any association governed by this act, shall not be considered or treated as in- terest, nor render such association amenable to the laws relating to usury. Sec. 8. — No association governed by this act shall set apart as an expense fund, exclusive of admission fees, to exceed ten (10) cents per month upon each share of its stock, or assess any fines for non-payment of monthly instal- ment, or otherwise, in excess of ten (10) cents per share for the first month that the same shall be in arrears, and fifteen (15) cents per share per month for every month thereafter. Sec. 9. — Any shareholder whose stock is not delinquent and has not been declared forfeited in such association, and whose share or shares are not pledged upon a loan, may withdraw such share or shares from the association at any time after one year by giving at least sixty days' notice in writing to the secretary of his intention to do so ; at the end of said sixty days the asso- ciation shall pay to the members so surrendering as follows : If said stock is not more than two years old, all amounts paid in by such members upon such stock, except the sums paid as membership fees and fines, and the amount of such payments set apart by said association as an expense fund, which expense fund, however, shall not exceed the amount fixed in this act. If said stock is more than two years old, the members upon such surrender shall receive, in addition to the amount above specified, at least three-fourths of all profits standing to the credit of such shares ; Provided, that not more than one half of the monthly instalments received by such association for any month shall be used to pay withdrawals without consent of the board of directors. Sec. 10. — Any such association may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien or other incumbrance, or in which it may have any interest, and may lease, sell, convey or mortgage the same at pleasure to any person or persons, but shall not otherwise acquire or deal in real estate ; Provided, that any such association may acquire any leasehold interest necessary or convenient for the transac- tion of its business. Sec. 11. — All such associations heretofore organized under the laws of this state or incorporated under this act, are hereby prohibited from hereafter creating or issuing any non-contributing stock. But this section shall not prevent the issue of different classes of stock. Sec. 12. — Every building and loan association heretofore or hereafter incor- porated under the laws of this state, and governed by this act, shall deposit and keep with the secretary of slate, or with a duly chartered and responsible trust company of this state, in trust for all its members and creditors, all mort- gages or other securities received by it in the usual course of business. When ited with a trust company, such company shall certify to the secretary of state I lie possession of such securities, and the same si i. ill not be surrendered without the authority or sanction of the secretary of state ; Provided, that every such corporation heretofore organized, not having or owning mortgage or other to the amount of twenty-five thousand ($25,000.00) dollars, shall it with the secretary of state additional securities, to make, with the /ned and deposited, equal in value to said sum of twenty-five thou - 000.00) dollars ; and every such corporation hereafter organized under this acl shall deposit and keep with the secretary of state in trust, as jcurities of the value of twenty-live thousand ($25,000.00) dollars, m ing to do business. The securities mentioned in this proviso 1 oi bonds or treasury notes oi the United States or national bank 01 bond ol this stale, or any other stale of the United States, or of any mnl 01 town of this state, or any other slate of the United State having a legal authority to issue the same, and such securities may be withdrawn from time to time, when mortgage securities of corresponding value dial! be deposited as provided in this ail, or when other securities of haractei are ub titutea therefor; Provided, further, that whenever re- quired by the laws of any other state, territory or nation, all securities taken in m h tate, territory or nation by any assoi iation organized under the laws ol this state, and subject to the provisions oi this act, may be deposited with GENERAL LEGISLATION. 853 the properly authorized officer of such state. The annual certificate of such officer certifying to such deposit filed with the secretary of state of this state shall constitute a compliance with the provisions of this section, as to the securities taken in such other state. SEC. i 3 . — 1 1 shall be the duty of the secretary of state annually to examine said associations to ascertain whether all its securities are deposited as required by this act, and as compensation the secretary of state shall receive twenty ($20) dollars. SEC. 14.— All interest, dividends, premiums an 1 payments which may accrue or be paid on securities held by the secretary of state or such trusl company as provided for herein, and all dues or monthly payments which may become payable on stock pledged as security lor loans, the mortgages for "which are so deposited in accordance with the provisions of this act, may be collected and retained by the association depositing such securities or mortgages so long as such association remains solvent, and faithfully per- forms all contracts with its members. Any mortgage, upon which default has been made, may be surrendered upon presentation of an affidavit sworn to bv the president or secretary of the association owing the same, stating that such mortgage is in default, and that it is withdrawn for the purpose of foreclosure. Any note and mortgage shall be surrendered to said association upon affidavit of two officers of said association that the same has been repaid in full. SEC. 15 — No building and loan association, or savings and loan association, organized under the laws of any other state, territory or nation, shall do business in this state unless such association shall have securities of the value of one hundred thousand c? 100,000) dollars, and of the character mentioned in this act, on deposit intrust for all its members and creditors, with some responsible trust company, duly incorporated under the laws of such slate or territory in the United States, or with some authorized officer of this or some other state of the United States ; a certificate of such deposit shall be filed w ith the secretary of state of this state, certifying the possession of such securities, the amount of which securities shall not thereafter be reduced without au- thority or consent of the secretary of state. Sec. 16. — Every building and loan association, or savings and loan associa- tion, organized under the laws of any other state, territory or nation, shall before commencing to do business in this state file with the secretary of state of this state a duly authenticated copy of its charter or articles of incorporation and by-laws ; second, file with the secretary of state of this state a duly au- thenticated copy of a resolution adopted by the board of directors of such association, appointing an attorney for such association, resident in this state, upon whom legal process may be served and whose name and residence shall be stated in said resolutions, and also an agreement that said association will pay every judgment that may be taken against it upon any such action within sixty (60) days after the final judgment shall have been entered ; third, file with the secretary of state a certificate of the authorized officer of such other state, showing "that securities of the value of one hundred thousand (.$100,000) dollars are on deposit with such state officer or duly incorporated trust company, in trust for all the members and creditors of such building and loan association ; fourth, pay the secretary of state five ($5) dollars as fees for filing the papers mentioned in this act. Sec. 17.— The word "process" in this act shall include any writ, declara- tion, summons or order whereby any action, writ or proceedings shall be commenced, or which shall be issued in or during any action, suit or pro- ceeding authorized by law in this state. Sec 18.— When, by the laws of any other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money or securities, or other obligations or prohibitions are imposed on building and loan associations of this'state, doing business in such other state, territory or nation, or upon other agents therein, so long as such laws continue in force, the same obliga- tions and prohibitions of whatever kind may be imposed upon all building and loan associations or savings and loan associations of such state, territory or nation, doing business in this state and upon their agents here. Sec 19.— Any building and loan association, or savings and loan associa- tion, organized under the laws of any other state or territory that shall fail to pay any judgment rendered against it upon a suit in any court of this state wi'thinsixtv (60) davs after the rendering of final judgment in such case, if 110 appeal be taken, "or if an appeal be taken, then within sixty (60) days after rendition of judgment on appeal, or shall fail to make yearly statements to the secretary of state, as hereafter mentioned and required, or to pay the fees 854 APPENDIX IV. of the secretary of state as provided in this act, or to do any other act required in this act to be done and performed, shall, upon failure or violation of the provisions of this act, have no right or authority to do or transact any further business within the limits of this state, and the secretary of state shall there- upon cause notice of the termination of such authority to do business to be mailed to such corporation and to be published in some newspaper of gen- eral circulation at the capital of the state, and shall communicate the facts to the attorney general of this state, who shall institute such proceedings in the matter as the case may require ; Provided, any such corporation may be again authorized to commence business in this state upon such terms as the secre- tary of state may deem just and proper and upon full compliance with the provisions of this act. Sec. 20. — All building and loan associations or savings and loan associations hereafter incorporated in this state shall have an authorized capital of at least one million 181,000,000) dollars at the time of the incorporation ; Provided, that ten thousand ^$10,000) dollars' worth of stock must be subscribed before organization. Sec. 21. — Any building and loan or savings and loan association heretofore or hereafter incorporated under the laws of this state may at any time in- crease the amount of its capital stock, or amend its articles of incorporation in anv other respect or its by-laws, by a vote of at least three-fourths of its share- holders, cast at the annual meeting or at a special meeting called for that purpose. Sec. 22. — Whenever any building and loan association or savings and loan association shall increase its capital stock, or amend its articles of incorpora- tion, as provided in this act, a certificate of such increase or change, or both, duly verified by oath of the president and secretary of such association, shall be filed in the office of the county clerk of the county in which the home office of said association is located, and in the office of the secretary of state. Sec. 23. — On or before the first day of September in each year, every build- ing and loan association and savings and loan association doing business in this state shall deposit with the secretary of state a report of its affairs and operation for the year ending on the thirtieth day of June immediately pre- ceding. Such report shall be verified upon oath by the president and secre- tary, or by three directors of the association, and shall contain answers to the following questions : — 1. The amount of authorized capital, and the par value of each share of stock. 2. The number of shares sold during the year. 3. The number of shares cancelled and withdrawn during the year. 4. The number of shares in force at the end of the year. 5. A statement of receipts and disbursements during the year. ?i. A detailed statement of the assets and liabilities at the end of the year. And shall pay to the secretary of state a fee of five ($5) dollars on filing such report. If any such association shall fail to furnish to the secretary of state any report required by this act at the time so required, it shall forfeit the sum of twenty-five $25) dollars per day for every day such report shall be delayed or withheld ; and the secretary of state may maintain an action in his name of office to recover such penalty, and the same shall he paid into the treasury of the state and applied to the expenses of the department of said secretary of stale. After receiving such report, the secretary of state, if satis- fied that such corporation has complied with all the provisions of this act and is entitled to r organizations or associations doing a savings and loan or investment business on the building society plan, whether mutu . and whether issuing certificates of stock which mature at a time fixed in art- gage or other security, as well as the power and right to purchase or erect nouses, and to sell, convey, lease or mortgage the same- at pleasure to their stockholders, or others for the benefit cf their stockholders, in such manner also that the premiums taken by the said associations for the preference or priorty of such loans, shall not be deemed usurious ; and so also that in case of non-payment of instalments, premiums orinterest byborrowing stock- holders, 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. Sec. 3. II. — 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 856 APPENDIX IV. five hundred dollars each, and in such numbers as the corporators may, in the application for their charter, specify ; Provided, That the capital stock may be issued in series, but no such series shall at any issue exceed in the aggregate five hundred thousand dollars, 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 dollars on each share, and said stock may be paid off and retired as the by-laws shall direct ; 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 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 ; and any stockholder wishing to withdraw from the said corporation, shall have the 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, less all fines and other charges ; but after the expiration of one year from the issuing of the series, such stockholder shall be entitled, in addi- tion thereto, to legal interest thereon ; Provided, That at no time shall more than one-half of the funds in the treasury of the corporation 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 for 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, 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 and after his or her decease, unless his legal representatives of such decedent assume the future payments on the stock. Sec. 4. — Stockholders withdrawing voluntarily, shall receive 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 presentation 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, (As amended 1879 p. 16.) Sec. 5. — The by-laws may provide for the involuntary withdrawal and can- cellation at or before maturity of shares of stock not borrowed on ; Provided, That such withdrawal and cancellation shall be pro rafoamong the shares of the same series of stock ; And provided further, That not less than legal in- terest shall be credited and allowed to each share so withdrawn and can- celled. (As amended 1879, p. [&) Sec. 6. III. — 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 electors, 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. Skc. 7. IV.— The said officers shall hold stated meetings, at which the money in the treasury, if over the amount fixed by charter as the full value of a share, shall be offered for loan, in openmeeting, and the stockholder who shall bid the highest premium for the preference or priority of loan, shall be entitled 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 loekholder may borrow such fractional part of the amount fixed by charter e lull value of a share as the by-laws may provide ; good and ample se- curity, as prescribed by the by-laws of the corporation, shall be given by the borrower, to secure the repayment of the loan; in case the borrower shall neglect to off ei security, or snail off er security that is not approved by the d ol direi tors, by such time as the by-laws may prescribe, he or she shall 1m 1 harged with legal interest, together with any expenses incurred, and the I in premium, if any, on a resale, and the money may be resold at the next stated meeting ; in 1 1 -<■ of non-payment of instalments or interest by borrow- holdei , for the space of six months, payment of principal and interest, without dedu< ting the premium paid or interest thereon, may be enforced, by 1 ding on Hull Bei in ities a< 1 1 irding to law. Stiles' Appeal, 95 Pa. 122, [880. Sec 8.— A borrower may repay a loan at any time, and in caseof therepay- GENERAL LEGISLATION. 857 merit thereof before the maturity of the shares pledged for said loan, there shall be refunded to such borrower (if the premiums, bonus of interest shall have been deducted in advance i such proportions of the premiums, bonus or advance interest bid as the by-laws may determine ; Provided, That in no case shall the association retain more than one one-hundredth of said premiums or bonus for each calendar month that has expired since the date Ol the meeting upon which the loan was made, or if interest inadvance.it shall retain only the interest due on the loan up to the time of settlement; And further pro- vided, that such borrower shall receive the withdrawing value of the shares pledged for said loan, and the shares shall revert back to the association. (.As amended 1879, p. 16.) Sec 9. — V. Xopremiums, fines or interest on such premiums, that may to the said corporation, according to the provisions of this act, shall be deemed usurious; and the same maybe collected as debts of like amount are now by law collected in this commonwealth. Sec. 10. Fines or penalties for the non-payment of instalments of dues, interest and bonus or premium, shall not exceed two per centum per month on all ar- rearages. (As amended lNjo, p. 16.) Sec 11. — VI. Xo corporation or association created under this act shall cease or expire, from neglect on the part of the corporators to elect officers al the time mentioned in their charter or by-laws ; and all officers elected by such cor- poration shall hold their offices until their successors are duly elected. Sec. 12. — VII. Any loan or building association incorporated by or under this act, is hereby authorized and empowered to purchase at any sheriff's or other judicial sale, or at any other sale, publicor private, any real estate upon which such association may have or hold any mortgage, judgment, lien or other incumbrance, 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 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 association so selling, are hereby confirmed and made valid, Sec. 13. — VIII. 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 ground purchased by any one of said associations hereafter incor- porated, shall not, in the whole, exceed 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. Sec 14. — IX. All land and building associations are hereby authorized to make sale of, and assign or extinguish, to any person or persons, the ground rents created as aforesaid. Sec 15. — All deeds of conveyance of lands situate within this commonwealth made by any savings fund, building or loan association after the term for which it was incorporated shall have expired, shall be as good and effect- ual, and have the same force and effect for passing title to the lands so con- veyed as though executed during the period of its chartered existence. (As amended 1876, p. 41.) Sec. 16. — All purchases of land heretofore made by building and loan as-*, icia- tions, 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 herein- declared good and valid, to all intents and purposes; and the said associa- tions, their successors or assigns, may sell, convey or lease, at pleasure, at anytime within five years from the passage of this act, the undisposed of portions of real estate so hereto purchased. (Acts 187s, p. 214. ) Sec 17. — It shall be lawful for any mutual savings fund, or building and loan association now incorporated, or hereafter 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 periodical instalments ; and such premium or bonus so paid in instalments shall not be deemed usurious, but shall be taken to be a payment as it falls due, in contradistinc- tion to a premium charged and paid in advance ; and in so far as said pre- mium or bonus so charged and paid, in addition to dues and interest, shall be in excess of two dollars for each periodical pavment, 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 858 APPENDIX IV. of right to a loan ; Provided, that the certificate of incorporation of each asso- ciation hereafter to be incorporated, and the certificate to be 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 paid in periodical instalments, or whether interest in advance shall be deducted from the loan in lieu of premium or bonus. (As amended 1879, p. 16.) Sec. 18. — In case of non-payment of instalments of stock, premiums, 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 oe paid into the treasury of the association for such uses (loans or otherwise i 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 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 association, such excess shall be repaid to such defaulting borrower. (Acts 1879, p. 16.) Sec. 19. — 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 all the rights and privileges of other members, including the including the right to borrow 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 association, 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 married woman join in the execution of such bond and mortgage ; and such married woman shall also have the right to sell, assign 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 dues, 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. (Acts 1879, p. 16.) Sec. 20. — Mutual savings fund, or building and loan associations, heretofore incorporated under the provisions of any law, shall be entitled to all the priv- ileges, 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 acceptance and approval thereof by the governor, he shall issue letters patent to said corporation reciting the same. (Acts 1879, p. 16.) Sec. 21. — The act relative to investments by building associations, approved May eight, one thousand eight hundred and fifty-five, shall be so construed as to extend lo savings fund associations incorporated by the courts of common pleas, under an act entitled "A supplement to an act to prevent waste in certain cases wilhin this commonwealth," passed the twenty-ninth day of Man h, one thousand eight hundred and twenty-two, to land and building iations, etc., approved April twenty-second, one thousand eight hundred and fifty ; Provided, That no company, incorporated under the last recited act, or any supplements thereto, shall invest its capital stock, assets or money in the purchase or discount of any promissory note, bill of exchange or other negotiable paper, nor the stock of any incorporated company, nor receive moneys on deposit other than the regular contributions of the members thereof. '*57. P- 437-' SEC. 22. — Mutual loan and building associations shall be exempt from the provisions of each and every law imposing taxes for state purposes on their al lock or mortgages, and other securities for moneys loaned to their own members ; but the real estate owned by said ass. iciation shall be subject to the ami rates of taxation as the real estate <>f other corporations and pei "ii. ; Provided, however,Th?A tin- right of the commonwealth to collect rued is hereby reserved. (Acts C883, p. 1.) Si 1 23.— In addition to the corporate powers conferred on building and loan . 1 ociations by the thirty-seventh section of tin- act of April twenty- iiinih. on' 11 101 1 in. 1 eight hundred and seventy four, they shall have the right, when applications for loans by the stockholders thereof shall exceed the GENERAL LEGISLATION. 859 accumulations in the treasury, to make temporary loans of such sum or sums of money to meet, such demands, not exceeding in the aggregate of such loan at any time fifteen thousand dollars ($15,000), at a less rate of interest than six per centum, and secure the payment <>i thesame by note, bond or assignment of its judgments and mortgages as collateral ; said loans to be repaid out of the accumulations in the treasury, as soon as sufficient is paid in and there is no demand therefor by borrowing stockholders. (Acts 1891, p. 174.) Sec. 24. — On the petition of any twelve or more citizens of Pennsylvania, the court of common pleas of the county of Philadelphia shall have all powers conferred by the acts relating to loan and building associations, to incorporate them and their associates as a perpetual corporation, for the purposes following, to wit : to purchase, hold and build upon and sell in fee-simple, houses and lots in the city of Philadelphia, and also to make loans on bonds and mort- gages to others to build and improve, and the same to sell and assign, and to orrow moneys upon bonds and mortgages or otherwise for said purposes ; and in making sales or leases or loans on mortgages, it shall be lawful for such corporation, and borrowers of them, to agree upon, and insert in the deeds of conveyance, a condition against the use of any granted or leased premises for the sale of any intoxicating liquors, or unlawful immoral purposes, the carrying on any noxious or unhealthful business, with right of re-entry for breach of such condition ; Provided, That no corporation chartered under tin's act shall have a greater capital than one-half million of dollars, and shall stipulate by their articles to devote their capital to improve or promote the improvement of parts of said city most needing physical, healthful and moral reform, which shall be defined and prescribed in its charter and not exceed eight main squares, and shall apply all their profits, over their expenses ; And a return of eight per centum per annum to the shareholders to and tor the construction of substantial stone, or brick or iron habitations for homes for respectable persons of limited means, either as lessees or purchasers : And Provided, That the said court shall be satisfied of the benevolent purposes of the petitioners ; and that the legislature may at any time repeal this act, and such charters, if the powers hereby granted should be found prejudicial to the community, but in manner to do no injustice to the corporators. (Acts 1869, p. 201.) Sec 25. — All buildings, saving and loan associations may bring and maintain suits, and carry on those already brought, in their corporate names, on all judg- ments, bonds, mortgages, notes or other evidences of debt or obligations due them, or for monthly dues, interest or any demand owing to them, and proceed to judgment and execution, notwithstanding their charter may have expired ; and the officers last elected, or the survivors of them, shall be the officers to represent said corporations for such purpose ; and if no officers survive, the stockholders may elect others under their by-laws. (Acts 1869, p. 1223.) Sec. 26. — This act shall only be construed so as to enable said associations to collect up and divide their assets and wind up their affairs, and not to allow them to transact new business ; Provided, that this act shall only apply to the city of Philadelphia. (Acts 1869, p. 1223.) Sec. 27. — Should any of the associations now or hereafter incorporated deem it necessary or expedient to purchase adjoining lands, for the purpose of squar- ing their grounds in conformity with the streets running through or touching their lands, they are hereby fully authorized to make such purchases, and are invested with all the powers as regards the sale and conveyance in fee-simple of the same given by this act, over the grounds squared by such purchases. (Acts 1853, p. 155.) Sec. 28. — The bonus or tax due to the commonwealth upon the capital stock of corporations, as provided for by act of first of May, one thousand eight hun- dred and sixty-eight, or by any other act, shall not apply to or be clue 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, one thousand eight hundred and sixty-eight, the first section of the act of twenty- fourth of April, one thousand eight hundred and seventy-four, and the twenty- sixth section of the act of twenty-ninth of April, one thousand eight hundred and seventy-four, apply to or be required of mutual savings fund, or building and loan associations. (Acts 1879, p. 16.) Sec. 29. — In addition to the corporate powers conferred on building and loan associations by the thirty-seventh section of the act of twenty-ninth April, one thousand eight hundred and seventy-four, they shall have the right, when a series of stock has matured, or when applicati* ms f< >r loans by the stockholders thereof shall exceed the accumulations in the treasury, to make temporary 860 APPENDIX IV. loans of such sum or sums of money to meet such demands, not exceeding in the aggregate of such loan at any onetime twenty-five per centum of the with- drawal value of the stock issued by said association at a rate of interest less than six per centum, and secure the payment of the same by interest-bearing order, note or bond as collateral ; said loans to be repaid out of the accumulations in the treasury as soon as sufficient is paid in and there is no demand therefor by borrowing stockholders. (Acts 1895, p. 303.) ACTS 1895, pp. 4, 233. Section I. — There is hereby established a separate and distinct department to be known as the banking department, the commissioners of which said depart- ment shall take care that the law of this commonwealth in relation to * * * building and loan associations * * * incorporated, or which may hereafter be- come incorporated, under the laws of this state, or incorporated under the laws of any foreign state, and authorized under the laws of this state to tran- sact business herein, shall be faithfully executed. * * * Sec. 11. — And in case of neglect or refusal of any corporation aforesaid to pay said sums into the state treasury at the times aforesaid, the auditor general shall settle an account against such corporation for the amounts due and pay- able under this act, and shall proceed to collect the same in the same way and manner and under the same penalties as are provided for the collecting of taxes and penalties under the existing laws ; Provided, however, That nothing here- in contained shall impose upon building and loan associations, doing busi- ness exclusively within this state, the payment of any sum or sums of money whatsoever. Sec. 12. — Every corporation, subject to the supervision of the banking depart- ment, as hereinbefore provided, shall make to the commissioner of banking, not less than two reports of its condition during each year, according to the form and in the manner prescribed by the said commissioner, which report shall be verified by the oath or affirmation of the president, cashier or treas- urer or other managing officer of such corporation, and attested as correct by the signature of at ieast three of the directors, trustees or other managers of such corporation. Sec. 13. — Each such report of condition shall exhibit, in detail and under ap- propriate heads, the resources and liabilities of the corporation at the close of business on any past day by the commissioner specified, and shall be trans- mitted to the commissioner within five days (which time in the discretion of the commissioner of banking may be extended) after the receipt of a request or requisition therefor from him, and an abstract summary thereof shall forthwith be published by such corporation in a newspaper published in the place where such corporation is located, at least three times, and if there is no newspaper published in such place, then in the newspaper published nearest thereto in the same county ; and upon completion thereof proof of such publication shall be furnished to the said commissioner by such corpora- tion. Sec. 14. — The commissioner of banking shall also have power to call for spe- cial report from any corporation whenever, in his judgment, the same may be necessary to a full and complete knowledge of its condition. Sec. 1%. — The reports of condition and publication thereof provided for and required in this section shall be in lieu of all reports and of all publication for similar purposes heretofore required by law to be made by such corpora- tions. Skc. 16. — In case any such corporation shall fail to make and transmitany of the reports, or furnish such proof of publication required by this act, such cor- poration shall be subject, at the discretion of the commissioner of banking, to a penalty of twenty dollars for each day after the time mentioned above, or the extension thereof by the commissioner of banking, for making such report or said publication. Whenever any such corporation shall delay or refuse to pay the penalty herein imposed for a failure to make and transmit a report or furnish prool "I publication, the attorney general, upon request of the com- mi lionet "I banking, is hereby authorized to maintain an action in the name ol the commonwealth against the delinquent corporation for the recovery of SUi li penalty, and ill sums collected by such action shall be paid into the ury and applied upon the expenses of the banking department, lint one repi >i t eai h year shall be required from building and loan a o< iationa doing business exclusively within this state j And provided further, 1 annual report by such building and loan associations need not be provided foi by this section. GENERAL LEGISLATION. 8G1 ACTS 1897, p. 178. Section i. — Upon all full paid, prepaid and fully matured, or partly matured stock in any building and loan association incorporated under the laws of this state, or incorporated under the laws of any other state and doing business within this state, and upon which annual, semi-annual, quarterly or monthly cash dividends or interest shall be paid, there shall be paid a state tax equal to that required to be paid upon money at interest by the general tax laws of this state ; and such tax shall be deducted from the cash dividend i ir in- terest so provided for by the secretary or treasurer of such corporation, and be paid to the state treasurer. And every such domestic corporation shall an- nually make return to the auditor general, at the time other returns for taxa- tion are required to be made, of the amount of its stock outstanding entitled to receive cash dividends or interest, and every such foreign corporation shall, in the reports required to be made by them to the bank department, make report of the amount of its stock held by residents of this state, entitled to re- ceive cash dividends or interest, and said banking department shall, at the time other returns for taxation are required to be made, certify to the auditor general the amount of such stock each of said foreign corporations had out- standing at the time of its last report to said banking department ; and upon said sum such foreign corporation shall pay the tax above required to be paid to the state treasurer, upon demand, and failure to make such payment within thirty days after such demand shall have been made shall subject such cor- poration to the forfeiture of its right to transact business in this state ; Pro- vided, however,tha.\. nothing in this act shall be taken to require the payment of any 'tax upon any unmatured stock of building and loan association upon which periodical payments are required to be made, or upon any such stock after it has matured and is in process of payment. Sec. 2. — All laws or parts of laws inconsistent herewith or supplied hereby are hereby repealed. Approved June 22d, 1897. ACT OF 1893, p. 89. CO-OPERATIVE BANKING ASSOCIATIONS. Section i. — Co-operative banking associations may be incorporated under this act upon compliance with the requirements of section eleven, article six- teen, state constitution, when ten or more persons of lawful age, citizens of this commonwealth, who shall have associated themselves together by written articles of association for the purpose of carrying on a co-operative banking business where the profits derived from the business shall, after paying all legitimate expenses, be divided pro rata among the depositors and borrowers of the bank in proportion to their deposits or loans to each class, one-half of the net profits, and a dividend not to exceed six per centum per annum on original subscribed stock may be considered legitimate expenses. Sec. 2. — Such persons so associating may adopt any corporate name indi- cating their co-operative character and which has not been previously adopted by any other corporation formed under this act ; Provided, the fas! three words of such name shall be co-operative banking association, and it shall not be lawful to use in such name either of the words "society" or "company," and that any violation of this proviso by any corporation formed under this act shall render each member thereof personally liable for all its debts. SEC. 3. — Before any company formed under this act shall commence its business its articles of association shall be filed and recorded in the office 1 >f 'the secretary of the commonwealth, and two copies of said articles shall be made which the said secretary of the commonwealth shall certify by his official signature and the seal of this commonwealth as being correct copies of said articles so filed and recorded ; one of said certified copies shall be tiled and recorded in the office of the clerk of the county in which the office ol the association shall be located and the said clerk shall certify by his official signature and seal of his office that the said certified copy of said articles has been filed and recorded in his office, and the other certified copy oi said articles shall be held by the association named therein, and the said articles or copies thereof, duly certified by either of the aforesaid officers, may be used as evidence in all courts and places of the incorporation of as well as tor or against such association, and the said secretary of the commonwealth and the said county clerk shall be paid for said tiling and recording and certifying at the rate of ten cents for each hundred words contained in said articles, and after such articles of association shall have been made, tiled and recorded as 862 APPENDIX IV. herein required, the person signing the same and such other persons, part- nerships or corporations who shall, from time to time, own or possess any share in the stock capital of such association, and their several successors and assigns, shall be deemed and taken to be a body corporate, and by the name and for the purposes mentioned in such articles of association. Sec. 4. — The articles of association shall be signed by the persons originally associating themselves together and shall be acknowledged by at least rive of them before a notary public, and shall state distinctly, (a) the name by which this association shall be known (b) the place in this state where its principal office is to be located, (c) the purpose or object for which it is formed, {d) amount of its stock capital, (e) the amount of each share of stock of such capital, such shares not to exceed ten dollars per share, and how such share may be paid for, (f) the amount of capital that will be actually paid in before commencing business ; also amount of preferred stock to be assigned to stockholders who may hereafter earn stock from custom dividends, (g) whether, and if so, to what extent, loans or deposits of money are to be received for use in its business, (h), the terms upon which persons may become members, (i) on what days in January regular annual meetings of the members are to be held, (j) such other matters not repugnant to this act, as may be deemed proper and necessary, (k) the term of its existence not to exceed twenty years, (1) and names of first associates, their respective resi- dences and the number of shares held by each of them. No such association shall commence business until the financial standing, responsibility and character of the original stockholders shall have been approved and certified by the superintendent of the banking department of the commonwealth. Sec. 5. — Any such association may take, hold, lease and convey such real estate as may be necessary for purpose of its organization, and may sue and be sued in its corporate name, and may submit any matter in dispute to arbitration, and shall have a common seal, which shall not be altered or imitated, and shall bear the corporate name of, together with such device or motto as may be adopted by such association, and such seal shall be impressed •upon the articles of association. Sec. 6. — Any association may alter or amend its articles of association and may alter or rescind any by-laws, or make any additional by-laws with the consent of the majority of its members present at a special meeting convened for such purpose, but the notice calling such meeting shall set forth fully and clearly the proposed alterations, amendment, recision or addition ; and any alteration or amendment of the articles of association shall be approved, filed, recorded and certified in the same manner as the original articles of associa- tion. Sec. 7. — The stock capital of any such association shall consist of the amounts standing to the credit of the members on account of the shares allotted to them, certificates of which shall be issued from time to time as shares shall be fully paid up or earned. Sec. 8. — It shall be lawful, if the by-laws so provide, for any minor to take and hold shares in, or to make loans or deposits of money to or with any such corporation, and for such association to pay any minor any moneys that may be due to him in respect of any shares, loans or "deposits standing in his name, and his receipt therefor shall be in all respects valid in law, but such minor shall not he eligible to hold any office in such association though he may be subject to its by-laws and vote at any meeting of its members. SEC. ().— It shall be the duty of such company to exhibit in some conspicuous place in its principal office, at all limes, a list of stockholders and the amount tock held by each stockholder, the amount of slock subscribed or earned at the lime oi eai h la 1 annual meeting ; also the amount of preferred stock which shall not be a liability stock, only as it becomes assigned to individual SEC. 10.— The members shall be severally and jointly liable for all deposits, debts for |ab< >r, or sen iceol any kind pei formed for such association, and for an v other debts lawfully incurred under the provisions of (his act ; each of the kill Ik- liable to twice the amount of his subscribed or earned stock al, and no more, but no suit shall be brought, or any execution issued again t any member individually until a judgment be first obtained for such iei i'' or other lawful debts against such association, and utionthen be returned unsatisfied, in whole or in part, and in case any member shall be compelled to pay any such judgment, or any part thereof beyond his pro rata liability therefor, he shall have the right to call upon all the membei 1 to pay their fro rata share ol the same, or up to their prorata liability therefor, and may sue them jointly, or severally, or any number of GENERAL LEGISLATION. *•'»:} them, and recover in such action the ratable amounts due. from the member or members so sued. Sec. II. — The first meeting of any such association may be called by a i ml Re- signed by any two of the associates who signed its articles of association, set- ting forth the time and place and objects oi such meetings, such notice to be mailed to the address of each associate, at least four days clear prior to such meeting, and a majority of such associates at such meeting shall be competent to make all such by-laws as they may deem necessary for the proper manage- ment of the association, so that any such by-laws are not repugnant to or inconsistent with (he provisions oi this act, or any law of the state or Tinted Stales, and to elect such officers as are heretofore provided by this act, and such officers shall hold office until their successors shall have been elected and installed. SEC. 12.— No profits shall be paid out to any stockholder until the total registered amount of stock shall be fully paid in cash, or earned from the net profits of the company. Sec. 13. — Depositors and borrowers to whom dividends are due shall not withdraw the same, but shall take full paid stock in lieu thereof, until the registered and preferred stock of the company becomes fully paid up. and as each share of stock becomes fully paid up, this class of stockholders may have become voting members, but each shareholder shall be entitled to but one vote on each share of stock. Sec. 14. — The company shall be controlled by a board of six directors who shall serve for three years, two of which shall be elected annually, and pro- vision shall be made at the first election to elect two to serve one year, two to serve two years, and two for three years. Said directors shall elect a pres- ident and secretary from their number, and said directors shall have full control of all employees and business of this association, subject to the by- laws, but no employee shall be a director. The by- laws shall provide rules and regulations for the loaning and discounting of the capital and deposits of the association and the nature of its securities, and no loan shall be made to any individual, hnn or company, either singly or collectively, in excess of ten per centum of the deposits of the association at the time of making such loan, and any violation of this provision will render the person or cashier so making, liable upon his bond, and the directors sanctioning such a loan will render them individually liable, unless a protest be entered at the first monthly meet- ing subsequent to the making of such loan. Sec. 15.— Two auditors shall be elected annually by the stockholders from their number at their annual meeting in January, and one auditor shall be elected by the depositors from their number on the first Monday of each December, notice of which election shall be posted conspicuously, in the bank room for at least three weeks prior to the election of such auditor, allot" which shall serve for one year. Sec. 16.— It shall be the duty of the auditors to audit all books, papers and vouchers of the company annually, or at any time when called upon in writing so to do bv the president or any fen of the stockholders, or twenty of the de- positors when joined by at least live of the stockholders, and each of these audits shall be rendered in writing which shall give a statement of the assets and liabilities of said company ; also a detailed statement of the character and nature of all the notes and securities held by the association, and such state- ment shall be posted conspicuously in the office. Sec. 17. — Any person appointed to any position in any such assi >ci ati 11 re- quiring the receipt, payment, management or use of money beL mging to such association, shall, before entering upon the discharge of his duties, become bound with two or more good and sufficient sureties, or insurance bonds, in such sum and form as the'directors shall require and approve; and di- rectors may also require from any other empli lyees of such associate m, bonds with good and sufficient securities for the faithful discharge of duties. RHODE ISLAND. GENERAL LAWS, 1S96, p. 609. OF DOMESTIC BUILDING-LOAN ASSOCIATIONS. Section l— Every building-loan association hereafter incorporated in this state shall be created bv special act, and shall have the powers and be subject to the provisions of this chapter, and shall have all the powers and privileges and be subject to all the duties and liabilities set forth in chapter one hundred seventy-seven ; but nothing herein shall be construed to authorize such a cor- 864 APPENDIX IV. poration to do a banking business. The words " building-loan association " as used in this chapter shall include all corporations, societies, organizations- and associations hereafter created by special act and doing a savings and loan or investment business on the building society plan, whether mutual or other- wise, and whether issuing certificates of stock which mature at a fixed time in advance or not. Sec. 2. — Every such building-loan association shall have included in its name the words " Savings-Fund," " Building-Loan," " Co-operative Savings," " Savings and Loan " or " Co-operative Bank," and no corporation or associa- tion not doing the business specified in section one shall be entitled to use a name embodying either of said combinations of words. Sec. 3. — Every such association shall have a board of directors of not less than five persons, and shall adopt and be governed by by-laws, which by- laws shall describe the manner in which its business shall be transacted, and shall be conformable to the provisions of this chapter and the laws of this state. A copy of the by-laws and of any amendment thereof, certified by the president and secretary of such association, shall immediately upon their adoption be hied in the office of the insurance commissioner. Such associa- tion shall also file in said office a copy of its charter and any amendment thereof duly certified by the secretary of state. Sec. 4. — Every such building-loan association shall take for every loan made, a non-negotiable note or bond secured by first mortgage on real estate, which security shall be satisfactory to the board of directors of such associa- tion and shall be accompanied by a transfer and pledge of the shares of the borrowing member of the association. The shares so pledged shall be held as collateral security for the performance of the terms and conditions of said note and mortgage ; Provided, that the shares without other security may be accepted as security for loans for an amount not exceeding their withdrawal- value as provided by this chapter. Sec. 5. — Any such building-loan association shall not buy or sell real estate except as follows : It may purchase at any sale, public or private, any real estate or other security upon which it has a mortgage, lien or other incum- brance, or in which it has any interest, and may sell, convey, lease, improve or mortgage the same to any person or persons, and may acquire and hold a lot or lots whereon to erect a building or buildings for the transaction of its business and from portions of which, not required for its own use, a revenue maybe derived, the cost of such building or buildings and lot or lots in no case to exceed ten per centum of its accumulated capital ; Provided, that any such association may acquire any lease or interest necessary for the transac- tion of its business. Si'X. 6. — The limitation of the capital stock of any such association shall be held to apply to the capital actually paid in, and any such association may issue its shares so long as the capital actually paid in "on its shares is not in excess of its authorized capital. Sec. 7. — Any such association may issue different series and classes of stock ; instalment stock, to be paid in periodical sums ; prepaid stock, upon which a gross sum shall be paid in advance ; and which instalment and prepaid stock shall mature when the amount so paid, together with the dividends declared upon the same, shall equal the par valueof such stock; and a dividend-bearing prepaid slock, upon which a larger sum is paid than upon the prepaid stock, and upon which an annual partial dividend maybe paid out of the full dividend apportioned thereto ; and a full paid stock, upon which the par value thereof shall be paid in advance, and upon which full- paid stock a definite dividend max 1 be paid, which dividend shall in no case exceed the per centum earned by all the classes or series of stock at the time said dividend is declared ; and may also issue shares of guaranty or per- manent stock, for which the full par value shall be paid at the time of issue. 1 guaranty or permanent stock shall not be withdrawn until all lawful clain other class of stock shall have been fully liquidated and paid ation, and shall only receive dividends from theearnings of ociation in excess of such rate as mav he specified in the by-laws to I"- paideai h other class of stock. But no building-loan association shall issue any certificate of shares until the terms and conditions thereof shall have been firs) submitted to and approved by the insurance commissioner, and s the same shall have plainly printed therein, or on the back thereof, the cash withdrawal-value oi such certificate. Sec. 8.- Any shareholder whose instalment-shares are not in arrears or pledged upon a loan, shall lie entitled to withdraw such share or shares at any time alter twelve months from the date of the first payment on the same, GENERAL LEGISLATION. 865 upon giving thirty days written notice. Any such shareholder may give notice or withdrawal in writing to the secretary of said association, and the liability of said shareholder to pay further instalments, and right to share in furl prolits, shall cease with said notice. Such withdrawing shareholder shall he entitled to receive, after one year from the date of nis first payment, ail monthly payments made on account of such share or shares, not including membership premiums or tmes, less a withdrawal-fee nol to exceed one per centum of the maturity-value of each instalment-share, and, during the in i three years from the date oi said first payment, less the amount deducted for expenses and the accumulation ol a guaranty-fund a- authorized by section eleven. All stockholders who do not give the notice as herein provided, tail- ing to make payments, shall be subjeel to a fine, to be fixed by the by- laws, not exceeding live cents per share per month, for each month or fraction thereof such payments are in arrears, for a period ol six months after the last payment made, such lines in the aggregate not to exceed the sum of thirty cents per share, and at the end of any period of six months, if arrearages and lines remain unpaid, the balance remaining of the monthly payments made shall be transferred to a suspense account, and shall be with- drawable after one and within ten years with interest at the rate ol three per centum per annum. If not called for within this period, the amount shall be transferred to a guaranty-fund and the delinquent shareholder shall, from the time of such transfer, be barred from prosecuting any claim against the association on account of such share or shares or the payments made there- on ; Provided, that such shares which may have been pledged as a collateral for a loan and become delinquent, shall be adjusted in such manner as shall be provided by the by-laws of such association. If such withdrawing mem- bers shares are thirty-six and less than forty-eight months old he shall be entitled to receive the amounts paid, less said withdrawal-fee hereinbefore provided for, together with interest on such amount, at the rate of live per centum per annum, for the actual time the association has had the payments, and if such withdrawing member's shares are forty-eight or more months old he shall be entitled to receive the amount paid in, less said withdrawal- fee, and the interest on such amount at the rate of six per centum per annum for the actual time the association has had the payments ; if such withdrawing member's shares are one hundred or more months old, if not previously matured, he shall be entitled to receive the amount paid in, less said with- drawal-fee, together with at least seventy-five per centum of the prolits ap- portioned his share or shares ; Provided, that the net profits of the associa- tion for the time the association has had the use of all the funds shall respect- ively amount to the sum of three, five and six per centum per annum, com- puted on the amounts paid in on all the shares in force at the time such withdrawals are made ; and if such profits are not sufficient when so com- puted, then the stock so withdrawn shall be entitled to a rate per centum found to be earned as net profits during said period, such interest payments to be in all cases in lieu of such profits; Provided further, that if by reason of extraordinary losses the entire net profit is exhausted, the withdrawing member shall not be entitled to the interest herein named ; and if by reason of extraordinary losses the association is compelled to charge such losses against its capital already paid in, all withdrawing shares shall be subject to a pro rata charge of such losses with those remaining undrawn, and in such case the withdrawing member shall only be entitled to such sums as may be found due him after the adjustment of such losses among all shareholders; And provided further, that whenever the capital of an association has been impaired by losses in excess of its guaranty-fund and the profits earned, and in excess of the full amount of its 'guaranty or permanent stock should any such association issue such stock, it shall be the duty of the directors to suspend sales of all classes of stock until such losses have been adjusted and distributed pro rata as a charge upon the book-value of the shares of stock in force, the liability of any shareholder being hereby limited to such book- value; Ami provided further, that no more than one-half of the amount received in payment on stock by such association in any month shall be used to pay withdrawals, without the consent oi the board of directors. Sec. o.— Upon the death of a stockholder in any such association, liability for further payment on his shares shall thereupon cease and his legal represent- atives, upon given thirty days' notice to the association within six months after his decease, may withdraw his share or shares at the full book-value thereof as determined at the last apportionment of earnings, and any payments which may have been made on said shares thereafter, less said withdrawal-lee here- inbefore provided. 866 APPENDIX IV. Sec. io. — Every such association shall provide in its by-laws in what man- ner applications and bids for loans shall be received and who shall be entitled to loans thereunder, and all applications shall be acted upon in the order re- ceived ; Provided, that the provisions of this section relating to bidding for loans shall not apply to associations which fix the rate of interest and premium or payments in any other manner. Sec. ii. — Every such association in payment of its expenses and the accu- mulation of a guaranty-fund, may use all fees and deduct an amount from their receipts each month not to exceed one-tenth of one per centum on the par or maturity value of each instalment share then in force, and a propor- tionate amount on other classes of shares. Sec. 12. — At least thirty days prior to any annual or special meeting of the stockholders of any such association, a notice stating the time and place of such meeting shall be deposited in the postoffice in the town or city where such association is required by its charter to have an office or place of business, directed to each member to his address as the same appears at such time on the books of the association ; and when so deposited, postage prepaid, shall be deemed a legal and sufficient notice of any such meeting ; and there shall be included in such notice any proposed amendment or amendments to the charter or by-laws of any such association and a statement of any officers to be elected at such meeting. Each member of such association shall be en- titled to one vote either in person or by proxy. Upon all questions to be voted upon at such meetings, the vote shall be taken by calling the roll of persons entitled to vote thereat, and the votes shall be by ballot, if demanded by any shareholder. Sec. 13. — All the officers of any such association who sign or indorse checks or handle any funds of such association, shall give bonds or fidelity insurance for the faithful performance of their duties as the board of directors may require, and no such officer shall be deemed qualified to enter upon the duties of his office until his bond is approved by the board of directors and the insurance commissioner, with whom the bond shall be filed ; Provided, that the insurance commissioner may require of any such association, at anytime, such increase of said bond or insurance as he may deem necessary for the protection of the members. If any such association shall fail to file and maintain the bonds or fidelity insurance required by this section it shall for- feit twenty-five dollars for each day of such default, to be recovered by the insurance commissioner in the manner provided in section fifteen of this chapter. Sec. 14. — The insurance commissioner shall retain the fees received for examining associations and filing reports provided for by this chapter to cover the expense of such examination and the extra labor made necessary by this chapter. Sec. 15. — Every such association shall, on or before February first of each year, file with the insurance commissioner an annual report of its affairs and operations for the preceding calendar year ; such report shall be certified by oath of the president and secretary or three directors of the association, and shall be in the form prescribed and on blanks furnished by the insurance commissioner. The insurance commissioner may at any other time call for reports showing the business-condition of the association at the close of any calendar month, and such reports shall be furnished within thirty days there- after. If any such association shall fail to furnish to the insurance commis- sioner any report required by this chapter at the time required, it shall for- feit the sum of twenty-live dollars for every day such report shall be delayed or withheld, and if not forthwith paid the insurance commissioner may maintain an action of the case in his name of office to recover such penalty, and when recovered the same shall be paid over to the general treasurer. SEC. 16. — It shall be the duty of the insurance commissioner at such time or as he may see lit. but at least once a year, to make an examination of the financial condition and methods of doing business of every such associa- tion, and publish, in the annual report in relation to banks and trust com- panii 1 itemenl of the financial condition of every such association n d ; and the expense of such examination and publication shall be paid ition, bul shall not exceed fifty dollars per year. Sec, 17 — If it shall appear to the insurance commissioner from any exami- nation made by him or from anv report made as herein required, that such »n is violating its chartei or the law, or that it is conducting its busi- ii' man mi afe, unauthorized or dishonest manner, he shall, by an order under In-, hand, addre ised to tut h a isociation, direct such association to dis- 1 nue such unsafe or illegal practices and to conform with the require- GENERAL LEGISLATION. 867 ments of its charter and the law ; and whenever such association shall refuse or neglect to comply with such order as aforesaid, or to hie the reports here- in required, or shall fail to pay any final judgment recovered against it in any court of this state within sixty days after the rendition thereof, or to pay the fees or forfeitures, or to do any other act required under the provisions here- of, the insurance commissioner shall thereupon give notice to such association to show cause why its right to do business should not be suspended, by de- positing such notice in the general postolhce in the city of Providence, pre- paid, addressed to such association at the town or city in this state where it is required by its charter to have an office or place of business ; and if it shall appear to the insurance commissioner, alter giving such association an opportunity to be heard as aforesaid, that it is in an insolvent condition or is violating the law, he shall give notice to such association that it is no longer authorized to do business, by depositing such notice in the | ostoffice addressed to such association as herein provided; Provided, thai any such association, not in an insolvent condition, shall be authorized by the in- surance commissioner to resume its business upon full performance of its duties and compliance with the provisions of this chapter, and presentation to the insurance commissioner of satisfactory proof of the same. Any such association aggrieved by any such order of suspension may appeal within thirty days from the time it is notified as aforesaid of such suspension, to the appellate division of the supreme court sitting in Providence. Said division shall proceed as soon as may be to hear such appeal after the manner of equitable causes ; and if such appellant shall show to the satisfaction of said court that it is entitled under the provisions of this chapter to be allowed to do business, said court shall sustain such appeal, and shall vacate such order of the insurance commissioner, or, upon failure to show ern n in the action of the insurance commissioner, shall affirm such order. After any such association shall be suspended from doing business as aforesaid, the insurance commissioner shall cause notice thereof to the published in one or more newspapers in this state for the period of two weeks. Sec. 18. — After the right of any such association to do business shall be sus- pended as provided in (he preceding section, any such association affected thereby shall cease to have anv right to continue in business, except for the purpose of winding up the affairs of the association ; and any officer, director or agent of such association thereafter selling shares of such association, or soliciting business for such association, shall be guilty of a misdemeanor, and upon conviction thereof shall be fined not less than one hundred dollars or more than one thousand dollars for each offence. GENERAL LAWS, 1896, p. 616. OF FOREIGN BUTLDING-LOANS ASSOCIATIONS. Section i. — The name " building-loan association " used in this chapter shall include all corporations, societies, organizations or associations organ- ized or incorporated under the laws of any foreign country, or of any state or territory of the United States other than the stateof Rhode Island, which do a saving and loan or investment business on the building-society plan, whether mutual or otherwise, and whether issuing certificates of stock which mature at a fixed time in advance or not. Sec. 2. — No building-loan association included under the definition in section one of this chapter shall directly or indirectly transact any business in this state until it shall have : First- Appointed in writing the insurance commissioner of this state to be its true and lawful attorney for the service of process upon it and upon whom all lawful process in any action or proceeding against it may be served with the same legal force and validity as if served on it, which authority shall continue in force as long as any liability remains outstanding against it in this state ; which said power of attorney shall be deposited in the office of the insurance commissioner and a copy of said power of attorney duly certified by him shall be received in evidence in all courts of this state ; and service upon said at- torney shall be deemed sufficient service upon the principal. Second. File with said insurance commissioner an application to transact business in this state under the provisions of this chapter, with a certified copy of its charter, constitution and by-laws, showing its method of doing business, and a statement of its financial condition, sworn to by its president and sec- retary, which must show that it is possessed of actual paid-in, unimpaired and well-invested assets of at least one hundred thousand dollars ; and 868 APPENDIX IV. Thud. Received a license from said insurance commissioner to transact business in this state as is hereinafter provided. Sec. 3. — It shall be the duty of the insurance commissioner upon the receipt of an application from any building-loan association to do business in this state, to receive and hie the papers required by this chapter, and to thoroughly examine the financial condition of such building-loan association and its methods of doing business ; and tor making such examination he shall re- ceive compensation from such building loan-association as follows : for the first one hundred thousand dollars of net assets, a fee of fifty dollars, and for each additional one hundred thousand dollars of net assets, or the major por- tion thereof, an additional fee of five dollars, but in no event shall such com- pensation exceed one hundred dollars. Six. 4. — If the insurance commissioner becomes satisfied after an examina- tion, that the building-loan association applying to do business in this state is solvent and possessed of sufficient assets as provided by section two of this chapter and is conducting its business according to law, he shall issue to such building-loan association' a license to do business in this state, for which said license said building-loan association shall pay a fee of twenty-five dollars ; but if said examination so made by said insurance commissioner shall show said building-loan association to be insolvent or not possessed of sufficient assets as provided by this chapter, the said insurance commissioner shall re- fuse to issue the license aforesaid, and forthwith notify said building-loan asso- ciation of his refusal, with the reasons therefor, and upon such refusal said building loan association applying for said license may appeal, within ninety days from the time it is notified of such refusal, to the appellate division of the supreme court sitting in Providence. Upon the filing of said appeal said appellant shall give bond in a sum not less than two hundred dollars to the state of Rhode Island, with surety satisfactory to the clerk of said court, con- ditioned that if said appeal is not sustained to pay all lawful costs to be taxed by said clerk. Said appellate division of the supreme court shall proceed to hear said appeal after the manner of equitable causes, and if said appellant shall show to the satisfaction of said court that is entitled to be allowed to do business in this state under the provisions of this chapter, the court shall sustain said appeal, and it shall be the dutv of said insurance commissioner to at once issue the license to said appellant in accordance with the pro- visions of this chapter. Sec. 5.— Every building-loan association admitted to do business in this state under the provisions of this chapter shall file with the insurance com- missioner, on or before the first day of February in each year, a statement of its financial condition on the preceding thirty-first day of December and a statement of the amount and kind of business done in this state up to said date ; and if said building-loan association shall refuse and neglect to file said statement, or if such statement so filed shall show said building-loan associa- tion to be insolvent, or not to be possessed of sufficient assets in accordance with the provisions of this chapter to transact business in Rhode Island, it shall be the duty of said insurance commissioner to revoke the license granted to said building-loan association, the said building-loan association to have the right to appeal to the said appellate division of the supreme court sitting in Providence, in the same manner and with Hie same rights as is provided in section four of this chapter ; Ptovided, thai (he said insurance commissioner shall make an examination of the financial condition of such building-loan iation as of ten as once in two years, and may at anytime examine into the financial condition of any building-loan association doing business in this state under the provisions of this chapter, for which examination he shall receive the same compensation as provided in section three of this chapter: and il such examination in the opinion of the insurance commissioner should show that the annual statement of said building loan association was false, or 1 hit .11. 1 building-loan association is not possess( (1 of sufficient assets to trans- it! Rhode Island under the provisions of this chapter, or that said build 1 a ociation is nol conducting its business in accordance with li ..ii hall be the duty of said insurance commissioner to revoke the license [ buil lin loan a > iation, from which decision of said insur- 01 ■ 1 ii' lid building-loan association whose license is so re- II ha ■ ih' right to appeal to the appellate division of the supreme e, in the same 111. 1 ami with the same rights as on fout 1 1 tin 1 hapter. 1 oi .ma ociation admitted to do business under the chapter shall, before the first day oi February in each year t to the general treasurer of this slate equal to one-fourth of one per GENERAL LEGISLATION. 869 centum on the amount of the capital actually paid in to December thirty-firs of the preceding year, from residents of this state, less the amount of all cer- tificates withdrawn, and less, also, the amount of its outstanding loans secured by its shares on bond and mortgage on real estate within this state and secured by its shares pledged by residents (if this state; and said building- loan association and its shares shall be exempt from payment oi any oilier tax whatever, except it shall be assessed for and pay a tax on all real estate acquired in this state in the course of its business. Sec. 7. — Whenever lawful process against a building-loan association in- cluded under the provisions of this chapter shall be served upon the insurance commissioner, he shall forthwith forward a copy of the process served on him by mail, post-paid, ami directed to the home office of said building- oan asso- ciation ; for each copy of process the commissioner shall collect the sum of two dollars, which shall be paid by the plaintiff at the time of such service, the same to be recovered by the plaintiff as part of the taxable costs if he pre- vails in the suit. Sec. 8.- -All building-loan associations included under the provisions of this chapter, doing business in this state, shall comply with the requirements of this chapter. Sec. 9.— Every person who shall act as agent in this state for, or who shall transact any business in this state for, a building-loan association included under the provisions of this chapter, which has not complied with the pro- visions of this chapter or which shall not have a license to do business in this state, shall be fined not less than one hundred dollars and not more than one thousand dollars, except as provided in the preceding section. Sec. 10. — Sections thirty-six to forty-one inclusive, of chapter two hundred and fifty-three [Judiciary Act of May 19, 1893, General Laws of 1896, p. 881], shall not apply to building-loan associations included under the provisions of this act. SOUTH CAROLINA. ACTS 1896, p. 92. Section i. — Two or more persons desiring to form themselves into a cor- poration for the purpose of carrying on any manufacturing, mining, mer- cantile, banking, railroad, steamboat or other industrial business or businesses, or one or more combined of any character whatsoever, except for municipal purposes, may file with the secretary of state a written declaration, signed by themselves, setting forth : 1st. The names and residences of the petitioners. 2. The name of the proposed corporation. 3. The place at which it purposes to have its principal place of business. 4. The general nature of the business which it purposes to do. 5. The amount of capital stock. 6. The number of shares into which it is to be divided, stating the par value of each share. 7. Any other matter which it may be desirable to set forth. Sec. 2. — Upon the filing of the petition as above, and upon the payment of a fee of $3 for the recording of said petition, the secretary of state shall issue to the parties or to any two or more of them a commission, constituting them a board of corporators, authorizing them to open books of subscription to the capital stock of the proposed corporation after such public notice, not exceed- ing ten days, as he may require in said commission. Sec 3. — All subscriptions to the capital stock of any corporation organized under this act shall be payable in money, or in labor, or in property at its money value, the labor or the property and the value thereof to be named in the list of subscription, no subscription in labor or in property to be received unless the value thereof, so to be specified as aforesaid, be approved by said board of corporators ; and in case of failure to perform the labor or to deliver the property according to the terms of the" subscription, the money value thereof, as named in the list of subscriptions, shall be paid bvthe subscribers. Sec. 4.— When not less than 50 per cent, of the proposed capital stock shall have been subscribed by bona nde subscribers, the hoard of corporators shall call the subscribers together. At such meeting of the subscribers, a majority of whom in value being present in person or by proxy, the subscribers shall proceed to the organization of the company by the election from themselves of a board of directors, trustees or managers, of such number as they may deem proper, not to exceed nine in number, which board shall manage the affairs of the corporation until their successors shall have been elected and shall have qualified, according to the constitution and by-laws of the corpora- tion. The board of directors, trustees or managers shall call for the payment 56 870 APPENDIX IV. of the subscription to the capital either in whole or in such instalments as it shall see fit. The board of directors, trustees or managers, shall elect from their number a president, and they may also elect such person or persons as they may see tit as secretary and as treasurer, the latter of whom shall give such bond as they may require. Sec. 5.— Upon the payment to the treasurer of the corporation or to some other officer designated for the purpose by the subscribers, of at least 20 per cent, of the aggregate amount of the capital subscribed payable in money and also upon the delivery to such officer of at least 20 per cent, of the prop- erty subscribed to the aggregate amount of the capital stock, or upon its delivery being secured by such obligations of the subscribers as the board of directors, trustees or managers may approve, the board of corporators, or a majority of them shall, over their signatures certify to the secretary of state that the requirements of this act have been complied with. Such certificate shall be known as the return of the corporators. Upon the filing of the return, and the receipt of the charter fee hereinafter provided for and upon the pay- ment to him of a fee of $3 for the recording of the return, the secretary of state shall issue to the board of corporators a certificate to be known as the charter, that the corporation has been fully organized according to the laws of South Carolina, under the name and for the purpose indicated in the written declaration ; and that they are fully authorized to commence business under their charter, a copy of which charter shall be recorded in the office of the register of mesne conveyance or clerk for each county where such corpora- tions shall have a business office ; Provided, that in cases when by the terms of the declaration the capital stock of the corporation is to be paid in instal- ments the charter may be issued when 50 per cent, of the first instalments of the capital stock has been paid in and the provisions of this act in other respects complied with. Any charter issued hereunder, may wind up the affairs of the corporation by resolution of the stockholders representing the majority of the capital stock, said resolution to be signed by the president and secretary, or other officers of the corporation, and forwarded to the secre- tary of state, to be filed and recorded as hereinbefore provided for declaration and return ; Provided, that such resolution shall not bar an action for two years thereafter against the corporation or any of its members for any liability incurred during the existence of the corporate m. Sec. 6. — No irregularity in complying with the provisions of this act shall be held to vitiate the incorporation until a direct proceeding to set aside and annul the charter be instituted by the proper authorities of the state ; and all acts done and contracts entered into shall have the same force and effect as if no irregularity had existed. Sec. 7. — Upon the issuance of the charter by the secretary of state, the board of corporators shall turn over to the proper officers of the corporation all subscription lists or other paoers they have taken as corporators and all such papers shall be as valid as if taken and made by the corporators. Si 1 . 8. — The declaration, the corporators' commission, the corporators' re- turn and the charter shall be recorded by the secretary of state in books kept by him for that purpose. SEC. 9. — The board of corporators, on making their return shall pay to the secretary of statea charter fee graded as follows : $5.00 fee for capital slock" of $5.0 10, or 1 --,s ; S 10.00 for capital stock of more than $5,000, up to and including |.00 fee for capital slock- for more than $25,000, 11,1 to and including $50,000 ; $20.00 fee for capital stock for more than $50,000, up to and including $100,000 ; $25.00 fee for caj ital stock for more than $100,000, up to and includ- ing $250,000, and $1.00 additional for each $io,coo increase or fraction thereof above $250,000. All charter fees received by the secretary of state shall be turned ovi 1 1 [uai tei ly to the state ti easurer. SEC. 10. — Any corporation heretofore created which has not forfeited its charter, and any corporation created by the general assembly of [894 may sur- 1 he Iii' and secure a new c 1 1 . 1 1 tei under this act ; and any such cor- poration Or any corporation created under this act may have its name changed imended in any particular under this act. Any corporations charl ious to the approval of this act desiring to increase its capital fore such increase be allowed and resolutions be filed and re- try oi state the fees prescribed in this act. Fees for to be paid a on capital stoek : $5.00 for all amounts up to and 1 ' incn ' in- a provided in secti ) oi this acl ; Provided, Thai :n "i ii' h new 1 hartei 01 su< h amendments shall not operate in any way to prejudi 1 th< cl: ol 1 1 editors of such corporation or to i elieve :.in i; m of any liability already created or assumed j but that although GENERAL LEGISLATION. 871 operating under a new charter it shall be regarded as the same corporation. In order to obtain such new charter or such amendment of charter, the board of directors, trustees or managers shall call a stockholders' meeting, giving al least thirty days' notice of the time, place and purpose of said meeting either by the mailing of written notice to each stockholder, or such meeting may be called by the president of the corporation, or by any stockholder, owing in aggre- gate 20 per cent, of the capital slock in the manner above provided. If a majority of the stock of the corporation be present, at such meeting in person or by proxy and a resolution asking for a new charter or an amendment of charter, be adopted by a majority vote of the shares represented at the meet- ing, then the board of directors, trustees or managers or a majority of them, shall certify such resolution over their signatures, to the secretary of state, such resolution petitioning for such a new charter or amendment shall set forth the date of the original charter of the company by reference to the act of the general assembly or to the record in the office of the secretary of slate, and shall in other respects conform to the form of the declaration, provided for in section 1 of this act. The secretary of state, upon the tiling of such dec- laration and upon payment of the charter fee in cases where an increase of capital stock is petitioned for and upon the payment of a fee of $3.00, shall issue to the corporation a new charter or an amended charter in accordance with the terms of the petition. All papers connected with the granting of such new charters or of such amendments shall be recorded as provided in section 8 of this act. Sec. 11. — No expenses shall be attached to the granting of charters or amendments thereto further than the fees as specified herein. Sec. 12. — All charters granted under the provisions of this act shall continue of force perpetually unless limited by the terms of the petition ; Provided, That all corporations shall always have the right to go into liquidation and to wind up their affairs, upon a stockholders' vote representing a majority of capital stock had after such notice as is provided in section 10. Sec. 13. — All elections for board of directors, trustees or manager of all corporations formed under this act shall be conducted as provided in article g, section 11 of the constitution of this state, ratified on the 4U1 day of Decem- er, 1895. Sec. 14. — Any corporation chartered under the provisions of this act and any corporation whose charter may be amended under this act may increase the capital stock to any amount upon securing the necessary amendment lo its charter, as provided in section 10 hereof : Provided, That each stockholder be given the preference of taking the increase in proportion to the amount of the original stock he may own. Sec. 15. — Every corporation chartered under this act shall have the follow- ing powers, to wit : 1. To have perpetual succession. 2.' To sue and be sued by the corporate name. 3. To have a common seal and to alter the same at pleasure. 4. To prescribe the mode of transferring the shares of the corpora- tion. 5. To make contracts, to loan money, to acquire and to transfer property, both real and personal including shares of stock in other corporations, possess- ing the same powers in such respects as individuals now enjoy. 6. To make by-laws, and all rules and regulations deemed expedient for the management of its affairs, not inconsistent with the constitution and laws of this state or of the United States. 7. To have a lien upon the shares of its stockholders to enforce the payment of instalments due upon the capital stock, lo provide and to enforce the collection of such fines and penalties for delinquency in payments of its instalments upon the capital stock as its by-laws may fix not to exceed 10 per centum on account due. 8. To borrow money fi >r the purpose of carrying out the objects of its charter, to make notes bonds of other evidences of debt, and upon a vote of the stockholders had after such notice as is pro- vided in section 10 of this act to secure the payments of its obligation by mortgage or deed of trust on all or any of its property and franchises, both real and personal. Sec. 10. — At least one meeting of the stockholders shall be held annually in this state, at such time and place and after such notice as the by-laws provide. In all stockholders' meetings each stockholder shall be entitled to one vote for each share of stock held or owned by such stockholder. Sec. 17. — No stock shall be issued by any corporation until fully paid, except in cases of corporations when by the terms of the petition, the capital stock is to be paid in in installments ; and no transfers of stock shall be valid except as between the parties thereto, until the same shall have been regularly entered upon the books of the corporation. Sec. 18. — Corporations organized for any purpose under the provisions of 872 APPENDIX IV. this act shall have power to construct and operate a railroad, electric railway, tramway, turnpike or canal, for their own use and purposes, and shall have the right to effect a crossing with any existing railroad or public roads as is now provided bv law for railroad corporations ; but they shall have no power to condemn lands except for crossing any existing railroad or public road, as herein provided. Sec. 19. — Xo stockholder in any corporation organized under the provisions of this act for banking purposes shall be eligible to election as a director, manager or trustee who is not the owner of at least ten shares of stock in said corporation. Sec. 20. — The books of any corporation organized under this act shall be open to the inspection of any stockholder at any and all times. Sec. 21. — Any corporation organized under the provisions of this act shall cease to exist bv a non-user of its franchises for hve years at any one time ; Provided, That this shall not relieve any stockholder of any liability incurred during the existence of said corporation. Sec. 22. — A failure to hold meetings or to elect directors, trustees or managers on the day appointed by the by-laws shall not work a forfeiture of the charter of the company, but a meeting may be called hereafter by the president or by the stockholders owning one-fifth of the capital stock of the corporation by giving such notice as the by-laws may require for annual meetings. Sec. 23. — The stock of any corporation organized under this act shall be deemed personal property. Sec. 24. — At all meetings of stockholders of corporations chartered under this act, a majority of the stock of such corporation shall be present, in person or by proxy, to constitute a quorum, and a majority vote of the shares represented shall be necessary to the adoption of any motion or resolution, unless the by- laws of the corporation provided for a different quorum. Sec. 25. — Any officer or stockholder who shall knowingly and wilfully make or cause to be made any fraudulent misrepresentation as to either capital, property or resources of the corporation shall be held guilty of a disdemeanor, and upon conviction thereof shall be punished by a tine of not more than S2,ooo, or bv imprisonment for not longer than two years, or both at the dis- cretion of the court Sec. 26. — The shares of every corporation shall be numbered and every stockholder shall be entitled to a certificate under the seal of the corporation, and in such form and signed by such officers as the corporation may deter- mine, certifying his property in such shares as are expressed in the certificate. SEC. 27 — If any corporation fails to organize within two years from the date of the commission appointing by the board of corporators, the commission shall be null and void. Sec. 2S. — Neither stock nor bonds shall be issued by any corporation, except for money paid, property delivered, or labor done ; and all fictitious increase i: or indebtedness shall be void. SEC. 20.— Anv corporation organized under this act, engaged in the transpor- tation of freight or passengers by means of steamboats or otherwise upon any of the navigable waters of this state shall have the authority to. exact reason- able tolls and fees for the use of wharves or landings located upon lands that are the property of such corporation or that are under lease or control of such ttion. SEC. 30.— This act shall take effect from and after the date of approval by the governor. SEC. 31. — Every corporation created under the provisions of this act shall ubject to the liabilities now imposed bv law, and shall have all the rights, powers and privileges now provided for by law. Approved the 9th day of March, A. 1). 1 No'). SOI Til DAKOTA. AC'l'S 1893, p. 60. — Chapter 40. SECTION [. — Any nine or more persons being of full age, two-thirds of whom shall 1»- 1 itizen ol tin itate, may form an a- io< iation .1 s provided in this act. All,, , Formed undei the provisions hereol <>r thai may hereafter ply with the .i:im , a hereinafter provided, shall he known as co-operative I id loan as ■" iations, and the name oi every such association shall 1 part thereof either, the words " building and loan association," loan i ation," or " savings association." ihr object andpurpo les of such associations shall be to encourage GENERAL LEGISLATION. 873 industry, frugality, home building and savings among their members ; the accumulation of savings and the I nan of such accumulations to their members, the purchase of real estate, the erection of buildings and the making of improvements thereon and on the lands of their members, and removing incumbrances therefrom, and the accumulation of a fund to be returned to such of their members as do not obtain loans, when they have accumulated a certain sum, or at any time when such members shall desire the same or the associa- tion shall desire to repay the same, and such association shall have power to accomplish said purposes. Sec. 3. — Such associations shall become incorporated by the said nine or more persons making, signing and acknowledging in the manner and form prescribed for the acknowledgment of deeds in lln> state, a certificate wherein shall be stated the name of said association, that the association is formed under and for the purpose prescribed in this act, the location within this state of its principal office or place of business, theamount of its authorized capital stock, the limit of the number of its shares, and the time for which it is to exist, the names and residences of the subscribers and the number of shares of its capital stock subscribed by each, the number of its directors and the names and residences of those who are selected as directors who shall hold their office until the next annual election or until their successors are elected and qualified. Said certificate shall be filed and recorded in the office of the secretary of state, and upon such certificate being so filed the secretary of state shall issue letters patent in the usual form incorporating the subscribers into a body corporate by the name chosen, which letters patent shall be recorded in the office of the register of deeds of the county where said associa- tion is located. Sec. 4. — The officers of the association shall consist of a board of directors or trustees of not less than five (5) nor more than thirteen (13), who shall be members of the association, and such board shall elect a president, vice- E resident, secretary and treasurer and such other officers as may be authorized y the by-laws. The duties and compensation of the officers, their terms of office, the time and manner of their election, and the time of regular meetings of the officers and shareholders, shall be determined by the by-laws, except that the board of directors may determine each year the compensation of the treasurer and secretary. Special meetings of the officers and shareholders may be called and held as provided by the by-laws. Each shareholder, not in arrears for dues, shall be entitled to one vote at all meetings of the share- holders for each share of stock owned by him or held by him as trustee, All officers shall hold office until their successors are duly elected and assume the duties of their office. No association shall expire from neglect on its part to elect officers at the time prescribed by the by-laws. Sec. 5. — The authorized capital stock of such association shall be divided into such number of shares of such par value as shall be provided tor by the articles of association or the by-laws, and shall be paid in at such times, amounts and at such places as the by-laws shall provide. Every share of stock issued by such association shall "be subject to a lien for the payment of unpaid instalments, fines, taxes and other charges incurred thereon under the provisions of the articles of association 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. The stock may be issued in one or more successive series in such of the board of directors or stockholders may determine, and any stockholder wishing to withdraw the amount paid in by him to such association shall have the right to do so by giving thirty (30) days notice of his intention to so withdraw, when such stockholder shall be entitled to receive the amount paid in. and such proportion of the profits as the by-laws may determine, less all tines and other charges ; Provided, that at no time shall more than one-half of the funds in the treasury of the association be applicable to the demands of withdrawing stockholders without the consent of the board of directors, and also that no stockholder shall be entitled to withdraw whose stockis heldas security fora loan. Upon the death of a stockholder, his legal representatives shall be entitled to receive the full amount paid on his stock and legal interest thereon, after deducting all charges against said stock. No tines shall be charged to a deceased mem- ber's account from and after his decease, unless the legal representatives of such member assume the future payments on the stock. The authorized cap- ital stock of such association may be increased by a two-thirds vote of the board of directors, a certified copy of a resolution of the board ot directors authorizing such increase being tiled with the secretary of state. Sec. 6. — The officers of the association shall hold stated meetings at which 874 APPENDIX IV. the moneys in the treasury shall be offered for loan in open meeting, and the stockholders who shall bid the highest premium for the preference or priority right of loan shall be entitled to receive a loan equal to the par value of the shares of stock held by him ; Provided, that good and ample security shall be given by the borrower to secure the repayment of the loan. In case the bor- rower shall neglect to offer security that is approved by the board of directors within such time as the by-laws prescribe, such member may be charged with one month's interest upon the amount of the loan so bid for, and a tine not to exceed one (Si.oo) dollar per share, together with any expense incurred, and the money shall be resold at the next regular meeting. In case of non- payment of any instalment of dues, interest, premiums, fines, insurance, taxes or other sums due from the borrower to the association for the space of six (6) months after such delinquency occurs, the whole sum loaned, together with the unpaid premium bid therefor, and all interest, tines, insurance, taxes and dues on stock pledged for said loan, shall become due and payable and may be at once collected for the full period for which the same were contracted to be paid. Sec. 7. — Any borrower may voluntarily repay a loan at any time by the pay- ment of the principal sum borrowed, together with the interest to the date of such repayment, and such per cent, of premium per annum as may have been ' bid for the preference or priority right to such loan, together with any fines or other charges that may be due by such borrower at the time of the repay- ment, and in case the amount of premium bid for the priority right to such loan be deducted in advance, and the repayment thereof is made before the expiration of the eighth year after the organization of the association, there shall be refunded to such borrower one-eighth of the premium bid for every year of the said eight years unexpired, providing that when the stock is issued in separate series the time shall be computed from the date of issuing the shares of stock on which the loan was made, and when the series of stock has a less period than eight years to complete the full payment thereof, or a longer period than eight years from the date of said series to complete the full pay- ment thereof, there shall be refunded only pro rata for the unexpired term of the series. But the by-laws of such association may prescribe different terms upon which loans may be repaid, and the voluntary repayment of loans can only be made in accordance with the by-laws of the association. Loans made in accordance with the provisions of this act shall become due and payable upon the date of the maturity of the stock of the borrowing member pledged as collateral security to such loans, but the payments made by the borrowing meml i the stock so pledged shall not be considered as payments upon the principal of the loan. Sec. 8.— Such associations may contract for and collect from their members the premiu or bonus bid by their stockholders for preference or priority right to I ians in periodical instalments, and such premiums or bonus so paid in in- stalments shall not be deemed usurious, and shall be taken to be a paymentas it tails due in contradistinction to a premium offered and paid in advance. SEC. 9 — Such associations shall have the right to impose tines upon their members fi ir the non-payment of dues, interest, premiums, taxes, insurance or other sums which may be due such associations at the times and in the man- ner provided for the payment of the same by their by-laws, which lines shall on the stock of such defaulting member, or upon any other prop- :curity held by the association and belonging to such member, and no fun-, premium, bonus or premiums paid by members for preference or prioi to loans, fines or interest on such premiums shall be deemed a i ol any statute againsl the taking of usury, and they may be enforced hall be collectible from the members of the association in accordance wiih the provisions ol its by-laws. [0 \i ciation incorporated by or under the provisions of this incoi orated accepting of the provisions i >1 the same, after provided, is hereby authorized and empowered to purchase at i ii other judicial sale, or at any other sale, public or private, any on which such associations may have or hold any mortgage, j ment, lien or other incumbrance or in which said association may nave ind thi real i urchased, or any other that such association may hold, they shall have power to i I ey, lease or mortgage at pleasure i oever, and all sales ol i eal estate heretofoi e mad m to any person or persons, are hereby confirmed and made valid. na b 'i :r by-laws provide for the retirement an time by enforcing withdrawals of GENERAL LEGISLATION. 875 same, provided that the shares to be so retired shall he determined by lot, and that the holders of the same shall be paid the full value of their shares as determined by the last annual or semi-annual distribution of protits, less all fines and a proportionate part of any unadjusted loss. Sec. 12. — When eaeh unpledged share of a given series reaches its par value, all payments of dues thereon shall cease, and the holder thereof shall be paid out of the funds of the association its par value with such rate of interest as shall be determined by the by-laws, from the time the board of directors have declared such shares to have matured until the time of payment ; Provided, That at no time shall more than one-half (2) the receipts' of the association be applicable to the payment of matured shares without the consent of the board of directors. The order of payment of matured shares shall be determined by the board of directors. Sec. 13. — Whenever any member shall be six (6) months in arrears for non- payment of dues upon unpledged shares the secretary of the association shall give him notice thereof in writing, with a statement of his arrearages, by mailing the same to him at the last post-office address given by him to the association, and if he shall not pay the same at the second regular monthly meeting thereafter, the board of directors may at their option declare his shares forfeited, and at the time of such forfeiture the withdrawal value thereof shall be determined and stated, and the defaulting member shall be entitled to withdraw the same without interest within one (ij year, upon the same conditions as shall be required of withdrawing shareholders. Sec. 14. — Such association may borrow money for the purpose of making loans, paying withdrawals or refunding existing indebtedness, not exceeding, however, fifty '50) per cent, of its then accumulated assets and as security for the same its board of directors may pledge or mortgage such portion of its mortgage loans or other assets as they may deem expedient. Any association having a surplus in its treasury for which there is no demand for loans, with- drawing shareholders, matured stock or other obligations, may loan the same to another similar association organized under the provisions of this act, or having accepted of the same as hereinafter provided, subject to the provisions of this section on the part of the borrowing association. No association shall borrow or make loans authorized by this section except by a two-thirds vote of its board of directors, such vote to be recorded by ayes and nays in its regular minutes, and such association at any time when it shall have a surplus of money in its treasury may make loans to persons not members of the asso- ciation upon real estate security on such terms and at such rates of interest, not in excess of twelve (12) per cent, per annum, as its board of directors may determine. Sec. 15. — Profits and losses shall be distributed at least annually to the shares then outstanding in proportion to their holding value, as distinguished from their withdrawing value. At each periodical distribution of profits, the board of directors may reserve and carry as undistributed profits, in the nature of a guaranty fund any sum from the net profits that in their discretion seems wise to be applied upon any future losses that may occur, which fund shall not be deemed a part of the lull value of stock in liquidating, surrendering or withdrawing shares. Sec. 16. — No transfer of shares shall be binding upon the association until the same shall have been made upon its books ; and the transferee thereof shall take the same charged with and shall be responsible for all the obligations, liabilities and conditions attaching thereto, or secured by said stock. Sec 17. — Such association shall have power to adopt by-laws not inconsis- tent with the provisions of this act, defining the duties of officers and com- mittees, times of meetings, mode of determining and declaring the withdrawal value of shares, and regulating all othermatters pertaining to their business. Such associations may in their original by-laws confer authority on their board of directors to make amendments thereto. Sec. iN. — Any person of sound mind may become a member of such associa- tion by taking one or more shares therein, and having his name and post- office address recorded upon the books of the association and whenever he desires his postoffice address changed he shall give written notice thereof to the secretary of the association, and in all matters requiring notice to be given to the members of such associations it shall be sufficient to mail such notice or a copy thereof, prepaid, and directed to the member to be notified at his last furnished postoffice address. Sec iq. — The filing by a member of his application for withdrawal of stock held by him shall not sever his relation to the association as a stockholder, but such relation shall continue and he shall be subject to all the duties and 876 APPENDIX IV. obligations of a stockholder until the final payment to him by the association of the withdrawal value of his stock ; and upon such payment his obligation and liability as a stockholder shall cease, as to the stock so withdrawn. Sec. 20. — All mortgages given to associations formed under this act for loans made or to be made, shall have priority over liens upon the mortgaged premises, and upon the buildings and improvements on such premises, which shall be filed subsequent to the recording of such mortgage in the office of the register of deeds of the county where such premises are situated. Sec. 21. — Any association shall have authority to consolidate with one or mrue corporations organized under this act or accepting of its provisions, upon such terms as may be agreed upon, when such consolidation shall be deemed advisable by the unanimous vote of the directors of each of the asso- ciations so consolidating, and to transfer to such consolidated corporations its entire assets, subject to the vested rights of its members. Sec. 22. — Such associations shall annually in January of each year make to the secretary of state a full report in writing of their affairs and financial con- dition, setting forth in detail their assets and liabilities as they appeared on the thirty-first (31st) day of December preceding. Such report shall be filed not later than the fifteenth day of January, and be verified by an officer of the association. Every association s'hall make any further reports which the secretary of state shall require, and in such form and as to such matters relat- ing to the condition and conduct of the business of the association, as the secretary of state shall designate. And it shall be the duty of the public examiner to examine at least once in each year the financial condition of every such association and to make such report of said examination as he is now required to make regarding the examination of banks. Any wilful false swearing in making and verifying such reports by the officers of such associa- tion shall be deemed a perjury. Sec. 23. — If any such association shall fail to furnish to the secretary of state any report required by this act, at the time so required, it shall forfeit the sum of ten ( 10) dollars per day for every day such report shall be wilfully delayed or withheld. The secretary of state may maintain action in his name of office to recover such penalty, and the same shaJ be paid into the treasury of the state and applied to the expenses of his department. Sec. 24. — All associations organized under the provisions of this act shall be subject to visitation and examination at all times by the public examiner or his deputies, upon the application of three (3) or more members of said asso- ciation. If it shall appear to said examiner, from the report of any such asso- ciation, or from any examination by him, that any such association is violating the provisions of this act, or is conducting its business in an unsafe or unau- thorized manner, he shall by an order under his hand and seal addressed to such association, direct the discontinuance of such illegal and unsafe prac- tices ; and whenever any association shall neglect or refuse to comply with such order, or make reports as required, he shall communicate such facts to the attorney-general, who shall (hereupon be authorized to institute such pro- ceeding as the nature of the case may require. Sec. 25. — All mortgages, obligations, undertakings or conveyances of real property heretofore given to, or mortgages, obligations, undertakings or con- veyances of real property, given by, and all contracts entered into with any building and loan association heretofore organized or doing business under the laws of the territory of Dakota or state of South Dakota before the passage ol Hi: 1 1 as ociation having first accepted the provisions of this act, as hereinafter provided, are hereby made and declared to be good and valid lo all intents and purposes, the same as though they had been made to asso- ciation 01 ganized under the provisions hereof. SEC. 26.— No such association shall ever issue any preferred or non-contrib- uting stock except fully paid debenture and deposit stock. S ice. 27. -Any building and loan association which has made and filed its ol incorporation under the laws of the territory of Dakota, or state of South Dakota, and received its certificate oi incorporation as by such laws provided, and whose principal place of business is within the state of South ill be entitled to all 11k- benefits ol" Ibis act, and have all the righl powersandpri this ad conferred, upon accepting the sam3 by a unanimous vote oi its board of directors al .1 regular meeting thereof, and filing with the sei retary oi tate the certificate oi iis president and secretary, ptance, and thereafter such association so accepting shall been duly incorporated at and From lite lime of the certificate of incorporation under the laws of the territory of of South Da 1 ind a certified copy oi such certificate of its GENERAL LEGISLATION. 877 president and secretary under the hand of the secretary of state, shall be prima facie evidence of such acceptance. Sec. 28. — Any corporation, company or association organized under the laws of any other state, territory or nation, and having for its title. 01 foi .1 part thereof, the words " building association," "building and loan associa- tion," " savings association," " homestead association," or whose stock is | ay- able by an accumulative fund in regular or stated periodical instalments, or whose business is done in a manner similar to that authorized to be done by the laws of this state relating to building and loan assi >< iations, shall transact no business of any kind within this state until it shall have complied with the requirements of this act. Skc. 29. — Every such corporation, company or association shall before transacting any business within this state, make and hie with the secretary of state, a statement verified by its president or secretary, showing the asi-cts and liabilities of such corporation, company or association, its principal place of business, the names and addresses of its officers, with a copy of its articles of incorporation, and shall accompany the same with an application lor per- mission to transact business within this state, and shall at the lime of filing such report and application pay to the secretary of state a fee of twenty-five ($25. 00) dollars. Sec. 30. — Every corporation, company or association described in Section 28 of this act and organized or incorporated without the state of South Dakota, before doing any business within this state, shall by an instrument in writing, duly executed, appoint the secretary of state the true and lawful attorney of such corporation, company or association upon whom all lawful process in any action or proceeding by any resident of this state against such corporation, company or association, may be served with the same effect as if such corporation, company or association existed in this state and had been lawfully served with process therein. A certificate of such appoint- ment, duly certified and authenticated, shall be filed in the office of the secretary of state and copies certified by him or his deputy shall be deemed sufficient evidence in regard thereto. Service in favor of a resident of this state upon such attorney shall thereafter be deemed a personal service upon such corporation, company or association. Sec. 31. — Whenever lawful process against such corporation, company or association shall be served upon the secretary of state, under the provisions of this act, he shall forthwith forward a copy of the process served on him by mail, prepaid and directed to the secretary of the corporation, company or association, at the last known postoffice address of such corporation, com- pany or association. For each copy of process, the secretary of state shall collect the sum of five ($5.00) dollars, which shall be paid by the plaintiff or moving party at the time of such service, the same to be recovered by him as a part of his taxable disbursements if he succeeds in the suit or proceed- ing. Sec. 32. — No such foreign association shall do business in this state unless it has first mortgage securities of the bona fide value of fifty thousand ($50,000) dollars; the ownership of which amount of said securities, by such foreign association, shall be authenticated by evidence satisfactory to the secretary of this state. Sec. 33. — When any such corporation, company or association shall have complied with all the requirements of this act, the said secretary shall issue to such corporation, company or association a certificate stating that it has complied with the same and is entitled to do business in the state of South Dakota until the thirty-first day of January of the year succeeding ; Pro- vided, however, That said secretary of state may at any time revoke such license if it shall by satisfactory evidence appear either : First. That any statement or report, required or authorized by this act to be made as a condition of doing or continuing such business in this state, is untrue, or Second. That such corporation, company or association is insolvent or the security of its shareholders in this state, by mismanagement or otherwise is rendered unsafe or insecure, or Third. That such corporation, company or association has violated the laws of this state or failed to comply therewith. If such license shall be revoked, as aforesaid, on notice thereof, such association shall cease to do business in this state, but such revocation shall not effect any of the provisions of this act in regard to the service of process. Sec 34. — Such corporation, company or association shall annually make 878 APPENDIX IV. and file with the secretary of state on or before the twentieth day of January of each year, a statement verified by the oath of its president or secretary, showing in detail its assets and liabilities as they existed on the thirty-first day of December previous ; and shall accompany the same with a fee of ten ($10.03) dollars, and on receipt of such report, it appearing that such corpora- tion is solvent, the secretary of state shall issue to said company, a certificate authorizing it to do business within this state until the thirty-first day of Janu- ary of the succeeding year. Sec. 35. — When by the laws of any other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money or securities or other obligations or prohibitions are imposed on building and loan associations of this state, doing business in such other state, territory or nation, or upon their agents therein, so long as such laws continue in force, the same obligations and prohibitions of whatever kind shall be imposed on the corporations or companies described in section twenty-eight of such other stale, territory or nation doing business in this state and upon their agents here. Sec. 36. — Any agent or other person who shall solicit subscriptions to, or sell or advertise to be sold in this state, shares of stock of any corporation, company or any association described in section twenty-eight (28) of this act, or who shall receive money or deposits for such corporation, company or asso- ciation, unless such corporation, company or association shall have fully com- plied with the provisions of this act, and shall hold uncancelled the certificate of authority provided for by this act, shall be guilty of a misdemeanor and upon conviction shall be punished by a fine not exceeding one thousand (Si.oooi dollars or imprisonment in the county jail not exceeding twelve months or by both such fine or imprisonment, and shall be also personally liable in case of loss for all subscriptions obtained or moneys paid through his solicitations or agency. Sec. 37. — All acts and parts of acts in conflict with the provisions of this act are hereby repealed. Sec. 38. — An emergency is hereby declared to exist and this act shall be in force from and after its passage and approval. Approved March 6, 1893. TENNESSEE. CODE OF 1884. Section 1742. — The charter for a building association shall be in the follow- ing form : " State of Tennessee — Charter of Incorporation. " Be it known, that (here copy the names of five or more corporators above the age of twenty-one years), are hereby constituted a body politic and cor- porate by the name and style of" (here insert the name of the corporation). Sec. 1743. — The general powers of said corporation are : 1. To sue and be sued by the corporate name. 2. To have and use a common seal, which it may alter at pleasure ; if no common seal, then the signing of the name of the corporation, by any duly authorized officer, shall be legal and binding. j. To purchase and hold, or receive by gift, in addition to the personal property owned by said corporation, any real estate necessary for the trans- action of the corporate business, ami also to purchase or accept any real in payment, or part payment, of any debt due to the corporation, and sell realty for corporation purposes. 4. To establish bv-laws, and make all rules and regulations not inconsistent with the laws and the constitution, deemed expedient for the management of corporate affairs. > To appoint such subordinate officers and agents, in addition to the president, secretary or treasurer, as the business of the corporation may re- quire. (\ To designate the name of the office, and fix the compensation of the offi- 7. To borrow money, and issue notes or bonds upon the faith of the cor- operty, and also to execute a mortgage or mortgages, as further secu- I r. iimiiI oi money thus borrowed I'll'- following provisions and restrictions arc coupled with said grant of j. A failure to elect officers at the proper time, does not dissolve the cor- GENERAL LEGISLATION. 879 poration, but those in office hold until the election or appointment and qualifi- cations of their successors. 2, The term nf all officers may he fixed by the by-laws of the corporal ion ; the same not, however, to exceed two years. 3. The corporation may, by by-laws, make regulations concerning the sub- scription for, or transfer of stock ; hx upon the amount of capital to be invested in the enterprise ; the division of the same into shares ; the time required for payment thereof by the subscribers for stock ; the amount to be called at any onetime; and in case of failure of any stockholder to pay the amount thus subscribed by him at the time and in the amounts thus called, a right of a( tion shall exist in the corporation to sue said defaulting stockholder for the same. SEC. 17.14. — The funds of said corporation may be loaned out to the stock- holders in such manner, on such terms and conditions, and under such reg- ulations as the said corporation, by its constitution and by-laws mav prescribe ; Provided, the same be secured by real estate, and any funds of the said cor- poration, which may remain after the stockholders have borrowed all they desire, may be loaned out to other persons, the same being secured by a lien on real estate. Sec. 1745. — The members of said corporation shall have the power to adopt a constitution, and the constitution adopted, the by-laws and regulations shall have the force and effect of a legal enactment on the members of said cor- poration ; Provided, the same are not in conflict with the general laws of the land. Sec. 1746. — The corporation shall have the power to take and hold all such real estate as may be mortgaged to it, or conveyed in trust, to secure any debt due to the corporation for loan of its funds ; and the said corporation shall have power to purchase any such real estate at any sale thereof, and the same to hold, sell or otherwise dispose of, as the said corporation may deem expedient. Sec. 1747. — The by-laws may prescribe the amount of shares and the time of payment thereof by instalments, but the monthly call for payment of said instalments shall not exceed two dollars on each and every share. Every share of stock shall be made liable for and subject to a lien for the satisfaction of any unpaid instalments, and the by-laws may prescribe the mode and manner of enforcing said lien. Sec. 1748. — New shares may be issued in lieu of any shares withdrawn or forfeited. The shares may be issued in one or successive series, in such amounts as the board of directors may determine, and any stockholder wish- ing to withdraw, as he or she may have the right, shall give thirty days' notice thereof, when said withdrawing stockholder shall be entitled to receive the amount paid in, and such proportion of the profits as may have accumulated. Sec. 1749. — At no time shall more than one-half the funds in the treasury be subject to the demands of withdrawing stockholders, without the consent of the board of directors ; nor shall any stockholder be entitled to withdraw, whose shares are pledged to the corporation. Sec. 1750. — The personal representative, upon the death of a stockholder, shall be entitled to receive the full amount paid in by the deceased, and all profits which have been realized. If said stock is pledged to the company, the same shall be redeemed by said personal representative. Sec. 1751. — The board of directors shall hold stated meetings, at which the money in the treasury, if over two hundred dollars, shall be offered for loan in open meeting, at a rate not in conflict with the law of the state, and the stockholder who shall bid the highest premium for the preference or priority, shall be entitled to receive a loan of two hundred dollars for each share held by such stockholder. Sec. 1752. — A stockholder may borrow such fractional part of two hundred dollars as the by-laws may provide, and good security shall be given by the borrower to secure the repayment of the loan. In case the borrower shall neglect to offer security, or shall offer security that is not approved, the pro- posed borrower thus failing to give security, shall be charged with one month's interest, and the money resold at the next slated meeting. Sec. 1753. — In case of non-payment of instalments or interest by borrowing members for the period of six months, payment of principal and interest, without deducting the premium paid, or interest thereon, may be enforced by proceeding on their securities, according to the terms of the contract under which the same were pledged. Sec. 1754. — The premium bid by borrowing stockholders for the preference or priority of loan shall be paid before the loan is consummated, not as a part of the loan, nor as interest, but as a means of determining which one of the 880 APPENDIX IV. shareholders shall receive the loan, whenever there are a number of stock- holders who may simultaneously desire to effect a loan. Sec. 1755. — Said corporation may purchase at judicial or execution or trus- tee's sale, any real estate, mortgaged or conveyed to it to secure a debt, and said real estate or any other real estate the corporation may be entitled to hold, the said corporation shall have the power to sell, convey, lease or mort- gage at pleasure. Sec. 1756. — Said corporation may determine by an express provision of by- laws, that when each share of stock reaches a certain value, to be specified thereby, not exceeding two hundred dollars, the stockholders shall be paid such value for each share they respectively own, and that upon such payment the stock shall revert to the corporation. Sec. 1757. — Married women may hold stock in such corporation, free from the claims or debts of their husbands. Xo one person shall hold mure than fifty shares. ACTS OF 1889— Chapter 267. Section i. — In addition to the form of charter for a building association given in said section [1742, Code of 1884], the charter for a building associa- tion may be in the following form : Charter of Incorporation. Be it known that (here copy the names of five or more corporators above the age of twenty-one years) are hereby constituted a body politic and cor- porate by the name and style of (here insert the name of the corporation). The general powers, etc., of said corporation are (here set forth the powers, etc., as declared in section 5 [1746] of the act to which this is amendatory): The funds of said corporation may be loaned out to the stockholders in such manner, on such terms and conditions, and under such regulations as the said corporation, by its constitution and by-laws, may prescribe ; Provided, the same be secured by real estate, and any funds of the said corporation which may remain after the stockholders have borrowed all they desire may be loaned out to other persons, the same being secured by a lien on real estate. The members of said corporation shall have the power to adopt a constitu- tion, and the constitution adopted, the by-laws and regulations shall have the force and effect of a legal enactment on the members of said corporation ; Provided, the same are not in conflict with the general laws of the land. The corporation shall have the power to take and hold all such real estate as maybe mortgaged to it, or conveyed in trust to secure any debt due to the corporation for loan of its funds, and the said corporation shall have the Eower to purchase any such real estate at any sale thereof, and the same to old, sell, or otherwise dispose of, as the said corporation may deem expedient. The by-laws may prescribe the amount of shares and the time of payment thereof by instalments, but the monthly call for payment of said instalments shall not exceed two dollars on each and every share. Every share of stock shall be liable for, and subject to a lien for the satisfaction of any unpaid instalments, and the by-laws may prescribe the mode and manner of en- forcing said lien. New shares may be issued in lieu of any shares withdrawn or forfeited. The shares may be issued in one or successive series in such manner and in such amounts as the board of directors may determine, and any stockholder wishing to withdraw, as he or she may have the right, shall give thirty days' notice thereof, when said withdrawing stockholder shall be entitled to receive the amount paid in, and such proportion of the 1 rotits as has been accumulated ; Provided, thai at m 1 time shall mi ire than one-half the funds in tin- treasury be subject to the demands of withdrawing stockholders withi t of the board of directi irs. Stockholders who are borrow- ind who desire to have their mortgages or deeds of trust can- celled d lea lation before their stock matures, may do so on the Jul; terms, to wit : If a loan is repaid within < me year from (he date on which it i-. made the borrowers must pay the premiums for one year and pay to tin- association an amounl which.wnen added to the due-- and earnings will aggregate the sum actually borrowed, together with the 1 tne date of repayment and all delinquent assess- [f, aftet the expiration of one year, a borrowing member desire to re] hi loin 1m- v ill only be ( om pel led to pay premiums and interest up [to] the lime ol repayment, and the cancellation of his mortgage or deed of trust will be adju 11 ive tated, GENERAL LEGISLATION. 881 The personal representatives, upon the death of a stockholder, shall be en- titled to receive the full amount paid in by the deceased, and any profits which have been realized ; Provided, that if said stock is pledged to the company the same shall be redeemed by said personal representative. The board of directors shall hold stated meetings, at which the money in the treasury, if over two hundred dollars, shall be offered for loan in open meeting, at a rate not in conflict with the law of the state, and the stock- holder who shall bid the highest premium (payable in the regular weekly or monthly rates or instalments) for the preference shall be entitled to receive a loan of two hundred dollars for each share held by such stockholder, Provided, that a stockholder may borrow such fractional part of two hundred dollars as the by-laws may provide, and good security shall be given by the borrower to secure the repayment of the loan. In case the borrower shall neglect to offer security, or shall offer security that is not approved, the proposed borrower thus failing to give security shall be charged with one month's interest, and the money resold at the next stated meeting. In case of non-payment of instalments or interest by borrowing members for the period of six months, payment of principal and interest, without de- ducting the premium paid, or interest thereon, may be enforced by proceed- ing on their securities, according to the terms of the contract under which the same are pledged. The premium bid by borrowing stockholders for the preference or priority of loan may be paid in regular weekly or monthly instalments, not as a part of the loan, not as interest, but as a means of determining which one of the shareholders shall receive the loan, whenever there are a number of stock- holders who may simultaneously desire to effect a loan. Said corporation may purchase at judicial, or execution, or trustee's sale, any real estate mort- gaged or conveyed to it to secure a debt, and said real es'tate, or any other real estate, the corporation may be entitled to hold, the said corporation shall have the power to sell, convey, lease, or mortgage at pleasure. Said corpora- tion may determine by an express provision of by-laws that when each share of stock reaches a certain value, to be specified thereby, not exceeding two hundred dollars, the stockholders shall be paid such value for each share thev respectively own, and that upon such payment the stock shall revert to the corporation. Married women may hold stock in said corporation free from the claims or debts of their husbands. No one person shall hold more than fifty shares. Sec. 2. — Building associations operating under any other form of charter may be permitted to be operated in accordance with the terms of the fore- going charter after the adoption by a vote of the stockholders owning two- thirds of the stock of a resolution to that effect, and the procuring of a new charter containing the provisions above set forth. Such stockholders as do not favor the change may be permitted to withdraw on the terms set forth in the act to which this is amendatory, for settlements between the corporation and the personal representatives of deceased stockholders. ACTS 1895, p. Sec. 2 Cas Amended, Acts 1897, p. 298).— The name of " Building and Loan Association " used in this act shall include all corporations, societies, organi- zations or associations doing business in this state under a building and loan charter, or engaged in a building and loan business, or engaged in seeking investments from citizens of the state by selling forms of stock, debentures, certificates, etc., on plans similar to building and loan associations, but which need not necessarily be mutual. Sec. 3 (as Amended, Acts 1897, p. 298).— On or before the first day of August in each year, every building and loan association doing business in this state and governed by this act, shall file with the treasurer of the state a detailed report of its affairs and operations for the vear ending the 30th of June immediately preceding, and such report shall be verified under oath by the president and secretary, or by three directors of the association, and such report shall show in detail the assets, liabilities, income and expenditures of the association, and such other matters of information as the treasurer of the state may deem it necessary to require, and shall also file copies of its by-laws and published literature, which shall be free from ambiguity and not mislead- ing in its nature. Sec. 4. — Each association shall pay to the treasurer of the state ten ($10) on filing of such report. If any association shall wilfully fail to furnish to the treas- 882 APPENDIX IV. urer of the state any report required by this act, at the time so required, it shall in the discretion of the state treasurer, forfeit the sum of twenty-five (§25) dollars per day for every day such report shall be delayed or withheld ; and the treasurer of the state may maintain action in his name of office to re- cover such penalty, and the same shall be paid into the treasury of the state for the benefit of the state. Sec. 5. — That it shall be the duty of the state treasurer, once in each year, or as often as he may deem necessary, at such times as he may select, to ex- amine the books and verify the statement of each association governed by this act doing business under the laws of this state. And he shall make an annual report to the governor, which shall be printed as other reports of the treasurer, giving a summary of the reports of all associations governed by this act. The treasurer or examiners appointed by him shall have access to, and may compel the production of all books, papers, securities and moneys of the association under examination. They shall have power to administer oaths and examine under oath the officers and agents of such association as to its affairs. And whenever it shall appear to the treasurer that any such association is impaired, he shall instruct the secretary to call a meeting of its stockholders and lay before them the result of his investigation. After pass- ing upon the report of the treasurer, the stockholders may continue business, if they so decide, but in that event there shall be no money paid to withdraw- ing stockholders, nor will die association be allowed to issue stock except a sufficient amount to loan the money as it accumulates, until said impairment is made good. And if it appears to the treasurer that the association is not con- ducting its business in accordance with its charter and by-laws, is being mis- managed or that its funds have been misapplied, he shall take the same course as above ; but in case the stockholders decide to continue business, the association shall be given sixty days to correct its irregularities. And in case the said association fails to correct such irregularities in the conduct of its affairs, and to comply with the instructions of the state treasurer in this re- gard, the said treasurer may, upon the advice of the attorney general, take such legal proceedings in the name of the state for the benefit of all parties in in- terest as may be needful to wind up its affairs ; and the court may, in its dis- cretion, appoint a receiver to take charge of its assets. In case of such pro- ceedings, the said association shall pay all costs. The expenses and attorney general's fees for services shall be allowed and paid out of the assets of the defaulting compam'. [The following was added in 1897, acts 1897, p. 298.] In case any stockholder or stockholders in any association governed by this act, shall believe or have cause to believe that said association is insolvent or is conducting its business contrary to law. its charter and by-laws, he or they shall file with the state treasurer a petition stating the facts as may be within his knowledge touching the insolvency or improper and unlawful conduct of said association, and asking for an examin- ation by said treasurer of the affairs of said association, and such stockholder or stockholders shall not begin any suit or proceedings in any court against such association for the purpose of winding up the affairs of said association or the appointment of a receiver, until he or they shall have filed said petition, and the treasurer shall have had a reasonable time to investigate the books and affairs of said association and make a report thereon ; Provided, that the treasurer shall nut be required to make such an examination asked until said shareholder or shareholders shall have first filed with said treasurer a bond to be approved by him, conditioned that if such examination shall disclose that such association is solvent, and is not conducting its business contrary to law, its charter and by-laws, that such shareholder or shareholders will pay CO 1 and expenses of such examination, and when such bond has been filed by said shareholder or shareholders, the said treasurer shall cause an exami- nation of the books, assets, and affairs of said association complained of to be L In case such examination shall disclose that said association is in- solvent, or that its affairs are conducted in violation of the law, or its charter and by-laws, the state trea urer shall proceed as hereinbefore directed in this section. SEC. o. — All officers of any building and loan association governed by this .1' :, and doing busine in thi itate, who handle any of the funds of such ■11, shall give sufficient bond tor the faithful performance of his a the board of directors may require ; and no such officer shall 1"- deemed qualified to enter upon thi dutie oi his office until his bond is ap- th( board oi directoi , and with whom such bond shall be tiled ; Pt Wed, that the state trea urei tnaj require oi any association, at any time, icreasi of said bond or additional securities thereto, or such increase of GENERAL LEGISLATION. 883 said insurance as he may deem necessary for the protection of members. The penalty for a failure of any association to file and maintain the bonds or policy, as required by the provisions of this section, shall be a fine of one hundred i$ too) dollars for each day such association transacts business after such bond has become due under the provisions of this act ; said bond or policy shall be held in trust for the benefit and protection of the members of such association, and shall be enforcible by any member whenever cause of action shall accrue. The fine herein provided for shall be recovered from the directors of such association. Sec. 7. — All building and loan associations hereafter organized under the laws of this state, shall confine their business to the county in which the main or principal office is located, until such association has accumulated twenty-five thousand ($25,000) dollars in building and loan or other securities ; and such associations shall, before doing any business in any other county in this state, obtain from the state treasurer a certificate showing that it has the amount of assets required by this section. Sec. 8. — Non-resident building and loan associations having not less than one hundred thousand ($100,060) dollars in assets shall, before doing any business in this state, obtain a license from the state treasurer by complying with the following : First. Such association shall file with the state treasurer a certified copy of its charter, articles of incorporation and by-laws, showing its mode of business. Second. File a detailed report of its actual financial condition as provided for in section 3 of this act. Third. File a written instrument, properly executed under the seal of the association, appointing the state treasurer its agent upon whom service of process may be had, stipulating and agreeing that any legal process, mesne or final, affecting such association may issue against it from any county in the state ; and when served upon the state treasurer, in duplicate, shall have the same effect as personal service on said association. The state treasurer shall, however, mail a copv of any papers served upon him, postage prepaid, to the home office of such association. Fourth. Pay the state treasurer twenty-five ($25) dollars as fees for filing the papers mentioned in this section. For each license and renewal thereof, the sum of ten ($10) dollars. Sec. q. — It shall be the duty of the state treasurer to examine the reports and papers of any such association applying for license to do business, and if he becomes satisfied that the applicant is solvent and is being lawfully conducted, he shall issue such association a license for a period of one year, and renew the same from time to time. The state treasurer shall, whenever he may deem it necessary, examine into the affairs of any foreign association doing business in this state, and should he find, on examination, that such associa- tion is not conducting its business in accordance with the law, or that the affairs are in an unsound condition, or if such association refuses to permit examination to be made, or to pay the examination fee, he may cancel the authority of such association to do business in this state, and cause a notice thereof to be sent to the home office of the association, and to be published in at least one daily newspaper of this state once a week for four consecutive weeks. After publication of such notice, it shall be unlawful for any agent of said association to receive any further stock deposit from members residing in this state, except payments on stock on which a loan has been made. Sec. 10. — Be it further enacted, That no officer, director or agent of any foreign building and loan association shall, in this state, solicit subscriptions to the stock of such association, or sell, or knowingly cause to be sold or issued to a resident of this state, any stock of an association while said asso- ciation is not duly licensed as herein provided. License to agents of such companies or associations shall be issued bv the treasurer annually, on the first of January, and said treasurer is authorized to collect from said associa- tion a license fee of five ($5) dollars for each travelling agent. Any violation hereof shall be deemed a misdemeanor, and upon conviction shall be punished by a fine of not less than ten ($10) dollars nor more than fifty $50 dollars ; Provided, that the license issued by the state treasurer to such associations as comply with this act, by filing the certified copy of charter, by-laws, annual reports and certificate making the state treasurer their agent for the service of process, as herein required, shall give full and complete authority and power to enter into contracts in this state, and no other requirements shall be made except as provided in this act. Sec. 11. — Be itfurther enacted, That the treasurer of the state is hereby au- 884 APPENDIX IV. thorized and empowered to employ agents or experts to examine said asso- ciations who shall be subject to removal at any time by the state treasurer. The examiner shall receive from the associations for the purpose of meeting his expenses and compensation, annual fees as follows ; Provided, non- resident associations shall not be required to pay such annual fees except when their affairs are actually examined during the year, to wit : Associations with assets of not exceeding $25,000 25 00 Associations with assets of more than $25,000 and not exceeding $100,000. 50 00 For each additional $100,000 of assets, or major part thereof, up to 31,000,000 10 00 For each additional §100,000 of assets, or major part thereof, over $1,000,000 5 00 Sec. 12. — Be it further enacted, That any and all parties violating any of the requirements of this Act, are hereby declared guilty of a misdemeanor, and shall be subject to a fine of twenty-five ($25) dollars per day for each day's violation thereof, and the treasurer of the state may maintain action in his name for the recovery of said fine. Sec. 13. — Be it further enacted, That when, by the laws of any other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money, securities or other obligations or prohibitions are imposed on building and loan associations of this state doing business in such other state, territory or nation, or upon their agents therein, so long as such laws continue in force, the same obligations or prohibitions of whatever kind shall be imposed upon all building and loan associations of such other state, territory or nation, doing business in this state, and upon their agents here. Sec. 14. — Be it further enacted. That all non-resident associations that have heretofore complied with the acts hereby repealed shall have ninety days from and after the passage of this act to comply with the provisions of same ; Provided; the state treasurer may in his discretion extend the time, not to exceed six months, as to any particular association. Chapter 95. Section 1. * * * sections 1092 to 2003 [general provisions relating to foreign corporations] of Milliken and Vertrees' compilation of the laws of Tennessee, be so amended as to apply to corporations chartered under the laws of other states known as " building and loan associations," * * * ACTS OF 1893— Chapter 12. Section, I. — Building and loan associations authorized and permitted to be incorporated under the provisions of chapter 142 of the acts of 1875 [sections 1742 to 1757, inclusive. Code of 1884], and chapter 267 of the acts of 1889, may be invested with the following powers, and subject to the following duties and restrictions, viz. : Said association may issue stock in different series, provided the par value of the shares shall not exceed two hundred dollars, and provided no person shall own more than one hundred shares of stock of the par value of two hundred dollars. .Said association may issue instalment stock, to be paid for in periodical sums, and prepaid and paid-up stock, upon which a gross sum shall be paid in advance in cash, as may be prescribed by the by-laws, and ; dividends may be paid on the said stock, authorized to be issued, out of the net earnings, as the by-laws may prescribe, provided such dividends shall not exceed the per cent of profits earned. Every share of stock shall be liable for and subjeel to a lien for the satisfaction of any unpaid instalments and other proper charges, such as lines, premiums and interest on loans. Any ho lock is not pledged for a loan, shall be entitled to with- draw ich conditions as may lie prescribed in the by-laws, upon thirty .vi itten notice. The hoard of directors shall have the (lower to loan the fund ol the ,1 ociation to its stockholders, either in open meeting or by a< lion on written application and bids at a rale of interest not in conflict with the laws ol tin- stale, and the premium may be payable in instalments or othei wi ic The board ol directors shall have the right, for sufficient reason, to reject any bid or application, but such action shall not be arbitrary The board of di I ill ha 1 the power, should they elect to do so, to establish 01 maintain bj ..1 agents branch offices for the conduct of its il .1 many 1 lai es a may be desired. tin .i' t hall not apply to any existing building or loan association <•! a 01 iation 1 organized under 1 hapter 142, acts of 1875 [sections 1742 to 1757, GENERAL LEGISLATION. 885 inclusive, Code of 1884], or chapter 267, acts of 1889; Provided, however, that any association heretofore incorporated and organized under chapter 142 of the acts of 1875 [sections 1742 to 1757, inclusive, Code of 1884], or chapter 267 of the acts of 1889, may avail themselves of the benefits of this act, and obtain the powers herein granted in the manner and form prescribed in section [9 of chapter 163 of the acts of 1883, brought into Milhken & Vertrees' compila- tion of the laws of Tennessee by section 1695 [providing for amendments and change of name]. TEXAS. The laws of this state contain no general legislation relating especially to building and loan associations. UTAH. REVISED STATUTES, 1898. Title ii. — Corporations. General Incorporation.— Chapter I. Section 314. — Private corporations may be formed in the manner pre- scribed in this title, for any purpose for which individuals may lawfully associate. The number of incorporators shall not be less than live, at least one of whom must be a resident of this state. [C. L. § 2267* ; '96, p. 29c;*.] Sec. 315. — The incorporators shall enter into an agreement in writing, signed by each of them and by at least three of their number acknowledged before the county clerk or any notary public of the county in which they have established, or intend to establish, their principal place of business, stating : 1. The name of the corporation. 2. The precinct or city where it is organized. 3. The names of the incorporators and their places of residence. 4. The time of its duration, which shall not in any case be less than three nor more than fifty years. 5. The pursuit or business agreed upon, specifying it in general terms. 6. The place of its general business. 7. The amount of stock each party has subscribed. 8. The amount of each share, and the limit of capital stock agreed upon. 9. The number and kind of officers, their qualifications and term of office, and the time and manner of their election, removal, and resignation, with the names of the officers to serve until the first general election ; Provided, that in no case shall the number of directors be less than three nor more than twenty-five. 10. How many of the entire board of directors shall be necessary to form a quorum and be authorized to transact the business and exercise the corporate powers of the corporation ; Provided, that a quorum shall not be less than one-fourth of the entire number. 11. Whether or not the private property of the stockholders shall be liable for its obligations. 12. Such additional clauses as the incorporators deem necessary for con- ducting the business of the corporation and for its future safety and welfare. [C. L. §§ 2268*, 2272*, 2273* ; '96, p. 299*.] Sec. 316. — To the agreement prepared in accordance with the provisions of the preceding section, there shall be added the oath or affirmation of three or more of the incorporators taken before any officer duly authorized to administer an oath, to the effect that they have commenced, or it is bona fide their intention to commence and carry on the business mentioned in "the agreement, and that the affiants verily believe that each party to the agree- ment, has paid or is able to and will pay the amount of the stock subscribed for by him ; Provided, that said acknowledgment shall not be made until at least ten per cent, of the stock subscribed by each stockholder and not less than ten per cent, of the capital stock of the corporation has been paid in ; Provided further, that where subscriptions to the capital stock of any corpora- tion formed under the provisions of this chapter shall consist, in whole or in part, of property necessary to the pursuit agreed upon, there must appear in the articles of incorporation a description of the property so taken with a statement of the fair cash value thereof, which statement, except in the case of corporations organized for mining or irrigating purposes, shall be supple- mented by the affidavits of three persons, to the effect that they are acquainted 57 886 APPENDIX IV. with said property and that it is reasonably worth the amount in cash for which it was accepted by the corporation ; and the owners of such property shall be deemed to have subscribed such amount to the capital stock of such corporation as will represent the fair estimated cash value of so much of such property, or of such interest therein, as they may have conveyed to such cor- poration by deed actually executed and delivered. [C. L. § 2268* ; '96, pp. 299-300.] Sec. 317. — Before the first or any other officer shall enter upon the duties- of their respective offices, they shall take and subscribe an oath of office, that they will discharge the duties of such office to the best of their judgment, and that they will not do nor consent to the doing of any matter or thing relating to the business of the corporation with intent to defraud any stockholder or creditor or the public, which oaths shall be filed in the office of the county clerk. [C. L. § 2270* ; '96, p. 301*.] Sec. 318. — The agreement, with the oath or affirmation, shall, within ten days from its due execution, be deposited with the county clerk of the county in which the general business is to be carried on, and shall be by him recorded in a book to be prepared for that purpose and kept in his office. [C. L. § 2269* ; '96, p. 301*.] Sec. 319. — As soon as the agreement and oath or affirmation and oaths of office are filed, the county clerk shall issue, under his seal, a certificate to the effect that the agreement and oath or affirmation and oaths of office have been filed in his office, which certificate, together with a copy of the articles agreement and oath or affirmation, must be filed in the office of the secretary of state, who shall issue under the great seal of the state a certificate that a copy of the articles of agreement and oath or affirmation, containing the required statement of facts, has been filed in his office, which shall be suf- ficient to constitute the association a body corporate with succession as speci- fied in the agreement, which certificate, or a certified copy of the same, shall be evidence of the due incorporation of the corporation. [C. L. § 2271* ; '96, p. 301*.] Sec. 320. — It shall be the duty of the county clerk and of the secretary of state, upon payment of the lawful fee therefor, to make certified copies of corporation papers recorded or filed in their respective offices, which copies shall be prima facie evidence of the facts therein stated. [C. L. § 2283*; '96, P- 305*-] Sec. 321. — Non-use for a period of two years of a franchise acquired under the provisions of this title shall be deemed a forfeiture of the corporate rights, privileges and franchises. [C. L. § 2284* ; '96, p. 305.] Powers. Section 322. — The corporation in its name shall have power to make alt contracts necessary and proper to effect its purposes and conduct its author- ized business, to sue and be sued, to have a seal, which it may alter at pleas- ure, to buy, use and sell, or dispose of personal property, to buy, use, sell or dispose of all such real estate as may be necessary for its general business, and Mich as shall be necessary for the collection of its debts, or judgments, or decrees in its favor, and to disburse out of profits actually earned and on hand such dividends from time to time as the directors may deem prudent. Il may make all such by-laws, rules and regulations, not inconsistent with law or with other corporate rights and vested privileges, as may be necessary lo carry into effect the object of the association ; and such by-laws, rules and regulations may be made in a general meeting of the stockholders, or board "I directors subject to the approval of the stockholders. [C. L. . 2516" ; '. p. 302*. . 323. — If the franchise of any corporation organized under this chapter shall expire by limitation or by forfeiture, the corporation may nevertheless continue for the purpose of winding up its affairs. [C. L. §§ 2275*, 2287 ; '96, ■' ■/ ■ I Ol'KICERS — DUTIES AND REMOVAL. The corporate powers of the corporation shall be exercised ■ board ol direi toi , who snail be stockholders in the company, and at lea t one-third ol whom shall be residents of this state. The number of director named in the agreement of incorporation as being sufficient to form a quorum for the transaction of business shall constitute a board, and every .1 majority oi the board so formed shall be valid as a corporate [ C. L. § 2272* ; ', pp, 302.*] GENERAL LEGISLATION. 887 Sec. 325. — Officers after having duly qualified may continue to exercise the duties of their offices until their successors shall be duly elected or appointed and qualified, unless sooner removed in the manner prescribed by the articles of incorporation or by-laws, or.in case no provision be made therein for such removal, according to the provisions of this chapter. [C. L. § 2277* ; '96, p. 304*. Sec. 326. — If from any cause the officers shall not be elected at the time pro- vided in the agreement or by-laws, such election may be held at a special meeting of the stockholders to be duly called at any time by the directors, or, upon their failure to call such a meeting for a period of three months after the regular time of such election, at the call of any two stockholders. [C. L. § 2278* ; '96, p. 304. Sec. 327. — A director or other officer may be removed from office as pro- vided in the agreement or by-laws, or, in case there is no such provision, then by a vote of two-thirds of the outstanding capital stock, at a meeting held after previous notice of the time and place and of the intention to propose such removal. Snecial meeting of the stockholders for this purpose may be called by the president or by a majority of the directors, or by stockholders holding at least one-half of the shares of stock outstanding. Such calls must be in writing and addressed to the secretary, who must thereupon give notice of the time, place, and object of the meeting, and by whose order it is called. If the secretary refuses to give the notice, or if there is no secretary, the call may be addressed directly to the stockholders. In case of the removal of a director or other officer, the vacancy may be filled by election at the same meeting, or by the board of directors, unless otherwise provided in the articles or by-laws. [C. L. § 2285* ; '96, p. 306*. Sec. 328. — It shall be the duty of the corporation to keep true and correct books of its proceedings and business. [C. L. § 2279 ; '96, p. 304. Sec. 329. — The books of every corporation organized under the laws of this state must be so kept as to show the original stockholders, their interests, the amount paid on their shares, and all transfers thereof ; all books of any cor- poration shall, at all reasonable hours, be subject to the inspection of any bona fide stockholder of record. Sec. 330. — Stock shall be deemed personal property, and the delivery of a stock certificate of a corporation, together with a written transfer of the same signed by the owner, to a bona fide purchaser or pledgee for value, shall be deemed a sufficient transfer of the title as against any creditor of the trans- ferror and all other persons whatsoever. But no such transfer shall affect the right of the corporation to treat the holder of record as the holder in fact for the purpose of voting and of receiving dividends until such transfer is made upon the books of the corporation, or a new certificate is issued to the person to whom it has been transferred. [C. L. § 2280* ; '96, pp. 304-5. Sec. 331. — The property of the corporation and the upaid stock shall be liable for the debts of the corporation ; but the individual property of any holder or full-paid capital stock of any corporation organized since March eighth, eighteen hundred and ninety-four, or that hereafter maybe organized, under the laws of this state, except as otherwise expressly provided in this title, shall not be liable for the corporate obligations, nor shall assessments be levied on such stock for any purpose whatever, except to such extent and in such manner as may be expressly provided in the articles of incorporation. [C. L. §$ 2258*, 2286*, 2393* ; '94, p. 119*, '96 ; pp. 299*, 306-7*. Sec. 332. — The stockholders of any corporation may regulate the mode of making subscriptions to its capital stock and of calling in the same by by-laws or by express contract. [C. L. § 2268* ; '96, p. 300. Sec. 333. — The corporation shall have a lien on the amount paid in and the dividends thereon for any balance due for the stock of a delinquent stock- holder. [C. L. § 2276* ; '96, p. 300. Sec. 334. — Unless required by the agreement or by-laws, no notice need be given of annual or stated meetings of the stockholders. Special meetings shall be called and notice thereof given in such manner as may be prescribed in the agreement or by-laws. When not otherwise specified in the agree- ment or by-laws, special meetings of the stockholders may be called by the president, by any three directors, or by any number of stockholders owning not less than one-third of the capital stock, and notice thereof shall be given by personal service of the notice upon each stockholder at least five days- before the clay fixed for the meeting, or by advertisement in some newspaper published in the state, having general circulation in the county in which the principal place of bufiness of the corporation is located. If publication be made in a daily newspaper, the notice shall be published in each issue of the APPENDIX IV. paper for a period of two weeks, and if in a weekly newspaper, for three suc- cessive issues next before the day of meeting. [C. L. § 2285* ; '96, pp. 305-6. Sec. 335. — At all meetings each shareholder shall be entitled to one vote for each share of stock which he or she may have in his or her own right, or held by him or her in trust for others, and such votes may be given in person or by an authorized agent, or by proxy. [C. L, § 2285* ; '96, p. 306. Sec. 336. — The articles of incorporation or by-laws may provide what pro- portion of the outstanding capital stock shall be represented at a stockholders' meeting as a requisite to the holding of the same, and for adjournment from day to day in the absence of a sufficient representation, and what proportion of the stock so represented shall be necessary to determine any question or election ; but in the absence of such provisions, a lawful meeting may beheld by the stock represented at the meeting, whatever its amount, and every ques- tion or election thereat shall be decided by a majority of the votes cast. Sec. 337. — Whenever any portion of the capital stock of a corporation is held bv the corporation, a majority of the remaining shares is a majority of the stock for all purposes of election or voting on any question at a stockholders' meeting. [C. L. § 2389*. Sec. 338. — The articles of incorporation of any corporation now existing or that hereafter may be organized under the laws of this state may be amended in any respect conformable to the provisions of this chapter by a vote repre- senting at least two-thirds of the outstanding capital stock thereof at a stock- holders' meeting called for that purpose, as hereinafter prescribed ; Provided, that the original purpose of the corporation shall not be altered, nor shall the capital stock be diminished to an amount less than fifty per cent, in excess of the indebtedness of the corporation ; And provided further, that the liability of the holder of full-paid capital stock for assessments or for the indebtedness of the corporation shall not be changed without the consent of all the stock- holders. [C. L. § 2273* ; '94, p. 119* ; '96, pp. 302-3*. Sec. 339. — Notice of such meeting shall be given by the president or secre- tary of such corporation in some newspaper printed in the English language and having a general circulation in the county where the corporation has its principal place of business in this state for at least twenty-one days, stating the nature of the proposed change or amendment and the time and place of such meeting. Such change or amendment, when adopted, shall be signed by the president and secretary of such corporation and be filed and recorded in the manner provided for the filing and recording of original articles. The secretary of state shall issue a certificate of amendment, which shall be evi- dence of the facts therein stated. [C. L. § 2273* ; '96, p. 303*. Sec. 340. — Corporations of the same kind, engaged in the same geueral busi- ness in the same vicinity, existing, or that hereafter may be organized under the laws of this state, may consolidate upon such terms and conditions con- formable to law as shall be agreed upon by a vote representing at least two- thirds of the oustanding capital stock of each of said corporations, at a special meeting of each thereof, upon notice stating the time, place, and object of such meeting, published for at least thirty days prior thereto in a newspaper having general circulation within the county where such corporation has its principal place of business. Such consolidation shall be evidenced bv a cer- tificate under the corporate seals of the respective corporations, signed by the president and secretary of each, briefly reciting the act or acts sought to be accomplished and describing the property sought to be conveyed or assigned, together with the name of the new corporation, with such other provisions as the law may require to be inserted in original articles of incorporation, and such others, being conformable to law, as may be deemed necessary to per- fect such consolidation ; which certificate shall be Hied and recorded in the manner provided for the filing and recording of original articles of incorpora- tion, and a copy thereof, duly certified by the county clerk, shall be filed in the office of die secretary of state, whose certificate shall constitute such con- solidated corporations a new corporation. [C. L. § 2273* ; '96, p. 303*. Sec. 341. — Upon the consummation of such consolidation, all the rights, privileges, and franchises of each of said consolidating corporations, and all the property, real and personal, and all subscriptions and debts due on what- ever account, shall be deemed fo be transferred to and vested in such new corporation without further act or deed; and such consolidation shall not • tin- 1 onsolidating corporations, or either of them, or die stockholders, f 1 0111 any liabilities, nor shall it extinguish or limit any franchise or right; 1 il .ill ili-Ms, liabilities, and duties of either of said corporations shall thenee- 1 h atta< li to in ii new corporation, and be enforcible against it to the same extent as if incurred or contracted by it. GENERAL LEGISLATION. 889 BUILDING AND LOAN ASSOCIATIONS.— Chapter IV. Section 392. — Building and loan associations organized for the purpose of raising a fund by the collection of dues or stated payments from its members, to be loaned among its members, may be incorporated under the provisions of chapter one of this title respecting corporations for pecuniary profit; and all the rights, privileges, and powers, and all the duties and obligations of such corporations and the officers and stockholders thereof shall be as pro- vided in said chapter, except as in this chapter otherwise provided. In addi- tion to the other facts required to be stated, the articles of incorporation of such companies shall state the terms and plan of becoming and continuing a member, and of withdrawal, the plans of making loans, distributing profits, equalizing losses, providing for expenses, and of providing a fund with which to pay losses, and the maximum compensation of officers. ['90, pp. 7-11*.] Sec. 393. — The capital named in the articles of incorporation shall be taken to mean the authorized capital, and the association may commence business when five per cent, thereof is subscribed and the other requirements of the law have been complied with. Sec 394. — Any such corporation shall have power, subject to the terms and conditions contained in the articles of incorporation and by-laws, to issue stock to its members ; to assess and collect from its members reasonable membership fees, dues, premiums, and fines ; to permit its members to with- draw any or all of their stock deposits upon equitable terms ; to hold and convey such real and personal property as shall be necessary for its accom- modation and the transaction of its business, such as shall be mortgaged in good faith by way of security for debts duly contracted, such as shall be i_< n- veyed to it in satisfaction of debts previously contracted in the course of its dealings, such as it shall purchase at sales under judgments, decrees or mort- gages held by it, or shall purchase to secure debts due to it ; to make loans to its members upon ample real estate security, unincumbered except by prior loans from the association, or upon the stock of such association to the extent of its withdrawal value ; to make annual or semi-annual distributions of its earnings, and to do all other things that may be necessary to effect its purposes and conduct its authorized business. Sec 395. — The treasurer and secretary, before entering upon their duties, shall give good and sufficient bonds for the faithful performance of the same and for the safekeeping and proper application of all money or property coming into their hands, and the same shall be approved by the board of directors. All such bonds shall be increased or additional sureties required by the board of directors when the same becomes necessary to protect the in- terests of the association or its members, but no director shall be accepted as a surety on such bonds, and the directors shall be individually liable for loss to the association or caused by their failure to comply with the provisions of this section. ['00, p. 9*.] Sec 396. — A borrower may repay a loan at any time upon duly complying with the provisions of the charter and by-laws in relation to the payment of loans ; and any stockholder wishing to withdraw from the corporation shall have power to do so by giving thirty days' notice of his intention to withdraw, when he shall be entitled to receive the amount paid in by him and such in- terest thereon, or such proportion of the profits thereon, less all fines and other charges, as the by-laws may determine ; Provided, that at no time shall more than one-half of the funds of the treasury of the corporation be appli- able 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 by the association for security. Upon the death of a stock- holder, his legal representative shall be entitled to receive the full amount paid in by him on all shares not borrowed upon or pledged to the association as collateral security and legal interest thereon after deducting all charges that may be due on the stock ; but no fines shall be charged to a deceased member's account from and after his decease, unless the legal representative of such decedent assume the future payment of the dues. ['90, p. 9*.] Examination of building and loan associations, ij§ 2441-2445. Sec. 397. — It shall be unlawful for any building and loan association not organized under the laws of this state, to transact business herein unless the company shall have obtained a certificate of authority from the secretary of state, and shall have filed with the secretary of state a certified copy of its articles of incorporation or charter and by-laws, together with a statement subscribed and sworn to by the manager or by an officer of the company, showing : 890 APPENDIX IV. 1. The amount of authorized capital, and the par value of each share. 2. The number of shares sold during the year. 3. The number of shares cancelled and withdrawn during the preceding year. 4. A statement of receipts and disbursements during the preceding year. 5. Salaries paid each of its officers. 6. A statement of its assets and liabilities at the end of the year, and the nature thereof in general terms. 7. Any other fact which the secretary of state may require. Upon receipt of such statement, the secretary of state, if he believes that the association is properly managed, that its financial condition is satisfactory, and that its business is conducted upon a safe and reliable plan, shall issue a cer- tificate of authority to such corporation. Sec. 398. — On or before the first day of March in each year, every building and loan association doing business in this state, whether domestic or foreign, shall cause to be filed in the office of the secretary of state, the statement re- quired in the next preceding section, and shall cause a copy thereof, duly cer- tified by the secretary of state, to be published at least four times in some newspaper published in this state and having a general circulation therein, such publication to be completed on or before the first day of May, and proof thereof filed in the office of the secretary of state. Sec. 399.— If any domestic building and loan association shall refuse to sub- mit to examination by the bank examiner, the secretary of state shall advise the attorney general, who shall proceed to wind up its affairs ; and if any foreign association refuse, the secretary of state shall revoke its certificate of authority. Sec. 400. — When, in the opinion of the secretary of state, any such corpora- tion is conducting its business illegally, or in violation of its articles of incor- poration or by-laws, or is practising deception upon its members or the public, or is pursuing a plan that is injurious to the interests of such members, or if he is satisfied that its affairs are in an unsafe condition, he shall notify its direc- tors or managers, and if it shall not immediately amend its course or put its affairs upon a safe basis, he shall in the case of a domestic corporation ad- vise the attorney general thereof, who shall take the necessary steps to wind up its affairs, and in the case of a foreign corporation he shall revoke its cer- tificate of authority. Sec. 401. — Within sixty after the taking effect hereof, each building and loan association doing business in the state shall file with the secretary of state the statement hereinbefore required, and each such foreign association shall file a copy of its articles and by-laws therewith, and shall obtain its cer- tificate of authority, or on failure or refusal to do so, shall forfeit its right to do business. Six. 402. — Any officer or agent of any building and loan association that shall do or attempt to do any business for any such association which does not hold a certificate of authority therefor as in this chapter provided, or which shall fail or refuse to file with the secretary of state the annual statement herein required, shall be deemed guilty of a "misdemeanor for each and every offence. VERMONT. LAWS 1896, p. 64. Sf.ctiov. i.— -No foreign or non-resident building and loan association shall do bu inessin this state until it shall have complied with the following provisions and re< eived a license from the inspector of finance, as provided in this act : First. It shall tile with the inspector of finance a certified copy of its cli.iiicr. together with its constitution and by-laws showing its manner of doing business. Second. H shall appoint in writing the inspector or finance in this state its true and lawful attorney for the service of process upon it, and upon whom a in any action or proceeding against it may be served with the 1 1 force and validity as if served on it, which authority shall continue inforceas long as any liability remains outstanding against it in this state, 1 -.iid poweroi attorney snail bedeposited in the office of the inspector of finance, and a copj ot the same duly certified by him shall be received in nee in all court; ot ihi tate ; and service upon said attorney shall be di emed uffi< ienl service upon the principal. GENERAL LEGISLATION. 891 Third. It shall file with the inspector of finance on or before the first day of February and August in each year, a statement of its business standing and financial condition on the last day of December and June next preceding signed and sworn to by its president and secretary, or by three directors, be- fore a notary public, which must show that it possessed actual paid in, unim- paired and well invested assets of at least three hundred thousand dollars, and a fully paid up cash guaranty fund of twenty-five thousand dollars. Fourth. It shall pay the inspector of finance, for the purpose of paying the expenses of filing papers, as heretofore provided, and for compensation for making examinations, annual fees as follows : P'or the first hundred thousand dollars or less of assets, a fee of fifty dollars, and for each additional hundred thousand dollars of assets or major portion thereof, an additional fee of five dollars, but in no event shall such compensation exceed one hundred dollars per year ; and such association shall also pay the actual expenses of the in- spector of finance while making such examination. Fifth. It shall deposit with the treasurer of this state first mortgage secu- rities, to be approved by the inspector of finance to the amount of twenty-five thousand dollars ; and the said deposit shall be held in trust by the treasurer for the protection and indemnity of the residents of this state with whom such association or corporation have done or may transact business. It shall also file with the inspector of finance, a bond to the state for such an amount as he may require, not more than ten thousand dollars and not less than five hundred dollars, with such sureties or securities as he may approve, condi- tioned for the making of all returns and reports required by this act, and the payment of all taxes that may be assessed against it, and in all things to com- ply with the laws of this state. Sec. 2. — All interests, premiums and dues which may accrue on mortgages- held by the state treasurer as provided for herein may be collected and re- tained by the association depositing such mortgages so long as such asso- ciation remains solvent and faithfully performs all contracts with its members; and when any mortgage shall have "been fully paid to said corporation the same may be surrendered to it, said company or corporation first depositing with the treasurer other first mortgage securities to the amount of those withdrawn, the same having been approved by the inspector of finance. Sec. 3. — It shall be the duty of the inspector of finance to receive and file the papers herein required, and thoroughly to examine the annual reports sub- mitted by foreign or non-resident building and loan associations. If the in- spector of finance becomes satisfied, after an examination, that an association desiring to do business in this state is solvent and conducts its business ac- cording to law, he may issue a license to such association until the first day of January following ; provided, that such association has complied with the provisions of this act ; but, if it be found insolvent, or is being illegally con- ducted, the inspector of finance shall refuse to issue the license. Should the inspector of finance refuse to grant a license to any association applying therefor that has complied with the provisions of this act, such association may appeal to the court of chancery for the county of Washington, which shall have jurisdiction of the premises. Sec. 4. — The inspector of finance by himself or his deputy shall make an annual examination of the securities, records, books, and accounts of every foreign or non-resident building and loan association doing business in this state and file a report of such examination in his office. If it shall appear to the inspector of finance that any association licensed to do business in the stale has violated its charter, or is conducting its business in an unsafe or unauthor- ized wav, he shall, by an order under his hand, addressed to such associa- tion, direct a discontinuance of such legal and unsafe practise ; and, whenever it shall appear to the inspector of finance that it is unsafe or inex- pedient for such association to continue business in this state, he may suspend the license theretofore granted to said association, and may apply to the court of chancery in anv county of the state for an injunction restraining such association from doing business in this State; and such court shall have power according to the"~usual course of proceedings in equity, to grant or re- fuse to grant said injunction ; Provided such association is given reasonable notice of such proceedings. Sec. 5.— When by the laws of anv other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money or securities or obligations or prohibitions are imposed upon building and loan associations of this state, doing business in such other state, territory or nation, or upon their agents therein, so long as such laws continue in force, the same obligations and pro- hibitions of whatever kind shall be imposed on builidng and loan associations 892 APPENDIX IV. of such other state, territory or nation, doing business in this state, and upon their agents here. Sec. 6. — All such foreign or non-resident associations doing business in this state at the time of the passage of this act shall comply with its requirements within sixty days from the date when it goes into effect ; but such associations may continue to do business in this state until the inspector of finance has made the examination provided for in this act. Sec. 7.— All acts and parts of acts inconsistent with this act are hereby repealed. Approved November 24, 1896. ACTS 1894, p. 9. Sec. 585. — The term "investment company," as used in this chapter, shall include all building associations, companies or corporations, and all other companies or corporations organized under the laws of this or any other state or territory, for the purpose of negotiating or placing loans secured upon property without this state, or that may be engaged in selling choses in action, or bonds secured by mortgages on property, or by pledges of such mortgages, and which are executed by individuals or issued by municipal or other corporations without this state. Sec. 586. — A person, investment company or corporation, obtaining money from residents or corporations in this state, to be loaned without the state, or doing business in this state by selling debenture bonds, mortgages upon real or personal estate, choses in action, or securities of any kind upon property without this state, not including bills of exchange having less than twelve months to run, shall annually, in the month of July, make returns to the com- missioner of state taxes of the amount of money so received, and the amount of bonds, choses in action or securities of any kind as aforesaid, sold to parties or corporations within this state. Said returns shall be for the period of one year preceding the last day of June annually. Sec. 587. — A tax of one per cent, upon the aggregate amount of all moneys so received to be loaned without the state, and upon the aggregate amount of bonds, mortgages, choses in action and securities of any kind negotiated as aforesaid, is hereby assessed against the person, investment company or corporation receiving such money, or transacting said business. Such tax shall be paid to the state treasurer within thirty days from the time of making said returns and shall be in lieu of all other taxation thereon for the period of one year only. Sec. 588. — A person, agent, investment company or corporation may omit payment of the tax provided in the preceding section by giving the name and Eostoffice address of the person or corporation from whom such money has een received, or to whom such bonds, mortgages, choses in action or securi- ties were sold and the amount received from each such person or corporation, and informing the commissioner that the taxes are to be paid by the purchaser. When advantage is taken of this provision, the commissioner shall assess thereon a tax of one per cent, against the person or corporation of whom such aj^ent, person, investment company or corporation received such money, or to whom said bonds, mortgages, choses in action or other securities were sold. The payment of said tax shall exempt such agent, person, investment company "i 1 orporation from all other taxes thereon, for the period of one year only. Said commissioner shall notify such person by mail, of the tax so assessed, immediately after such assessment is made and the same shall be paid to the stale treasurer within thirty days from the time such notice is issued. If the purchaser puts such securities or investments into his personal list for taxation, and is assessed and pays taxes thereon for the full amount in the town where I hi i I1.1 it or investor resides, the commissioner may, with the concur- n in c of the treasurer, remit payment <>f such tax. Sec. 589. — A person, agent, investment company or corporation who es Ol neglei ts to comply with the three preceding section shall be fined nol more than live thousand dollars and not less than five hundred dollars. If a foreign investment company or corporation so neglects or refuses, the hail have a lien on ils bonds, filed with the slate treasurer according to law, foi any fine which maybe imposed against it. The provisions of this and tin- lour preceding sections shall not apply to corporations organized in thai pay taxes on their capital stock, premiums or deposits, except where the ales ol such securities exceed their premiums, deposits or capital hall apply to such excess. GENERAL LEGISLATION. 893 VIRGINIA. ACTS 1890, p. 170. Section i.— No building and loan association or company, which is not in- corporated under the laws of this state, shall solicit or take subscriptions to its stock, loan out money, purchase or sell property, or carry on any of the transactions pertaining to the business of such associations and companies within this state, until it shall have complied with the requirements of this act. Sec. 2. — Any building and loan association not chartered by the laws of this state shall file with the secretary of the commonwealth a certified copy of the charter under which they work ; also satisfactory evidence that they have complied with the laws of the state under which they are chartered. Sec. 3. — A certificate from the state officer designated by the laws of the state in which said corporation was given a charter, that they have complied with the laws of said state as to the amount of securities required to be deposited for the benefit of all the members of said association, the same shall be accepted as sufficient guaranty for the members of the association in this state. Skc. 4. — Every such association or company shall forward to the treasurer of this state all reports made by said association relating to their assets and liabilities, properly sworn to before some competent officer authorized to ad- minister oaths in said commonwealth, territory or country ; Provided, that any association failing to make at least an annual report, as required in this section, shall be required to deposit, within sixty days from the date named by the treasurer, an amount of securities sufficient to secure all business which they have done in this state, the same to be not less than ten thousand dollars nor more than fifty thousand dollars. Said securities shall be bonds or notes, se- cured by deeds of trust on real estate, worth at least twenty-five per centum more than the money advanced thereon to members, exclusive of premiums taken by such companies in the regular course of business in this or any other state, the value of such real estate in all cases to be determined by the officers of the local boards of said association ; but such mortgages or deeds of trust to be taken only as first liens, and held in trust as aforesaid until all shares of such association held by citizens of this state shall have been fully matured and paid off by such association, and its contracts and obligations to persons and members residing in this state shall have been fully performed and discharged. As fast as such securities held by the state treasurer as afore- said shall mature, according to the agreement with members of said associa- tion, said association shall have the right to withdraw them from said deposit ; Provided, that at the time of such withdrawal they deposit other like securities of equal value in their place. Sec. 5. — The agent, officer or employee of any such building or loan asso- ciation or company, doing business in this state without complying with the provisions of this act, shall be deemed guilty of a misdemeanor, and, upon conviction, shall be fined in a sum not exceeding five hundred dollars in the discretion of the court. Sec. 6. — This act shall take effect July first, eighteen hundred and ninety. ACTS 1894, p. 734. Section i. — No building and loan association or company shall be allowed to conduct any business, or solicit the sale of stock, or offer to lend money in this state, without having first obtained a license therefor by payment of the tax herein specified, nor shall any person act as an agent for such company, incorporated in this or any other state, unless the company he represents has obtained a license in accordance with this act. Sec. 2. — The specific license tax upon every such company or association for the privilege of doing any business in this state shall be fifty dollars ; Provided, the capital of such company actually paid in, whether from paid-up stock or partially-paid stock, is not less than twenty-five thousand dollars ; if the capital paid in is twenty-five thousand dollars, and not more than fifty thousand dollars, the tax shall be seventy-five dollars ; if the capital paid in is not less than fifty thousand dollars nor more than one hundred thousand dol- lars, the tax shall be one hundred dollars ; if the capital paid in is not less than one hundred thousand dollars, nor more than one hundred and fifty thousand dollars, the tax shall be one hundred and twentv-five dollars ; if the capital paid in is not less than one hundred and fifty thousand dollars, nor 894 APPENDIX IV. more than two hundred thousand dollars, the tax shall be one hundred and fifty dollars ; if the capital paid in is not less than two hundred thousand dollars, nor more than three hundred and fifty thousand dollars, the tax shall be one hundred and seventy-five dollars ; if the capital paid in is four hundred thousand dollars, the tax shall be two hundred and fifty dollars ; but on capital exceeding four hundred thousand dollars, the tax shall be fifty dollars for each additional one hundred thousand dollars thereof ; And, provided, that as to any non-resident building company or association doing business in this state, and which has otherwise complied "with the laws of Virginia, shall pay the license tax under this act upon the capital invested by such company in this state. It shall be the duty of each association, on the first day of April of each year, or within ten days thereafter, to make a report in writing under oath of its 'chief accounting officer or agent to the commissioner of revenue for the district in which the principal office or agent is situated, of the amount of the capital of said association as provided in this act. Any association or agent doing business in this state without having first obtained a license therefor, shall pay a fine of not less than fifty nor more than five hundred dollars. The shares of any building fund company which has been assessed with and has paid the specific tax provided for in this bill, shall not be taxable in the hands of the holder, nor shall any additional tax be imposed upon the capital of the said companies. And it is provided that no city or corporation shall impose a greater tax than is provided by this bill, which tax can only be levied where the principal office of the company is located ; it is further provided, that on any company doing business on a purely mutual plan, and whose business is confined solely to the citv or county where organized, the tax shall be fifty dollars. Sec. 3. — All acts or parts of acts inconsistent with this act are hereby re- pealed. Sec. 4. — This act shall be in force from its passage, provided that associa- tions or companies now doing business within this state shall have until April first, eighteen hundred and ninety-four, to comply herewith. ACTS 1894, p. 500. Section 1 i. — Any number of persons, not less than five, may hereafter form a building and loan association for the purpose of encouraging industry, fru- gality and home building and saving among its members, upon being incor- porated as provided in section eleven hundred and forty-five, Code of Virginia. Building and loan associations formed under this chapter, or heretofore chartered or incorporated under said section, or by any general or special act, or formed or incorporated under the laws of any other state, which have complied with the laws of this state, shall have the right to lend to the stock- holders or to other persons the moneys accumulated from time to time, and the right to purchase land or erect houses, and to sell, convey, lease or mort- gage the same at their pleasure to their stockholders or others for the benefit of their stockholders. Such association may acquire, hold, convey and en- cumber all or any property, real or personal, taken by them as security or otherwise acquired by them in the due course of business ; and may also secure the payment of loans and the performance of the conditions upon which loans are made, and the payment of the purchase money for any prop- erty sold by taking personal security, or by a mortgage or deed of trust upon real or personal property and by a transfer and pledge of its stock. Such associations shall have the power to establish and maintain, by their officers and agents, branch offices lor the transaction of their business at as many desirable. SEi . 2. — It shall be lawful for every such association or company to fix by its by-laws the premiums or bonus at which it will dispose of the money in its treasury to its stockholders, and award or lend to any member or stock- holder the value of any shares held by him, less such premium or bonus, and the mode of making the disposal, loan or award shall be fixed by the by laws, and to charge and receive said premium in advance or in instal- ments, or in default of application for said money by stockholders, it shall be lawful for bu( ii companies or associations to lend the same to other persons on such term .1 may be agreed upon and in such manner as maybe fixed by laws. Sec. I Every a ociation nuv lew, assess and collect from its stockhold- : men! upon evcrv hare ol its slock, the amount, time and man im hi oi the s; i to be fixed by the by-laws, and the said stock may i"' paid Ofl ami olio I a thi I'' 1 IW hall due. I ; and iiliv lew, assess and Collect from members to whom loan-, have been made interest upon the GENERAL LEGISLATION. 895 par value of the shares redeemed ; and may levy, assess and collect fines for the non-payment of dues or for failure to comply with or perform any other obligation or duty to the association. The amount of the respective inns shall be fixed by the by-laws, and they shall be imposed under regulations to be made by the by-laws. Sec 4. — A borrower from such associations may repay the loan at any time ; but in case of the repayment thereof before the maturity of the loan the bor- rower shall pay such an amount for the privilege as may have been agreed upon or is provided for in the by-laws ; and there shall be refunded to such borrower, in case the premium shall have been deducted in advance, such proportion of the premium bid as the by-laws may determine. Stockholders withdrawing voluntarily shall receive such proportion of the profits of the association or such rate of interest as may be prescribed by the by-laws. Sec. 5. — Every such association shall adopt by-laws for its government and the management of its business not inconsistent with this act. WASHINGTON. BALLINGER'S ANNOTATED STATUTES AND CODES OF 1897. Volume I.— General Statutes. Sec. 4395. — Whenever any member [number] of persons not less than ten desire to be incorporated as a building and loan association for the purpose of accumulating the savings and funds of its members and lending them only the funds so accumlated, they shall make and execute a written declaration to that effect in the form now provided by statute for the execution of deeds of real estate, to entitle the same to record. Said declaration shall state the name of such association, its principal place of business, which shall be within this state, the limit of capital to be accumulated, the time of its duration, the names and places of residence of such persons, and that it is organized under this chapter for the purpose herein expressed. When so executed said declaration shall be filed and recorded in the office of the secretary of state, whereupon such officer shall issue a copy of such declaration under his cer- tificate, in proper form, setting forth the time and place of filing and record- ing thereof in his office, which declaration and certificate shall thereupon be recorded in the office of the recorder of deeds of the county where such as- sociation is located, and published once in a daily or weekly newspaper, printed and published and of general circulation in said county. Upon com- plying with the foregoing requirement, and upon filing an affidavit of proof of such publication in the office of the secretary of state, the persons exe- cuting such declaration, their associates and successors, shall become a cor- porate body. Sec. 4396. — The name shall not be the same as, nor too closely resemble that in use by any existing corporation established under the laws of this state, the words " building and loan association," or " savings and loan associa- tion," shall form a part of the name, and no corporation not organized under this chapter shall be entitled to use a name embodying either [of] said combi- nation [s] of words ; Provided, that associations now existing may continue their present names. Sec 4397. — Each association shall adopt by-laws for its government, and therein describe the manner in which its business shall be transacted, which by-laws shall be in conformity with the provisions of this chapter and the laws of this state, and at all times be open to the inspection of the state auditor, and the members of the association at its home office. All by-laws shall be sub- ject to the approval of the state auditor before going into effect, and every corpo- ration heretofore organized and brought under the provisions of this chapter shall, within sixty days from the passage hereof, present its by-laws to said auditor for approval, and in case any provision in such by-laws shall be contrary to the provisions of this chapter or to the laws of this state, or be detrimental to the interests of the members of such organization, or against public policy, he may, under the advice and consent of the attorney general, require the same to be stricken out. Sec 4398. — For every loan made, a note non-negotiable or bond secured by first mortgage on real estate shall be given, which security shall be double the value of the loan, and satisfactory to the directors, and shall be accom- panied by a transfer and pledge of the shares of the borrowers to the associa- tion. The shares so pledged shall be held by the corporation as collateral security for the performance of the conditions of said note or bond and mort- 896 APPENDIX IV. gage ; Provided, that the shares, without other security, may, in the dis- cretion of the directors, be accepted as security for the loans for an amount not exceeding their withdrawal value as provided by this chapter. Sec. 4399. — Any such association may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien or other incumbrance, or in which it may have any interest, and may sell, convey, lease or mortgage the same at pleasure to any person or persons, but shall not otherwise acquire or deal in real estate ; Provided, that any such asso- ciation may acquire any leasehold interest necessary for the transaction of its business. Sec. 4400. — Every building and loan association heretofore or hereafter in- corporated under the laws of this state, and governed by this chapter, shall deposit and keep with the state auditor, or with a duly chartered trust company of this state, approved by the state auditor, in trust for all its members and creditors, all mortgage or other securities received by it in the usual course of business. When deposited with a trust company, such company shall certify to the state auditor the possession of such securities, and the same shall not be surrendered without the authority or sanction of the state audi- tor ; Provided, that every such corporation heretofore organized not having or owning mortgage or other securities to the amount of twenty-five thousand dollars shall deposit with the state auditor additional securities, to make, with the securities so owned and deposited, equal in value to said sum of twenty- five thousand dollars, and every such corporation hereafter organized under this chapter shall deposit and keep with the state auditor, in trust, as afore- said, securities of the value of twenty-five thousand dollars before commencing to do business. The securities mentioned in this proviso shall consist of bonds or treasury notes of the United States or national bank stocks, or bonds of this state, or any other state of the United States, or of any solvent city, county, or town of this state, or any other state of the United States, having legal author- ity to issue the same, and such securities may be withdrawn, from time to time, when mortgage securities of corresponding value shall be deposited, as provided in this chapter, or when other securities of like character are substi- tuted therefor ; and it shall be the duty of the state auditor, from time to time, to examine said associations, to ascertain whether all its securities are depos- ited as required by this chapter ; Provided, that whenever required by laws of any other state, territory, or nation all securities taken in such state'by any association organized under the laws of this state, and subject to the pro- visions of this chapter, may be deposited with some officer authorized to receive the same in such state under the laws thereof, for the bene- fit of its members and creditors ; but in every such case a certificate of such deposit, showing the amount and character of such deposit, shall be filed with the auditor of this state, and renewed annually together with a statement, verified by the affidavit of some officer of such association who has knowledge of the facts, showing all of the securities taken by such asso- ciation in such state at the time of the filing of such certificate ; and in case any securities taken in any such state are not deposited there, then the same shall be deposited here, as required by this chapter. Skc. 4401.— All interest, and dividends, and premiums, which may accrue on securities held by the state auditor, or such trust company as provided for herein, and all dues or monthly payments which may become payable on stock pledged as security for loans, the mortgages for which are so deposited in accordance with the provisions of this chapter, may be collected and re- tained by the association depositing such securities or mortgages, so long as n iation remains solvent, and faithfully performs all contracts with its members, and when any mortgage shall have been fully paid to said cor- 1 ime may be surrendered by said state auditor, or under his or- - filing with him a certificate 01 the auditor of the county where the real estate is situated, to the effect that the satisfaction of such mortgage In . been filed for record, <>r in case no mortgage was taken, then the ivit of the secretary or treasurer of said corporation showing judgment Any mortgage upon which default has been made may be surrendered as 1, upon tiling with the state auditor an affidavit sworn to by thepresi- 111 l secretary of the association owning the same, stating that such mortgage is in default, and that it is withdrawn tor the purpose of foreclosure. Se» . 140Z -No building or loan association organized under the laws of any e, territory 01 nation shall do business in this state unless such as- h ill ha ! <■' urities of the value of one hundred thousand dollars, and ot the 1 harai ter mentioned in this chapter, on deposit in trust for all its .'cis and creditors with some responsible trust company, duly incorpo- GENERAL LEGISLATION. 897 rated under the laws of such state or territory in the United States, or with some authorized officer of this or some other state of the United States ; Pro- vided, that foreign companies now doing business in this state shall have until August first, A. D. eighteen hundred and ninety, to deposit the last one- half of the required one hundred thousand dollars. Certificate oi suchdi shall be made to the auditor of this state, certifying the possession oi such securities, which shall not thereafter be surrendered without the authority or consent of the auditor or other authorized officer of the state or territory in which said company is incorporated ; And provided further, that all such foreign companies shall make a deposit of their mortgages and other securi- ties taken in this state, in the same manner and amount, and for the sam fmrpose, as provided for home companies in section sixteen hundred and our of this volume of general statutes. Si;c. 4403. — Every building and loan association organized under the laws of any other state, territory or nation shall, before commencing to do business in this state, — 1. File with the state auditor of this state a duly authenticated copy of its charter or articles of incorporation ; 2. File with the state auditor of this state the certificate of the authorized officer of another state showing that securities of the value of one hundred thousand dollars are on deposit with such state officer or duly incorporated trust company, in trust for all the members and creditors of such building and loan association ; 3. File with the auditor of this state a duly authenticated copy of a resolu- tion adopted by the board of directors of such association, stipulating and agreeing that if any legal process affecting such association be served on such examiner, and a copy thereof be mailed, postage prepaid, by the party pro- curing the issue of the same, or his attorney, to said association, addressed to its home office, then such service and mailing of such process shall have the same effect as personal service on said association in this state, and also an agreement that said association will not remove any action commenced in any state court of this state against the same to the United States court, and will pay every judgment that may be taken against it upon any such action within sixty days after the final judgment shall have been entered ; 4. Pay to the state auditor twenty-five dollars as fees for filing the papers mentioned in this section. Sec. 4404. — When process against or affecting any foreign building and loan association is served on the state auditor, the same shall be by duplicate copies, one of which shall be filed in the office of the state auditor, and the other by him immediately mailed, postage prepaid, to the home office of said association. Sec. 4405. — The word " process," in this chapter, shall include any writ, dec- laration, summons, or order whereby any action, writ or proceedings shall be commenced, or which shall be issued in or upon any action, suit or pro- ceeding authorized by law in this state. Sec. 4406. — Services of process, according to a stipulation provided in sec- tion sixteen hundred and seven of this volume of general statutes, shall be sufficient personal service on the association filing such stipulation. Sec. 4407. — When, by the laws of any other state, territory or nation, any taxes, fines, penalties, licenses, fees, deposits of money or securities, or other obligations or prohibitions, are imposed on building and loan associations of this state, doing business in such other state, territory, or nation, or upon their agents therein, so long as such laws continue in force, the same obligations and prohibitions, of whatever kind, shall be imposed upon all building and loan associations of such other state, territory or nation doing business in this state, and upon their agents here. Sec. 4408. — Any building and loan association organized under the laws of any other state or territory that shall remove any action that shall be com- menced against it in a court of this state to the United States court, or that shall fail to pay any judgment rendered against it upon a suit in any court of the state within sixty days after the rendering of final judgment in such case, or that shall fail to make yearly statement to the state auditor, as hereafter mentioned, or statements of the amount and value of its stock held in this state, as hereafter required, or to pay the fees of the state auditor as provided in this chapter, or to do any other act required in this chapter to be done and performed, shall, upon failure or violation of the provisions of this chapter, have no right or authority to do or transact any further business within the limits of this state, and the state auditor shall thereupon cause notice of the termination of such authority to do business to be mailed to such corporation 898 APPENDIX IV. and to be published in some newspaper of general circulation at the capital of the state, and shall communicate the facts to the attorney general of this state, who shall institute such proceedings in the matter as the case may require ; Provided, any such corporation may be again authorized to com- mence business in this state upon such terms as the state auditor may deem just and proper, and upon full compliance with the provisions of this chapter. Sec. 4409. — All building and loan associations hereafter incorporated in this state shall have an authorized capital of two million dollars at the time of the incorporation. Sec. 4410. — Any building and loan association heretofore or hereafter incor- porated under the laws of this state may at any time increase the amount of its capital stock, or amend its articles of incorporation in any other respect, by a vote of at least three-fourths of its board of directors ; Provided, that no such increase shall be made unless three-fourths of the capital stock pre- viously authorized has actually been issued, and the amount of increase made at any one time shall not exceed the amount issued previous to the time of such increase. Sec. 441 1. — Whenever any building and loan association increases its capital stock, or otherwise amends its articles of incorporation, as provided in this chapter, a copy of the resolutions of the board of directors making such in- crease or other amendment, duly verified by oath of the president and secre- tary of such association, shall be filed in the office of the auditor of the county in which the home office of said association is located, and in the office of the secretary 1 >f state, and be published four successive times in the same daily or weekly newspaper published at the capital of the state, or in the county where the association has its home office. Proof of such publication shall be filed in [the] office of the secretary of state. Sec. 4412.— On or before the first day of September in each year every building and loan association doing business in this state shall deposit with the state auditor a report of its affairs and operations for the year ending on the thirtieth day of June immediately preceding. Such report shall be veri- fied under oath bv the president and secretary, or by three directors of the association, and shall contain answers to the following questions : — 1. The amount of authorized capital, and the par value of each share of stock ; 2. The number of shares sold during the year ; 3. The number of shares cancelled and withdrawn during the year; 4. Number of shares in force at the end of the year ; 5. A detailed statement of receipts and disbursements during the year ; 6. A detailed statement of the assets and liabilities at the end of the year, and shall pav to the state auditor a fee of twenty-five dollars on filing such report. If any such association shall fail to furnish to the auditor of the state any report required by this chapter, at the time so required, it shall forfeit the sum of twenty-five dollars per day for every day such report shall be delayed or withheld ; and the auditor may maintain an action in his name of office to er such penalty, and the same shall be paid into the treasury of the state and applied to I lie expenses of the department of said auditor. After receiving such report, the auditor, if satisfied that such corporation has complied with all the provisions of this chapter, and is entitled to do business in this state, he shall issue his certificate slating the compliance with such provisions, and that [such] corporation isentitled to do business in this slate, which certificate shall be in force for the period of one year, unless sooner rescinded, as pro- vided in this chapter. Such certificate shall also be issued to any foreign cor- poration authorized to do business in this state after complying with the con- ditions t,f section sixteen hundred and seven of this volume of general statutes, and hall be in force until the time herein required for such annual report. Sec. 4413.— II shall be the duty of such state auditor, at least once in each and as often as he may deem necessary, to assume and exercise over every building a sociation incorporated under the laws of this state, its busi- offii eis, directors, and employees, all the power and authority conferred upon him over banks and othei moneyed ( orporations under the laws of this Provided, he shall not have the power to suspend the operation of any • cent in the manner provided in the next succeeding section. Si 1 . 441 l- 1 1 it shall appear to the said state auditor, from any examination made by him, or from any report of any examination made by him, orfrom tnnual report at ore aid, thai said « orporation is violating its charter or the 1 thai it is conducting business in any unsafe, unauthorized or dishonest manner, he Bhall, by an order under his hand and seal of office, addressed to GENERAL LEGISLATION. 899 such corporation, direct conformity with the requirements of its charter and of the law ; and whenever such corporation shall refuse or neglect to make such report or account as may be lawfully required, or to comply with such order as aforesaid, or whenever it shall appear to the said auditor that it is un- safe or inexpedient for any such corporation to continue to transact business, he shall communicate the facts to the attorney general, who shall thereupon be authorized to institute such proceedings against any such corporations as are now or may hereafter be provided by law in the case of insolvent corpora- tions, or such other proceedings as the occasion may require. And if such corporation shall have been organized under the laws oi any other slate or territory, the said attorney general shall, upon receiving such communication, if in his judgment the facts in the case are sufficient to warrant such action, give notice to such corporation that it is no longer authorized to d< i business in this state, by depositing such notice in the postoffice, properly sealed and stamped, addressed to the said corporation at its principal office in the state where incorporated, and thereupon said corporation shall cease to have any right in this state, and said notice may be published in the manner as provided in section sixteen hundred and twelve of this volume of general statutes. Sec. 4415. — All officers of any building and loan association governed by this chapter and doing business in this state, who sign or indorse check-, or handle any of the funds of such association, shall give bonds or fidelity in- surance for the faithful performance of their duties as the board of directors may require, and no such officer shall be deemed qualified to enter upon the duties of his office until his bond is approved by the board of directors and the state auditor, with whom such bonds shall be tiled ; Provided, that the state auditor may require of any association, at any time, such increase of said bond or additional sureties thereto, or such increase of said insurance, as he may deem necessary for the protection of the members. The penalty for a failure of any association to rile and maintain the bonds and policy as required by the provisions of this section shall be a hue of one hundred dollars for each day such association transacts business after such bonds have become due under the provisions of this, chapter. Said bonds or policy shall be held in trust for the benefit and protection of the members of such association, and shall be en forcible by any member whenever cause of action shall accrue thereon. Sec. 4416. — The name " building and loan association," as used in this chapter, shall include all corporations, societies, organizations and associa- tions doing a saving and loan or investment business on the building society plan, whether neutral or otherwise, and whether issuing certificates of stock which mature at a time fixed in advance or not. Sec. 4417. — Any officer, director or agent, or [of] any foreign building and loan association, or any other person whomsoever who shall, in this state, solicit subscriptions to the stock of such association, or who shall sell or issue, or knowingly cause to be sold or issued, to a resident of this state any stock of such association while such association shall not have had the certificate of the state auditor authorizing it to do business in this state, as herein prescribed, or has not deposited, as required by this chapter, securities of the value and at the times herein prescribed, or before said association has complied with all the provisions of this chapter, or when said association shall have been notified and required to discontinue business in this state, as hereinbefore provided, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or bv imprisonment of not less than ten clays nor more than six months, or both such fine and imprisonment, in the discretion of the court. Sec. 4418. — Any officer, director or agent of any building and loan associa- tion incorporated under the laws of this state, or any other person whatever, who shall sell or issue, or knowingly cause to be sold or issued, to any person not a resident of the county in which the home office of said association is located, or in the counties immediately adjacent thereto, any stock of said association while said association does not have on deposit with the state auditor, as required by this chapter, securities of the value and at the time herein prescribed, or while such association shall not have the certificate of the public examiner, authorizing it to do business as herein prescribed, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars and not more than five hundred dollars, or bv imprisonment of not less than ten days nor more than six months, or both such fine and imprisonment, in the discretion of the court. Sec. 4419.— Any premiums taken for loans made by any association governed 900 APPENDIX IV. by this chapter shall not be considered or treated as interest, nor render such association amenable to the laws relating to usury. Sec. 4420. — Every such association heretofore organized under the laws of this state, or incorporated under this chapter, is hereby prohibited from here- after creating or issuing any preferred or non-contributing stock ; but this section shall not prevent the issue of different series of stock. Sec. 44-1. — Any shareholder whose stock has not been declared forfeited in such association, and whose share or shares are not pledged upon a loan, may withdraw such share or shares from the association at any time after one year, by giving at least sixty days' notice in writing to the secretary of his in- tention to do so. Upon receipt of such notice, the same may be considered a withdrawal by such person, and the association may, within sixty days, dispose of said stock, and the members shall assign them for that purpose. At the end of said sixty clays the association shall pay to the members so sur- rendering as follows : If said stock is more than two years old, all amounts paid in by such members upon such stock, except the sums paid as member- ship fees and fines, and the amount set apart unon such shares by said associa- tion as an expense fund, which expense fund, however shall not exceed the amount fixed in this chapter ; if said stock is more than two years old, the member, upon such surrender, shall receive, in addition to the amount above specified, at least three-fourths of all profits standing to the credit of such shares ; Provided, that not more than one-half of the monthly instalments received by such association for any month shall be used to pay with- drawals without consent of the board of directors. Sec. 4422. — Whenever any such association shall declare any of its stock forfeited for non-compliance of the holder with any of its laws or regulations, the said stock shall, it one year old, be sold by said association at a monthly meeting thereof to the highest bidder, and it is made the duty of such associa- tion, at any such sale, to bid in the stock so offered at its then withdrawal value, and thereupon said stock shall be cancelled ; but, if a higher bid is received, the person making the highest bid shall have such stock assigned to him, and upon such sale, said association shall pay to the member so forfeiting his stock the withdrawal value thereof as fixed in the next preceding section of this chapter, less all fines and arrearages against him. Sec. 4423. — Upon the death of a stockholder in any such association, except in cases where the stock matures at a fixed and definite time as aforesaid, his heirs or personal representatives shall, upon giving sixty days' notice to the association, receive from such association the then withdrawal value of his shares, agreeable to the provisions of section sixteen hundred and twenty-five of this volume of general statutes. Sec. 4424. — Every such association shall provide in its by-laws in what manner applications and bids for loans shall be received and who shall be en- titled to loans thereunder ; such bids shall be opened at stated times, and all the money in the loan funds shall be loaned upon such bids ; Providing, that the securities shall be in the amount and of character stated in this chapter, and the amount bid shall not be less than the rate for any legal indebtedness under the laws of this stale, the object of this section being to prevent such association from retaining in its loan fund any moneys actually bid for, for the purpose of securing belter bids or inducing the bidders to raise their bids, and to compel said ass< iciations to loan their funds to the highest and best bidders therefor; Provided, that the provisions of this section relating to bidding for loans shall not apply to associations which fix the rate of interest and premium annually, by resolution of the board of directors, at a rate which will keep the money oi such association at all times safely invested, and in which the system ot bidding is not allowed. Si 1 . 442C — No association governed by this chapter shall set apart as an ex- pense fund, exclu ive "i admission fee , to exceed one dollar peryearupon 1 oi 1 tock, or assess any fines for non-payment of monthly instal- ments, 01 otherwise, in excess ol ten cents per share for the first month that line hall be in arrears, and fifteen cents per share per month for every month Si 1 . H'' 1 \" 1 more than three of the officers of any such association incorporated under the laws of this state shall be members oi Hie board of m-Ii ation ; Provided, 1l1.1t no change shall be required under this se< lion until the next annual meeting of such association. . , . Ml " organized in this state and doing business in in othei late, a building and loan associations, shall comply with and to all the provisions ol this act within sixty days after its passage, ball be entitled to .ill il privileges and benefits thereof without reincor- GENERAL LEGISLATION. 901 porating ; Provided, that all such companies or associations, organized in the state prior to the passage of the act of which this act is amendatory, shall only be required to deposit all their securities in the manner provided by the act of which this actis amendatory, but shall not be required to depo-it any other or further securities than are provided by this section as hereby amended. SEC. 44-^- — This chapter shall not apply to any association organized under the laws of this state winch confines its loaning and business 0] erations wholly to its county and the [counties] adjacent and adjoining thereto \Provided, that any such association heretofore incorporated which desires tohereaftei confine its'business to adjacent counties, as aforesaid, may hie w ith the state auditor a statement to that effect, and also containing the names of those holding, and the amount held by them, of the stock of said association outside such counties, and so long as such association thereafter confines its -ales oi stock within the limits aforesaid it shall not be subject to the provision) sj hereof, and any sales of stock outside the limits of said counties made after filing all such state- ment[s] by any officer, director or agent of any such association, shall sub- ject such person to all the penalties prescribed in section sixteen hundred and twenty-two of this volume of general statutes ; Provided further, that nothing in this section shall be so construed [as] to prevent the bona fide sale or trans- fer oi the individual stock of any member of such association. SEC. 4421;.— Every such association shall be assessed for and pay taxes upon its office furniture and fixtures and all real estate acquired in the course of its business, and every stockholder in such association shall be assessed and pay taxes upon the share[s] held by him therein, the value of which said shares for the purpose of taxation shall be fixed at the withdrawal value thereof, as provided in section sixteen hundred and twenty-live of this volume of general statutes, except in case of such associations the stock of which heretofore or hereafter issued shall mature at a fixed time, and the value of the shares in any such association of all stocks so issued as aforesaid for the purpose of taxation shall be fixed upon the basis of the aggregate amount paid in by a member, together with interest at the rate of six per cent, per annum, computed on an- nual risks. Sec. 4430. — It shall be the duty of the secretary of every such association in- corporated under the laws of this state to make out and transmit to the auditor of every county in this state in which said association shall have shareholders, on the first day of May in each year, a statement containing the names of every person holding stock" in such association in such county, and the amount and value of the respective shares of such stock at such date, upon the basis oi its value as fixed in this chapter, and any failure to comply with the provisions of this section by any such association shall be deemed sufficient cause for j ro- ceeding under this chapter for forfeiture of the charter of the association so of- fending. The books and papers of every such association shall also be open at all convenient times for inspection by any assessor desiring to make examin- ation thereof for purposes of taxation ; Provided that no report shall be required under this section upon stock pledged as collateral security for a loan, so long as the amount of such loan exceeds the withdrawal value of such stock as fixed in this act and, when it shall exceed such value, then only as to such excess. Sec 443T. — It shall be the duty of every such association not incorporated under the'laws of this state to make and forward to the public examiner, upon the first dav of May in each year, a statement containing the names and the withdrawal value of all its stock held and owned by residents of this state, to- gether with the place of residence of every such stockholder, except those having loans as provided in the foregoing section, and it shall be the duty oi the said state auditor to make out and forward to the county auditor of the proper counties a statement of the stock held by them ; and it shall be the duty of tlie said county auditor, upon receiving the statement provided for in this and the foregoing sections, to furnish the assessors of each township in his county having such stockholders with the names of such stockholders, and the value of their stock, as given in such statements, for the purpose of assess- ment. Sec. 4432.— The state auditor shall receive and retain all the fees mentioned in this chapter, and the same shall be in lieu of any allowance of clerk hire made necessary by the extra labor required by the provisions of this chapter. Sec. 4433.— At leasf thirty days prior to any annual or special meeting of any such association, a notice, stating the time and place of such meetings, shall be deposited in the postoffice at the headquarters of such association, directed to each member at his address as the same appears at the time on the books of the association ; and when so deposited, postage prepaid, shall be deemed a legal and sufficient notice of any such meeting ; and there shall be attached 53 902 APPENDIX IV. to and accompany such notice any proposed amendment or amendments to the articles of association, or by-laws of such association and a statement of any officers to be elected at such meeting, any member of such association entitled to vote in person or by proxy. WEST VIRGINIA. CODE OF 1891, THIRD EDITION.— Chapter 54. Section 2. — Such companies [joint stock companies] may be incorporated for the following purposes : * * * 3. For establishing * * * building and loan associations, and transacting the business properly pertaining thereto. * * * Sec. 2y — Any number of persons, not less than nine, may form a building and loan association for the purpose of encouraging industry, frugality and home building, and saving among its members. Building and loan associa- tions formed under this chapter shall have the right and power of loaning to its stockholders thereof, the moneys accumulated from time to time, as well as the right and power to purchase land 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. Such associations may acquire, hold, convey and encumber all such property, real and personal, as may be taken as security, or may be otherwise transferred to it in the due course of its business, and may secure the payment of loans and the performance of the other conditions upon which loans are to be made, or the payment of the purchase money for any property sold, by taking personal security, or by a mi ntgage or deed of trust upon real or personal property, or by a transfer or pledge of its stock. Sec. 26. — Every such association shall have the power to provide by its by- laws for selling to the stockholders, who shall bid the highest premium there- for, the money in the treasury, or in default of bidders at or above a minimum premium, may award to a member the value of any shares held by him less such minimum premium ; the minimum premium, and the mode of making the award to be fixed by the by-laws. Or such association may charge and receive the premium bid by a stockholder for the priority of rights to such loans, in periodical instalments ; but the by-laws of every association shall set forth whether the premium bid for the prior right to a loan shall be deducted therefrom in advance, or be paid in periodical instalments. But whether the premium be deducted from the loan, or paid in periodical instalments, the transaction shall not be deemed usurious, although any and all the dues, fines, premium and interest, shall exceed the legal rate of interest on the amount of money received by the stockholders. SEC. 27. — Every such association may levy, assess and collect from its stock- holders, periodical dues upon every share of its slock; the amount of such dues to be fixed by the by-laws; but no periodical payment to exceed two dollars upon each share ; and said slmk may be paid off and retired as the by- laws shall direct ; and may lew, assess and colled from members to whom loans have been made interest upon the par value of the shares so loaned; and may levy, assess and collect lines for the non-paymenl of periodical dues, or for failure to comply with or perform any other obligation or duty to the 1 iation. The amount of the respective fines shall be fixed bythe by-laws, and they shall be imposed under regulations to be made by the by-laws ; but such lines shall be uniform, and where they are imposed for default in the oi dues, shall be in proportion to the amount of the dues for the vhich they are imposed ; but 110 members shall be fined more than once fi >r the same default. Sec 28.— A borrower from such association may repay the loan at anytime; and in case of the repayment thereof before the maturity of the shares pledged for said loan, there shall be refunded to such borrower, in case the premium shad n deducted in advance, such proportions of the premium hid, as the 1 nay determine ; but the borrower shall receive the withdrawing value of th Iged for said loan, and the shares shall revert back to ation. Stockholders withdrawing voluntarily shall receive such n ol the profits of the asso< iation, 01 u< h rate of interest as maybe 1 by the by-law - In ca e oi default oi a borrower to pay dues, mi' : nium, foi the period oi three months, payment of (he same, ther with the lull principal oi the loan, may be enforced by proceedings ii .i' 1 ording CO law ; and the money so received shall be paid h( trea ury of the association; and il the moneys so recovered shall GENERAL LEGISLATION. 903 exceed the amount it would have required to repay the loan under the fust part of this section, together with all the expenses incurred by the association, such excess shall be paid to such borrower. SEC 20. — Every such association shall adopt by-laws, which shall embrace all the provisions of the lour proceeding [ preceding J sections, and such further provisions for its government and the management of its business, not inconsistent with these sections, as it may deem proper. WISCONSIN. ACT 1807, p. 953. Section I. — A corporation for the purpose of raising money to be loaned among its members shall be known in this act as a " budding and loan " asso- ciation ; if organized under the laws of this state, as a local association ; if under the laws of any other state or territory, as a foreign association. The words " building and loan association " shall form part of the name of every such local association hereafter organized, and no corporation not organized under this act shall be entitled to use a name embodying said words, except that corporations now existing may continue their present names. Sec. 2. — Such local association may be organized and conducted under the general laws of Wisconsin relating to corporations, except as otherwise pro- vided in this act ; but the articles of incorporation, amendments thereof and all papers in relation thereto, required by said laws to be tiled with the secretary of state, shall be instead tiled with the bank examiner, who shall have power to issue the charter or certificate of incorporation ; but such cer- tificate shall not issue until a verified copy of the by-laws adopted by the asso- ciation shall be filed with said bank examiner, and not until the articles and by-laws shall have been examined by the attorney general and approved, by him as conforming to the requirements of this act. And no such local asso- ciation shall, until such certificate be duly issued, have legal existence ; and only such by-laws and alterations and amendments thereof as shall have been filed and approved as herein provided, shall be deemed operative. The fees for said certificate shall be ten dollars, for filing amendments to the articles of incorporation five dollars, which said fees shall be paid to the bank examiner, and all fees received from such associations shall be paid into the state treasury. Sec. 3. — Such local associations shall have power : 1. To issue stock to members; to assess and collect from members fees, dues, fines and other charges, and interest and premiums, and the same shall not be held to be usurious ; to permit or force members to withdraw all or part of their stock ; to make loans to members ; all upon such terms and con- ditions as may be provided in the by-laws. 2. To borrow money for temporary imposes not inconsistent with the objects of the association, and issue its' evidences of indebtedness or paid-up stock therefor, but for no longer term than one year, and not exceeding, in the aggregate amount, one-fifth of the assets on hand. 3. The only real estate which it shall be lawful for any local association to acquire, by purchase or otherwise, shall be such as it may be necessary to buy or take in the protection or enforcement of its securities, and the collec- tion of any claims or debts due to it, and such real estate shall be sold within teu years from acquiring title thereto. 4. To delegate authority to its directors to alter or amend the by-laws of the association, under such restrictions and limitations as it may deem proper. 5. All such powers as are necessary and proper to enable such local associa- tion to carrv out the purposes of its organization. Sec. 4. — The capital stock of any such corporation shall not exceed five million dollars in the aggregate, and may be issued in one or more successive series, and in such amount as the directors, in the absence of a provision in the by-laws, may determine ; but no single series shall exceed in amount the sum of five hundred thousand dollars, nor one-tenth of the aggregate capital stock. The said capital stock shall be divided into shares of not less than twenty-five nor more than two hundred dollars each, payable in periodical instalments, called dues, not exceeding two dollars each per share. No paid- up stock shall be issued except as provided in section 9, hereof. Sec. 5.— All shares withdrawn, forfeited, retired, matured and surrendered, shall be cancelled and become the property of the association and in lieu of the same new shares may be issued in any subsequent series. Unpaid in- 904 APPENDIX IV. stalments and other charges upon shares shall be a lien thereon, enforcible as in the by-laws prescribed. Payment of dues or interest may be made in advance, but no interest shall be allowed therefor at a greater rate than six per cent, per annum, nor for a longer period than one year. Sec. 6. — The shares of a member who continues in arrears for dues, in- terest or premiums more than six months, shall, at the option of the directors, be declared forfeited, and the withdrawal value of the shares at the time of the first default shall be ascertained and all fines and other charges shall be deducted therefrom. If said member is not a borrower he shall be entitled to receive said balance on thirty days' notice, without interest ; if he is a bor- rower then said balance shall be applied as a payment upon his loan. All shares so forfeited shall cease to participate in any profits of the association accruing after the last adjustment and valuation of said -hares before said default, but shall revert to the association freed from all interest claim or demand on the part of such defaulting member, or any person claiming under him. Sec. 7. — A member may withdraw his unpledged shares at any time by giving thirty days written notice of such intention, and shall then be entitled to receive the amount of dues paid in by him and such proportion of the profits as the by-laws may prescribe, less all fines and other charges, and in the order of his respective turn of presenting such notice ; but at no time shall more than one-half of the funds in the treasury be applicable to the demands of withdrawing members without the consent of the directors. Sec. 8. — Upon the death of a member his legal representatives shall be entitled to receive, sixty days from the date of said death, the full amount of dues paid in by him and legal interest thereon, first deducting all charges that may be due on the stock ; Provided, that in case of shares } ledged for a 1 >an, this section shall not apply unless the said loan be fully repaid within the aforesaid sixty days. No fine shall be charged to a deceased member's account after his decease, unless his legal representatives shall have assumed future payments on such shares. Sec. 9.— When the stock in any series shall have reached its matured value payment of dues thereon shall cease, and all borrowers in such series shall be entitled to have their securities returned to them and cancelled. The holder of unpledged shares in such series shall be paid out of the funds of the association, the matured value thereof, or receive paid up stock therefor, and, in either case, with such rate of interest as shall be determined by the by-laws from the time the directors shall declare such series to have matured : paid. And when such maturity is reached between the dates of adjust- ment Hi profits the holders of all the shares in such series shall, in addition to the value thereof, be entitled to interest at such rate as may be fixed by the by-laws for all full months from the date of the preceding adjustment. Pro- -. ided. that at no time shall more than one-half of the monthly receipts of the association be applicable to the payment of matured shares without consent of the directors. But the directors may, at anytime before maturity, retire unpledged shares by enforcing the withdrawal of the same, as prescribed in the by-laws and articles of incorporation. SEC. 10. — At slated meetings, the money in the treasury shall be offered for loan in open meeting, and the member who shall bid the highest premium for the preference or priority of the loan shall be entitled to a loan lor the full amounl of each share of stock held by him with interest at such rate as may lie fixed by the by-laws. The premium bid mav be a certain sum or per- centage on the loan to be deducted in advance from the loan, or mav be by cal payments during the existence of the loan, as the bylaws ; Provided, that the offer in open meeting mav be dispensed 1 when the by-laws prescribe a fixed rate of interest and premium, or a bidding. Sec. 11. — Forevery loan made a non-negotiable note, or bond, secured by morl 1 oil. tate situated in the county where such association is 1 11 ated, and unin< umbered ex< ej 1 by prior loans oi such association, shall be give- inied by a transfei 01 pledge to the association oi the shares ed u « j Pi mded, thai any association heretofore organized may make loan upi :al estate situated outside of the county where such a 1 m i located, if authorized thereto by its articles of incorporation or by- Sui 1 1 mortgage hall have priority Over all liens upon I he mortgaged tnd thi buildings and improvements thereon, which shall be filed cording of such mortgage. The directors mav. in their di ense with said mortgage when the withdrawal value oi the ■ . .-. ■ d upon ■ hall exi eed the amounl borrowed and interest there- GENERAL LEGISLATION. 905 mi for six months. If the borrower neglect to offer security satisfactory to the directors within the time prescribed by the by-laws his right to loan shall be forfeite 1, and he shall be charged with one month's interest and premium at the rate bid by him, together with any expense incurred, and the money may be reloaned at any subsequent meeting. SEC. 12. — A borrower may repay his loan at any time. He shall be charged with the full amount of the original loan together with interest, premium and hues in arrears ; he shall be given credit lor the withdrawal value of his shares, pledged and transferred as security, and in cases where the premium was deducted from the loan in advance with such proportion of the premium so deducted as the part of the term unexpired bears to the whole term of the loan, f'he balance shall be received by the association in full satisfaction and discharge of said loan, and the shares thus credited shall be cancelled and revert back to the association. All settlements made at periods interven- ing between stated meetings of directors shall be made as of the date of the stated meeting next succeeding such settlement. A borrower may, at his op- tion, repay his loan without claiming credit for said shares, whereupon said shares shall be retransferred to him freed from all claim, by reason of said loan. Partial payments of loans may be made in a sum equal to the par value of one share, or any multiple thereof, and for each such sum one share of stock shall be released from pledge. Sec. [3. — Whenever a borrower shall be six months in arrears in the pay- ment of his dues, or interest, or premium, his whole loan shall become due and payable, without deduction of any premium paid ; his pledged shares may be declared forfeited and their withdrawal value, at the time of the hist default, applied as a payment on the loan ; the balance, with interest and premium, lines and other charges thereon, from the time of the first default, may be enforced by proceedings on his security according to law. When the amount thus collected exceeds the amount due, the excess shall be re- turned to the defaulting borrower ; the money received shall be re-loaned at any subsequent meeting. Sec. 14. — Any person of full age and sound mind may become a member of such association in such manner as may be prescribed in the by-laws ; but no person shall become the owner of more than one hundred shares. Shares may be issued to minors above the age of fourteen years, who shall then bo subject to the same duties and liabilities as adult members, and such shares in the discretion of the directors may be withdrawn by such minor, or its parent or guardian, but in either case the payment made on such withdrawal shall be valid, as well as in relation to payment on shares forfeited, retired or matured. Minors under fourteen may hold by trustee or guardian. The by- laws may limit the number of votes each member may be entitled to, and may prohibit voting by proxy. Sec. 15. — The real estate owned by such local association shall be assessed for taxation in the same manner as provided in case of other corporations, but the shares of capital stock issued by, and the mortgages and other personal estate held by such association shall not be liable to taxation, except as provided in this act. The shares held by a member of a local association shall be exempt from levy and sale on execution or attachment to the amount of one thousand dollars in such shares at the withdrawal value thereof, provided that such ex- emption shall not apply to any person who shall have a homestead exempt under the general laws of this state. Sec. 16. — All expenses of such association unless otherwise provided in the by-laws shall be paid out of the earnings annually, and so much of the earn- ings as shall be necessary shall be set aside each year for that purpose. A portion of the earnings on being determined by the directors, shall also be re- served annually, or semi-annually, for the payment of contingent losses ; but in all permanent or perpetual associations at least five per cent, of the net earnings shall be set aside each year for such fund until it reaches at least five per cent, of the outstanding loans. All losses shall be paid out of such fund until the sum is exhausted, and whenever said fund falls below live per cent, of the loans aforesaid, it shall be replenished by annual appropriations, of at least five per cent, of the earnings, as hereinbefore provided, until it again reaches said amount. The residue of such earnings shall be transferred as a dividend, to the credit of all members in such proportion, and payable at such times, and in such manner as the articles and by-laws may provide. All shares, at their maturity, shall be entitled to receive such share of said reserve fund as the directors may determine in addition to the amount mentioned in section 9, hereof. Sec. 17. — The by-laws of such local association must specify : The manner 906 APPENDIX IV. in which persons may become and cease to be members and the number of shares a member may own and hold ; the terms on which certificates for shares are to be issued, the form thereof and the fees therefor ; the number of shares a member may transfer, and the manner and condition of transfer, ami fees therefor ; the manner of renewing lost or destroyed certificates, and lees therefor ; whether interest shall be allowed on dues paid in advance, and if so, at what rate ; how shares in default may be forfeited and disposed of ; how snares may be withdrawn, the fees to be charged therefor, and the proportion of the profits payable on such withdrawal ; the regulations as to retiring shares, and the amount to be paid to holders thereof; the amount, time and manner of paying dues, interest, premiums, fees and other charges ; the method and manner of bidding for loans, and the terms and conditions upon which loans may be obtained, paid and cancelled ; provisions for the custody and handling of securities, and the banking and checking of funds ; when and how meetings shall be called and held, and what shall constitute a quorum ; the number of votes members may cast and whether voting by proxy be permitted ; the election and removal of officers, the filling of vacancies, defining duties and providing remuneration ; the fines on non-payment of any sum due, or for other defaults or violations of the rules and such other rules and regulations not inconsistent with law or the articles of incorporations, as the business of the association may require. Sec. iS. — All corporations formed under this or any other law, or authorized to transact in this state a business similar to that authorized to be done by this act, shall be under the control and supervision of the bank examiner. Every such corporation shall, annually, at the end of its fiscal year, make_ a full and detailed report of its business done the preceding year and of _ its condition at the close thereof, in such form and containing such information as said examiner may prescribe, and shall file with him a true and verified copy thereof within thirty days thereafter ; accompanying the same shall be an affidavit of the secretary of said corporation showing that a true copy of said report has been delivered or mailed to each member of said corporation. If any such corporation fail or refuse to furnish the report herein required, it shall forfeit the sum of ten dollars per day for each and every clay such report shall be withheld, and said examiner may maintain an action in the name of the state to recover such penalty, and the same shall be paid into the state treasury. Sec. 19. — Once every two years the said examiner shall make, or cause to be made, an examination into the affairs of all such corporations, and for that Eurpose he shall have full access to, and may compel the production of, all ooks, . -ccurities, moneys, etc., of the corporation, and have the power to administer oaths to, and examine the officers and agents of the corpora- tions as to ils affairs, and to punish for contempt. Special examinations shall be made upon written request of five or more members of any such corpora- tion, they guaranteeing the expense of the same; otherwise, the actual and necessary expenses of such examinations shall be paid out of the state treas- ury. Any such corporation refusing to submit loan examination duly or- dered or requested, shall have its charter revoked. SEC. 20. — Should the examiner, upon examination, find any such corporation ng it-- business in whole or in part contrary to law, or failing to cqm- tne law, he shall so notify the board of directors of such corporation in writing, and if, after thirty days, such illegal practices or failure continue, the facts to the attorney general, who shall cause proper pro- to be instituted to revoke the charter of such corporation. Should on examination, that the affairs of any such corporation are in an 1 and that the interests of the public demand the dissolution ition, and the winding up of its business, he shall so report to eneral, who shall institute the proper proceedings for that i On . ; before [une 1, [897, every mutual building and loan cor- 1 ] and heretofore incorporated under the laws of this state ii: tile m the office of the bank examine] a 1 , of its and of its by-laws in force at the time of the passage and publicati .1 thi act, the force and effeel oi which said articles and by- ill nol be affected nor invalidated by this act ; but alter said last men- tioned dale no ami ndmenl to said articles, nor to said by-laws, shall be valid, 1 pro da mi section 2, ol this act provided. 1 ol incorporation or the by-laws may provide for the • I 1 thi associatii in, and in case 1 'I dissolution the ■ nay, bj majoritj 1 authorized to sell and transfer its GENERAL LEGISLATION. 907 mortgage securities and other property to another corporation, person or per- sons subject always to the vested and accrued rights of the mortgagors. Sec. 23. — Said examiner shall annually, at the earliest practicable dale after the reports are received, make a report to the governor of the general con- duct and condition of all building and loan associations doing business in this stale, including the information contained in such reports, arranged in tabular form, together with such suggestions as he may deem expedient. He' shall also report the names and compensations of employees and other expenses in relation to such association, the whole amount of the income and the sources whence derived. One thousand copies of said report shall be printed ; each local association shall be entitled to three copies, the remainder to be for general distribution. Sec. 24. — No foreign building and loan association of any kind, and no foreign association or corporation representing itself to be a "building and loan association," or doing business on the building society plan, and no asso- ciation or corporation organized under the laws of any other state or territory and doing business in the manner provided for mutual loan and building corporations by this charter, or upon any similar instalment plan, shall issue its shares, receive moneys or transact any business in this slate unless such association shall have and keep on deposit with the state treasurer of Wiscon- sin, in trust, for the benefit and security of all its members in this slate, one hundred thousand dollars to be held in trust as aforesaid, until all shares of such association, held by residents of this state, shall have been fully re- deemed and paid off by such association, and until its contracts and obliga- tions to persons and members residing in this state shall have been fully per- formed and discharged ; the securities comprising such deposit shall first be approved by the bank examiner under the same laws and regulations govern- ing the approval of securities of insurance corporations ; and upon such deposit, the state treasurer shall issue a certificate for such deposit, and there- upon the bank examiner may issue his certificate of authority to said associa- tion to transact business in this state. Sec. 25. — The deposit to be made with the state treasurer by any foreign building and loan association may consist of bonds or treasury notes of the United States, or bonds of this state, or any other state of the 'United States, or any city, town or county of this state, or any other state of the United States having legal authority to issue the same, or mortgages, being first liens on real estate located in this state. All dividends and" interest which may accrue on securities held by the stale treasurer as provided for herein, and all dues or monthly payments which become payable on stock pledged as security for loans, the mortgages for which are on deposit with the state treasurer, in accordance with the provisions of this act, may be collected and retained by the association depositing such securities or mortgages, so long as such asso- ciation remains solvent and faithfully performs ad'eontracts with its members. Any securities on deposit as provided herein, if approved by the bank ex- aminer, may from time to time be withdrawn if others of equal value and of the character named in this section are substituted therefor. If any securities, as provided in this act, shall depreciate in value for any cause, new 7 securities must be added, so that the deposit may at all times be kept good and of the value of one hundred thousand dollars, and it shall be the duty of the hank examiner to revoke the certificate of authority of any such association when- ever there exists an impairment of such deposit for a period of more than thirty days, after due notice, by the bank examiner. Sec. 26. — No foreign building and loan association shall do business in this state without having first paid the fees prescribed in this act, and obtained from the state treasurer of Wisconsin a certificate that the deposit required by this act has been made, and from the bank examiner of this state a cer- tificate <>f authority or license, authorizing said association to do business in Wisconsin, stating that such association has complied with all the provisions of this chapter, and such certificate shall be in force one year, unless sooner revoked, and shall be renewed from year to year, and unless so renewed and continued in force such association shall in it do business in this state. S ice. 27. — Every foreign building and loan association before commencing to do business in this state shall : 1. File with the bank examiner a duly authenticated copy of its charter or articles of incorporation, and by-laws, copy of the certificates or shares issued, together with a copy of all printed matter issued by the associatii >n 2. Kile with the bank examiner of this state a certificate of the proper state officer having charge and supervision of such associations in the state in which incorporated, certifying that such association is duly and legally incor- 008 APPENDIX IV. porated and authorized to transact business, and that similar associations incorporated under the laws of this state are permitted and licensed to trans- act business in such state. S. Pay to the bank examiner twenty-five dollars for filing the papers men- tioned in this section. The bank examiner, before granting a license to any such corporation, organized or incorporated under the laws of any other state of the United States or foreign government, shall require that every such o >rporation shall first file in writing an appointment of the bank examiner, or his successor in office, as the attorney upon whom any summons, notice or process of any court of this state may be served, and stipulate that any service of any such "summons, notice or proceedings upon such attorney, in any action brought upon any cause of action arising out of any business or trans- action in this state, shall be accepted irrevocably as a valid service upon such corporation, and copies of said appointment certified by the bank examiner shall be deemed sufficient evidence of his authority to accept service as the attorney on behalf of any such corporation. Each such corporation shall agree in such appointment of attorney that the license granted by the bank examiner shall cease and be revoked in case such corporation shall remove or make application to remove into any court of the United States, any action or proceeding commenced in any court of this state, upon a claim o"r cause of action arising out of any business or transaction done in this state, and it shall be the imperative duty of the bank examiner to revoke any and every author- itv, license or certifiate granted to any such corporation, violating the pro- visions of this section, and no such coi"poration shall have its license or cer- tificate of authority renewed for three years after such revocation, and shall agree that in the event of revocation of license such appointment of the bank examiner shall continue for the purpose of serving process for beginning actions upon anv certificate of stock or liability incurred or contracted in this state, while it transacted business therein, so long as any liability shall exist. When legal process against any such corporation is served upon the bank examiner' he shall immediately notify the corporation of such service by letter, and enclose copy of the process served on him, to said corporation, or to any person designated by the officers in writing. The plaintiff, for each process rved, shall pay to the bank examiner, at the time of such service, a fee of two dollars, which shall be recovered by the plaintiff as a part of the taxable if he prevails in the suit. The bank examiner shall keep a record of all processes served on him, which record shall show the day and hour when such service was so made, and all the fees received by the bank examiner at the time of serving such process, shall be paid into the state treasury. SEC. 28. — When' by the laws of any other state, territory, or nation, any taxes, fines, penalties, licenses, fee deposits, or moneys or securities or other obligations or prohibitions are imposed on building and loan associations of this state doing business in such other state, territory or nation, or upon their agents therein, so long as such laws continue in force, the same obligations and prohibitions of whatever kind, shall be imposed upon all building and loan associations of such other territory or nation doing business in this state and upon their agents here. Sec. 20. — The name " building and loan association " as used in this act, shall include all incorporations, societies, or organization or association doing a saving and loan or investment business on (he building society plan, whether mutual or otherwise, and whether issuing certificates of stock or bonds, or any other evidence of indebtedness which mature at a time fixed in advance or m 'i. Si;c. 30. — The bank examiner before granting a license shall examine or examined every foreign building and loan association applyingfor permis ion to transacl bu >iness in this state, and every such association shall Cay the ame fees, and hill make such annual repori as required of local 11 ■■ and loan associations, comply with all laws applicable to such local 1 m , and hall be subject to the same penalties. si i] No person shall act as the agenl or representative of any foreign building or loan ass.u iation, until after lie shall, at the request oi such .issue, ia- tion, ured from the hank- examiner a license reciting the fact that ition is authorized and licensed to transact business in this stale and has complied with all lawful requirements. The fee for such license be I'-ii dollai and the license shall continue in force, unless sooner ml 1 aminer during and until theclose of the fiscal yeai of th ■ a ioi iation. [| hall be unlawful for any person to act as the agenl for anv un- authi and loan . 1 iociation in this state, or to sell or dispose of GENERAL LEGISLATION. 909 any shares, certificates, bonds or other evidences of indebtedness of, or for any such authorized association and nol licensed to transact business in this stale, and any person acting for any such unauthorized association, or in manner aiding in the transaction of the business of such association in this state, shall lie guilty of a misdemeanor and be punished by a line or not less than one hundred dollars nor more than five hundred dollars tor each offence, and every person convicted of such offence shall be personally liable foi sum or sums received by him for or on behalf of such unauthorized associa- tion. SEC. 33. — Anv foreign building and loan association having made the de- posit of securities with the state treasurer required by this act and desiring to withdraw such securities, or any portion of them, without depositing securities of like character and amount, or desiring to disci ml inue its bti i or withdraw from the state, may do so by complying with the following conditions and requirements: Such association shall tile with the bank examiner a statement reciting the reasons lor desiring to withdraw such securities, and the amount of securities to be withdrawn, and the bank ex- aminer shall thereupon examine such association and determine the amount of the liabilities on account of all agreements or contracts outstanding with residents of this state, and if he shall be convinced that the interests of such residents of this state will not be injured or jeopardized by such withdrawal, he shall cause to be published in three newspapers in this state for a period of three weeks at the expense of the association, the request of such associa- tion for the withdrawal of such securities, and if no objection is filed by any resident of this state, holding any share, certificate bond or other evidence^ of indebtedness of, or against such association, within one week after the last date of the publication of such request, the bank examiner shall issue a cer- tificate certifying to the state treasurer the amount of liabilities, if any, exist- ing in this state, and the amount of securities such association shall be per- mitted to withdraw, and upon filing a receipt for such amount, the association shall be permitted to withdraw the same ; Provided, however, that under all circumstances there shall remain at all times a sufficient deposit to protect the members or residents of this state holding shares, certificates, bonds or other evidences of indebtedness of, or against such association, and that such deposit shall decrease only as the liabilities of such association decrease on account of such members or residents of this state. Sec. 34. — Any service of summons in any action against any foreign build- ing and loan association not authorized to transact business in this state may be served, and such service held to be valid upon the association if served upon any person who shall solicit on behalf of any such association, or who transmits an application for membership, or a share, certificate, bond or other evidences of indebtedness to or from any such foreign building and loan as- sociation, or in any manner aids or assists in doing either, or in transacting any business for such association, ot on any person who advertises to do any such thing. Sec. 35. — It shall be the duty of the bank examiner, upon evidence furnished to him that any foreign building and loan association, not authorized to trans- act business in this state, has failed or refused to pay any final judgment rendered against it in any court of this state, to appear before the bank exam- iner, or other proper officer of the state in which such association is incorpo- rated or principal office is located, with a complaint and petition for the ap- pointment of a receiver, and to take such steps as may be necessary to secure the appointment of a receiver. Allnecessary expenses incurred by the bank examiner in carrying out the provisions of this section shall be certified to the secretary of state as actually necessary in the discharge of his duty, whereupon it shall be the duty of the secretary of state to draw his warrant upon the state treasurer for the same, to be paid out of the general fund. Sec. 36. — This act being intended as a revision of, and substitute for chap- ter 93, of the annotated statutes, and of chapter 525, laws of 1889, and of chapter 469, laws of 1891, the said chapter 93, of the annotated statutes, and all acts amendatory thereof and supplementary thereto, and chapter 525, laws of 1 and chapter 469, laws of i89i,are hereby repealed. Sec, 37. — This act shall take effect and be in force from and after its pas- sage and publication. Approved April 27, 1887. ACTS 1897, p. 940. Sec. 1. — Any foreign building and loan association which is actually and in good faith winding up its business and has entirely ceased to issue or sell its 910 APPENDIX IV. stock, shall not be required to renew or replace securities so withdrawn in the usual course of its business from time to time, but shall be required to keep on deposit with the state treasurer sufficient mortgages or other satisfactory securities to secure the payment by it of all its obligations to citizens of this state ; proof of its condition and of the value of its deposits shall be made from time to time to the state treasurer, whenever required. And whenever any such association has fully discharged all its obligations to the citizens of this state, proof may be made of such state of facts by the oaths of its president and secretarv, and thereupon, on the approval by the attorney general, the treasurer shall release and return to such association all securities remaining in his hands. Sec. 2. — This act shall take effect and be in force from and after its passage and publication. Approved April 27, 1897. WYOMING. ACTS 1897, p. 138. Section i. — Any number of persons not less than seven, may associate themselves together for the purpose of forming a corporation to accumulate the savings of its members and loan the same at stated times, by complying with the general laws of this state relating to the creation and regulation of corporations, and shall thereupon become a body politic and corporate, and shall be invested with all the powers granted by this act and all other laws of this slate relating to corporations generally, and shall be subject to all the liabilities and restrictions upon such corporations, except as herein otherwise provided. Sec. 2. — The capital stock named in the articles of incorporation of any such association, shall be deemed to refer to the authorized capital thereof. At least rive per cent, of the authorized capital shall be subscribed before any such association shall commence to do business. The par value of each share shall not exceed two hundred dollars, and unless otherwise provided in the by-laws, shall be paid in by the stockholders in regular, equal, periodical pay- in jnts, at such times and in such amounts as shall be specified in the by-laws. Such payments shall be called dues, and at or before a time to be stated in the by-laws, each stockholder shall pay to the treasurer of the association, upon each share of stock held by him, a certain amount of dues to be specified in the by-laws, and shall thereafter continue to pay such dues at such stated times until the stock upon which such payments are made shall mature, or is withdrawn, cancelled or forfeited. Each" stockholder shall be entitled to a certificate of stock for the number of shares subscribed by him at any time after he has paid his first instalment of clues thereon. Unpledged stock shall be subject to a lien for the payment of delinquent dues, fines and other charges inclined thereon under the provisions of the by-laws, and the by-laws may provide for the manner of enforcing such lien, and also the manner of enforc- ing a lien on stock pledged to the association as security for a loan. Such slock may be issued in series at such times and in such amounts as the trustees may by resolution or otherwise determine. It the by-laws so pro- vide, lull not otherwise, prepaid and paid up stock may be issued, upon which a gross sum shall be paid in advance in cash and cash dividends may be paid on su< h slock out of any earnings, as the by-laws may provide, but such divi- dends shall in no case "exceed the per cent, of profits earned. At anytime a series of stock is three years old, anv holder of unpledged stock in any such series shall have the right to withdraw from such association by giving the trustees thirty days' notice in writing of his intention so to do, and he shall thereupon be entitled to receive from the association the lull amount paid in by him. and such interest thereon, or such proportion of the profits, as tin- by laws shall provide, less all claims and other charges ; at no liinc.how- ihall more than One-half of the funds in the treasury of the association be applicable to the demands of withdrawing members without the consent oi tru tees. No stockholder shall be entitled to withdraw whose -I as security. Incase of the death of any member holding unpledg( 'I l'" I:, his legal representatives shall be entitled to receive the lull amounfpaid in by such membei less all lines and other charges thereon, thei with interest on the balance at the rate of six per cent, per annum eragi time thai the money has been paid to the association. No fin< 1 hall bi charged to any deceased member's accounl unless the legal ati .< a oi in li dei edenl assume the future payments on stock. New toi I. may be is sued in lieu of shares withdrawn as aforesaid. The GENERAL LEGISLATION. 911 trustees may, in their discretion, and pursuant to the by-laws, retire the un- pledged shares of any scries, and enforce their withdrawal at any time after three years from the date of issue. The members whose shares are to be retired, shall be determined by lot, under such regulations as the trustees may prescribe. The withdrawal value of shares so retired, shall be the amount of of dues paid thereon, together with the profits apportioned to such shares according to the last apportionment of profits, less all tines and other charges and a proportionate part of any unadjusted loss. SEC. 3. — Members who make default in the payment of their dues, interest or premiums shall be subject to a hue of not exceeding ten per cent on the total amount of their delinquincy ; Provided, however, that the total amount of delinquency shall not include any other fines. Sec. 4. — The moneys paid to the association shall be disposed of at each stated meeting of the trustees in the following manner : 1. In payment of any expenses, including moneys advanced by the associa- tion for insurance, taxes or other assessments on property mortgaged to the association. 2. In payment of the balance due on account of any loans previously made by the association. 3. In payment of matured stock. 4. In payment of stock withdrawn. 5. And the balance, if more than the par value of one share, shall be offered tor loan by the secretary in open meeting, and the stockholder who shall bid the highest premium for the right of precedence, shall be entitled to receive a loan of not more than the par value of each share for every share of stock held by him, but a stockholder may borrow such fractional part of the par value of a share, as the by-laws may provide. In case the borrower shall neglect to offer security before the next stated meeting, or shall offer security that is not approved by the trustees, he shall be charged with one month's interest, the same as if he had obtained his loan, together with any expenses incurred, and the loss in premium, if any, on resale, and the money shall be resold at the next stated meeting. If there be no bidders, the money on hand may be awarded by lot to the holders of unpledged stock in such manner as the by-laws shall provide, and in case the by-laws so provide, but not other- wise, loans may be made to others than members of the association at not less than the legal rate of interest, to be paid monthly at the same time and place as interest on other loans is paid by members of the association. Such loans to non-members may be made in any sum not to exceed five hundred dollars to any one person, company or corporation. In case real estate security be offered for such loans to non-members, it shall be worth at least double the amount of the loan. No bonds or other personal property shall be accepted as security for loans made to members or others without the anani- mous consent of the trustees, provided that the stock of any such association may be accepted at all times as ample security to the extent of the withdrawal value thereof. In case of the non-payment of any instalment of dues, interest, premiums, fines, insurance, taxes or other sum due from the borrower to the association for the space of six months, the whole sum loaned, together with the unpaid premium bid thereon, if any, and all interest, hues, insurance, taxes and dues on stock pledged for such loan, shall be due and payable forth- with and may be collected at once, and any stock pledged or any mortgage or deed of trust given to secure the payment thereof, maybe enforced according to the terms of the contract. Sec. 5. — Any borrowing member who is not in arrears shall be entitled to immediate release of his deed of trust or other securities given to the associa- tion to secure a loan, when he shall deposit with the treasurer the full amount of the loan secured thereby, less the unearned premium for the unexpired term of the series in which such loan was made; Provide d, such premium was paid in advance, and thereupon his stock shall be returned to him and shall be subject to withdrawal the same as other unpledged stock. Sec. 6. — Any deed of trust given to any such association to secure any indebtedness thereto, may be released by the trustee named therein or by his successor in trust, at any time after payment of such indebtedness, by an entry on the margin of the page or pages u'^on which such deed of trust is or may be recorded, duly signed by such trustee or his successor in trust, and wit- nessed by the countv clerk or his deputy. Such entry may be in the follow- ing form, to wit : " By request of the (here insert the name of the association), I hereby acknowledge satisfaction in full of the debt secured by this deed of trust, and hereby release, cancel and discharge the same, and I do hereby convey and quit "claim under the grantors named therein, all the right, title 912 APPENDIX IV. and interest which I acquired in and to the property therein described, under and by virtue of this deed of trust. Trustee, (or successor in trust). Witness : County Clerk (or deputy county clerk)." Any such deed of trust may also be released in any other manner authorized by the laws of this state for the release of deeds of trust. Sec. 7. — Whenever any member shall become delinquent for six months on any instalment of dues upon unpledged stock, the secretary of the association shall give him notice thereof in writing, stating the amount of such delin- quency, and that he is required to pay the same on or before the next stated meeting of the trustees, and that in default thereof his stock shall be declared forfeited. Such notice shall be mailed to the delinquent member at his last known postoffice address, at least twenty days prior to the time for holding the stated meeting therein referred to, and in case he fails to pay within the time specified in such notice, the trustees shall declare his stock to be for- feited, and the defaulting member shall thereupon be entitled to withdraw from the association the paid-up value of such stock without interest, less all fines and other charges thereon, at any time within one year thereafter, and if not called for within that time, the amount due thereon shall be forfeited to the association. Sec. 8. — When the stock in any series shall have reached its maturity, the payment of dues thereon shall cease, and all of the stockholders in such series who have obtained loans from the association shall be entitled to have their securities returned, and the mortgage or deed of trust given by them to secure such loan shall be released, cancelled and discharged, and the holders of unpledged stock in such series shall be paid out of the funds of the association the mature value thereof, together with such a rate of interest thereon as shall be determined upon by the trustees from the time such share shall have matured until paid ; but at no time shall more than one-half of the receipts of the association be applicable to the payment of matured shares without the consent of the trustees. The order of payment of matured shares shall be provided for in the by-laws, and if not so provided shall be determined by lot. Sec. 9. — All persons, companies and corporations holding stock in any such corporation, shall be considered members thereof uutil such stock is duly transferred upon the books of the association or is cancelled, forfeited or withdrawn, and shall be subject to all the laws, rules and regulations thereof. Minors may become stockholders in any such association the same as adults, and such minor stockholders shall be subject to thesameduties and liabilities as respects their stock, as adult members. Any receipt, release, acquittance or discharge given to the association by any such minor, shall be binding upon the minor to the same extent as if such minor were of full age. It shall also be lawful for any copartnership, company or corporation created under the laws of this state, to hold stock in any building and loan association on the ame terms as individuals. Si ( . 10. — Any such association shall be subject to visitation and examination at all times by the state examiner upon the application of three or more members thereof. If it shall appear to said examiner from tin- report of any i.orfrom any examination made by him, that such association is violating any ol the provisions of this act, or is conducting its business in an mi .lie or unauthorized manner, he shall, by an order under his hand addressed to tin- president of such association, direct the continuance of such illegal and unsa e, and whenever such association shall neglect or refuse to 1 .r shall fail to make reports as required, the said iall thei upon communicate such facts to the attorney-general ol Hie state, who shall thereupon institute such proceedings as the nature of the 1 equire. SEC. II. 'Ill name "building and loan association," as used in this act 1 iclude al organizations and associations doing indloanin 1 tmentbusim on the building and loan plan, whether mill and whether issuing certificates ol stock that mature at a time m advam e or not. i b ' i v. oi every building and loan association hereafter ized hall s] ei ify : 1. Th( tim< and place for holding the annual meeting of the stockholders GENERAL LEGISLATION. 913 at which the board of trustees shall be elected, the manner of giving notice of such meetings and how special meetings of the stockholders may be called and the qualifications of voters at all such meetings. 2. The time and place for holding the states meetings of the trustees and how special meetings of the trustees may be called. 3. The manner in which vacancies in the board of trustees may be filled. 4. The officers of the board of trustees ; the duties of each officer, and the amount of his compensation if any, and when payable. 5. The form of bonds which shall be given by the treasurer and secretary of such association, and the place where the same shall be deposited for safe- keeping. 6. The law relating to the membership of such association, as hereinbefore set forth in section 9 of this act, and the amount of the initiation or entrance fee, if any. 7. The terms on which instalment stock will be issued in the different series, and how the different series shall be designated. 8. The terms, if any, upon which prepaid and paid-up stock will be issued, and all necessary rules and regulations in relation to the disposition and management of such stock and the income therefrom. 9. The different forms of certificates of stock to be issued in such associa- tion. 10. The manner in which certificates of stock may be transferred, and the fee to be charged therefor. 11. The conditions upon which duplicate certificates of stock may be issued in lieu of certificates supposed to be lost or destroyed, and the fee to be paid therefor. 12. The amount of the periodical payments to be made on each share of stock, and the time and place for making such payments. 13. The minimum premium and rate of interest to be charged on all loans, and the time and place, for the payment thereof, and all other terms and con- ditions on which loans may be obtained, and the kind and nature of the securities to be taken for such loans, and by whom all expenses incident thereto shall be paid. 14. The amount of fines to be charged in case default be made in the pay- ment of dues, interest or premiums. 15. The times and manner in which profits and loans shall be apportioned among the different series. 16. The manner of awarding loans when there are no bidders. 17. The terms and conditions if any, upon which loans may be made to others than members of the association. 18. The terms and conditions upon which loans may be repaid to the association. 19. The terms and conditions upon which stockholders may withdraw from the association, and the fees to be charged therefor. 20. The terms and conditions upon which holders of unpledged stock may be forced to withdraw from the association. 21. The manner of enforcing liens upon unpledged stock to secure the pay- ment of delinquent dues, fines and other charges against delinquent members, and how shares in default may be forfeited and disposed of. 22. The manner of enforcing liens on stock pledged to the association as security for loans, in case default be made in the payment of dues and interest thereon. 23. Provisions for banking and checking the funds of the association. 24. Provisions concerning the reporting and custody of the securities be- longing to the association. 25. The manner in which amendments may be made to the by-laws. 26. The order of business at all meetings of the board of trustees and stock- holders of the association. 27. Such other rules and regulations as may be deemed necessary and ex- pedient for the proper management of the business affairs of such association, provided the same be not inconsistent with the certificate of incorporation of such association, the provisions of this act, or the laws of this state. Sec. 13. — The secretary of every such association shall submit to the stock- holders at their annual meeting a report showing the condition of the associa- tion at the close of business on the last day of the preceding fiscal year. Such report shall also specify : 1. The amount of authorized capital. 2. The amount of capital subscribed. 3. The amount of bills receivable. 914 APPENDIX IV. 4. The par value of each share. 5 The cash paid-up value of each share, in each series. 6. The actual or book value of each share, in each series. 7. The number of shares withdrawn of each series, and the amount so withdrawn. 8. The number of shares retired from each series, and the amount so retired. 9. The total number of shares remaining in each series. 10. A statement of all receipts and disbursements during the year, show- ing the amounts received for dues, interest, fines, premiums and from other sources ; the amount loaned on real estate security ; the amount loaned on stock security ; the amount paid withdrawing members ; the amount paid on account of shares retired ; the amounts advanced for insur- ance, taxes, and other assessments on real estate mortgaged to the associa- tion ; and the amount of cash on hand. 11. A statement of .assets and liabilities showing the condition of the asso- ciation at the close of business on the last day of such fiscal year, specifying the amount of bills receivable, the value of real estate, and other property be- longing to the association, the amount due from delinquents, the cash on hand, the total amount of dues paid to the association on shares in force in each series, the amount of overdrafts or bills payable, the amount of unearned premiums, and the amount of the net earnings in each series. 12. A statement of such other matters as ma}' be of interest to the members of the association, or concerning which they should be advised and a summary of such report duly verified by the affidavit of the secretary shall be mailed by him to the state examiner within ten davs after such annual meeting. Sec. 14. — Chapter 29 of the session laws of Wyoming, for 1890, relating to mutual loan and building associations approved March 7th, 1890, and all acts and parts of acts inconsistent with the provisions of this act are hereby re- pealed so far as the same relate to the formation, regulation and conduct of building and loan associations ; Provided, lioivcvcr, that all rights acquired and any and all acts performed in pursuance of the provisions of any act so repealed, and hereby saved from the effects of such repeal, and all building and loan associations doing business under said acts or any of them, may com- plete their term of existence under such acts, or may proceed under the pro- visions of this act, and shall be entitled to all the privileges, immunities, fran- chises and powers conferred by this act, upon accepting the same by a unanimous vote of its board of trustees at any regular meeting thereof, and filing with the secretary of state a certificate signed by its president and see retary, showing such acceptance, and thereafter such association so accept- ing shall be deemed to have been duly incorporated at and from the date of its certificate of incorporation, and a certified copy of such acceptance, under the hand of the secretary of state, shall be deemed prima facie evidence of such acceptance. In force March 7, 1897. ACTS 1895, P . 235. Skction 1. — Upon request in writing of any number of shareholders, repre- senting one thousand shares of any building and loan association, the state examiner shall have authority to examine (he affairs of said company or asso- ciation and the treasury thereof ; and if upon any such examination, the same shall be found to be either insolvent or unable to produce upon demand the moneyand securities which should of aright be in the custody, control and 1 ion of said association, or in the treasury thereof, without incumbrance or hypothecation; said examiner shall assume temporary control of said iation or the treasury thereof, as the circumstances shall seem to re- quire, and incase the responsibility or defalcation lies with the association itself, or its management, a receiver may be appointed to take charge of said pany, upon an application therefor by any stockholder, lo whom, when d, the examiner, if in charge, shall deliver all the booksaud effects of iation which shall have conic into his hands. If upon the report of howing the unsatisfactory condition of said company, no ap- ttion for a receiver shall he made by any stockholder within ten davs ei 1 he examiner si 1,1 11 return all the books and effects of said associa- tion having come into his hand , to the < ifficers thereof. INDEX. References are to Sections. ABANDONMENT. Plan of association, 390, 391, 396, p. 446, note. ABSTRACT OF TITLE. Cost of, not usurious, 260. ACQUIESCENCE. Directors', effect, 105. ACTUARY. Duties, 88. ADMINISTRATOR. May continue membership, 88. Vote may cast, 51. ADMISSIONS. Presidents', effect, 65. ADVANCES. Loans, see. AGENT. Authority in securing subscriptions, 153, p. 153, note 8. Delegating power to, 105. Directors may be, p. 94, note 6. Fraud, company not liable for, 153. ALABAMA. Loans not usurious, 243. Statute concerning building associations, p. 665. AMOUNT DUE. Appointment of receiver, p. 174, note 4. Loans, see. ARBITRATION. By-laws providing for, 139. 915 916 INDEX. ARKANSAS. Loans, when not usurious, 243. Statute concerning building associations, p. 671. ARITHMETICAL PROGRESSION. Fines in order of, 210. ARTICLES OF ASSOCIATION. Amending. 26. Constitute charter, 20. Duplicates of, executing, 27. Failure to record, p. 26, note 6 ; p. 27, note 1. Signing, estoppel to deny, 44. Subscribing to secure loan, 276. ASSETS. Available, defined, 379. Converted into cash for distribution, p. 444, note 6. Distribution uf, 396. how made, 396. Marshalling, 293 to 297. liens, notice as to, 297. Mortgages, not for withdrawals, 291. when not, 388. What are, 388. ASSIGNMENT. Of a mortgage, 290. Power to make a general assignment, 385, 408. ASSUMPSIT. Remainder due on a mortgage, 309. Suit for withdrawal amount, p. 338, note 6. ATTACHMENT. Stock may be, 173, p. 345, note. ATTORNEY. A -cut of society, is p. 85, note 7. Authority, 87. Directors may rely upon his legal advice, 110. Employment, 86, 87. Powers, 87. Suit may appear in, 85. AVAILABI.E ASSETS. I), dned, 379. BANKING. Forfeit franchise of association, 392. Powers of, association does not have, 29. Whal is mm!, p. 131, note ; i». 422, noted. INDEX. 917 BANKRUPTCY. Interest ceases when intervenes, p. 239, note 1. Law of 1898 does not apply to society, 409. Premium, effect upon, 235. BENEFITS. To be derived from association, 6. BIDS. Premiums, see. BILL OF EXCHANGE. Acceptance binds society, p. 281, note 1. Does not bind society, p. 75, note 4 ; p. 415, note 2 ; p. 421, note. BONUS. Dividends sometimes so called, 181. Premiums, see. BOOKS. Foreign society's, inspecting, 46. Inspecting, general law applies to, p. 49, note. Mandamus to secure inspection, 46. Right to inspect, 46. Secretary keeps, 75. BORROWER. Assigning stock, 170. Defined, p. 8, note 1. Equality on with non-borrowers, p. 445, note 1. Estoppel to deny membership, p. 254, note 1 Liable for losses of society. 355, 356. on his note for society's losses, 360. Loans, see. Member may become, by act of borrowing, p. 33, note. Mortgagor cannot dispute his membership, p. 33, note. Preferring, over withdrawing members, 317. Usury may set up, 258. who may insist upon, 269. Value of his stock as applied to his debt, 174. BORROWING MONEY BY SOCIETY. American cases as to right to borrow, 375. Bill of exchange, accepting, p. 75, note 4 ; p. 281, note 1 ; p. 415, note 2 ; p. 421, note. Deposits, receiving, 376. Director may, when, 106. may loan to society, 108. English cases previous to 1874, 372. statute of 1874, 372. Members not liable for, 374. Overdrafts of bank account, 376. 59 918 INDEX. BORROWING MONEY BY SOCIETY.— Continued. Personal liability of director, 373. Rights of loaner in distribution of assets, 377. Rules of society must authorize, 368. cannot exceed limit fixed by, 371. limit fixing, 369. Subrogation when loan illegal, 370. BOWKETT SOCIETIES. Defined, 11. Starr-Bowkett societies defined, 12. BUILDING AND LOAN ASSOCIATIONS. Dayton plan, 12 a. Defined, 3, p. 11, note 1. Discussion of plans, 469. Earliest, 1, 2. p. 472. Favorably received by courts, 4. General powers, 399. General scope and methods, 5. Methods of business, 13. Repository of supreme power, 47. BUSINESS. Where transacted, 48. BY-LAWS. Adopting, 126, 127. Amending, 131, 132. how done, 134. notice as to, 133. who makes. 134. American, examples of, pp. 664 to 672. Arbitration, as to, 139. Common law must conform to, 129. Conflicting with contract, 124, note. Conform to charter, must, 128. Constitution must follow, 129. Const ruing, 124. Contract for members. 119. < '"tit r,,ll-, I by charter, 406. Courts cannot change, p. 133, note 3. Declaring invalid, 142. Defined, 115. Elections, as to, 90, 144. English, examples of, pp. 541. Equally, tnusj operate, 130. Extorl ionate are void, 135. Fines, may ant horize, I I". 203. certainly a ; t<>, 1 II. axed by, 204. INDEX. 919 BY-LAWS.— Continued. Forfeiture under, 140. Formalities in enactment, 121. Interpretation, 124. Judicial notice of, not taken, 125. Knowledge of, members presumed to know, 120. Law for members, 118. Lien upon stock may create, 156. Mortgage, a part of, 287. Oppressive, void, 135. Power to adopt, 126. Premium, effect of requiring, 231. Proof of, 125. Proxy, may authorize, 51. Releasing shareholder from, effect of, 137. Regulation, is not, 117. Resolution, differs from, 116. Restricting right to sue, 138. Retroactive, invalid, 123. Rule, is not, 1 17. Signed by members, not necessary, 132. Statute must follow, 129. Stock transfer, regulated by, 159. Transfer of stock, rule for, 136, 159. Unreasonable, cannot be, 135. Vested rights cannot disturb, 131. Void in part, 143. Voting, regulated by, 51. Waiver of, 122. When part of incorporating act, p. 22, note 1. Who adopt, 127, Withdrawals, competition requiring, void, 317. CALIFORNIA. Statutes concerning building associations, p. 671. CANADA. Loans not usurious, 255. CANDIDATE. Effect of voting for himself, 52. CAPITAL STOCK. Stock, see. CERTIFICATE OF STOCK. Evidence of membership, 45. Forged, effect of making transfer of, 77. Stock, see. Surrender on withdrawal, p. 337, note 3. Unnecessary, 33. 920 INDEX. CHARTER. Board of directors cannot change, 106. By-laws must conform to, 128. Constitutionality of special law, 16. of amendments, 17. Denned, 20. Legislature may grant. 14. Restraining violation of, p. 35, note. Special act of legislature, 14. amending, 17. validity of, 16. what sufficient, 15. CHINA. Had earliest building associations, 1. CHOSES IN ACTION. Shares of stock are, 145. COLORADO. Statute concerning building associations, 679. COMITY. Principles of, applied, p. 35, note 1. COMMON LAW. By-law must conform to, 129. COMPROMISE. Corporation may make, 350. Treasurer cannot make, 82. CONNECTICUT. Laws, when usurious, 254. Statutes concerning building associations, 683. CONSTITUTION. By-laws must conform to, 129. CONSTITUTIONALITY. Banking powers, as to, 29. General law as to building associations, 19. Special charter, 16, 17. CONTRACT. By-laws is with member, 119. contravening contract of loan, p. 120, note. Directors, interest in, 100, 107. 108. Error of judgment not sufficient for relief from, 106. I [ow officers execute, 63. Power of president to make, 57, 60. President executing for third person, 59. for himself, 59. Secretary, power to make, 75. Treasurer's power to make, 81. INDEX. 921 CORPORATION. Abandoning corporate existence, 391. De facto and irregular, 30. Estoppel to deny existence, 31. Incorporation, see. Member of a building association may become, 40. COSTS. Redemption of mortgage, 343. COURTS. By-laws, cannot make for association, p. 133, note 3. Right to office testing, 90. View associations with favor, 4. •CREDITORS. First paid, 363. Members, when not, p. 37, noteS. Preferred stockholders, postponed to, 149. Withdrawing stockholders is not, see 337, note 2. CUSTOM. Enlarging powers of president, 62. DAMAGES Refusing to transfer stock, 163. DAYTON PLAN. Described, 12 a. DECLARATION. Directors', not binding, 94. President's, effect, 65. Secretary's, not binding, p. 320, note 3. DECREE. On foreclosure, 305. Stands as security, 306. DEED. Authority to execute, what is, 105. Resolutions authorizing, 94. DE FACTO CORPORATION. Validity of, 30. DE FACTO OFFICE. Validity of acts, 93. DEFENCES. No funds to pay withdrawals, 318. Withdrawals, insolvency, fear of, 323. suit for, 322. 922 INDEX. DEFINITIONS. Bonus, 181. Building and loan associations, 3, p. 11, note 1. Dues, 185. Fines, 199. Premium, 222. DELAWARE. Statutes concerning building associations, 686. DEMAND. Transfer of stock, 161. DEPOSITOR. Member of association may, 42. DEPOSITS. Note given for not negotiable, p. 422, note 3. Postponing depositor's right of action, 379. Power of society to receive, 376. President, changing place of, 58. Statute of limitations as to, p. 425, note 1. DIRECTOR. Acceptance of office, proof of, 92. Accidental meetings, 102. Acquiescence by, effect, 105. Advice of attorney, may rely upon, 110. Agent of corporations may be, p. 94, note 6. Assess stock, 106. Bankrupt, a, may be, 92. Borrowing money, 106. binding members for, 374. liable for. 473. By-laws, may adopt, 127. Capital stock, increasing, 106. reducing, 106. Charter, cannot change, 106. Contracting with corporation, may, 100, 108. when set aside, 106. De facto officers, 93. validity of acts of, 93. Delegating power, cannot, 105. hut ies, generally, 107. Election of, 90. Errors of judgment, not Liable for. 109, 110. r ential to corporal ion. .so. Exp< lling one of i heir own numbers, p. 96, note 7. Exl ra sen ices, pay for, 1 18. Failure to elect, effect, 89. Fraudulenl representations, liability for, 112. INDEX. 923 DIRECTOR.— Con tinned. Giving away assets, 106. How act, 94. Individual members' powers, 95. Insolvency, effect, 385. Interest in contracts, 107. Liability for acts, 109, 110. for losses, 111. 112. Majority rules, 97. Meetings, accidental, 102. calling, 104. extra-territorial, 103. must be regular, 104. notice of, 104. Negligence, liable for, 109, 110. Number, 97. Powers of, generally, 106. limit, 106. President is a director, 101. Presumptions concerning acts, 98. Proxy, voting by, cannot, 96. Quo warranto to test right to office, 90. Quorum, 97. power of, 97. Ratification of illegal act, 99. Resignations, 92. Right of payment may be postponed, 364. Right to vote, 91. Salary, 113. Security from coi'porations, may take, 108. Statute of limitations as a defence, 111. Suit by, for private purposes, 106, 107. against member for loss, p. 112, note 2. Term of office, 89. Time of election, 90. Vacancies in office of, how filled, 90. Voting for himself, 52. DISCOUNTING. Premium is not, p. 228, note 1. DISTRICT OF COLUMBIA. Loans in not usurious, 248. Statutes concerning building associations, 687. DIVIDENDS. Earnings applied to, 181. value of, p. 193, note 1. Stock, see. 024 INDEX. DRAFT. Accepting, p. 415, note 3 ; p. 421, note. DUES. Application of payments, 198. Assumpsit for, 189. Defined, 185. Duty of member to pay, 186. Estoppel on receipt after foreclosure, 175. Forfeiture of stock for non-payment, 193. Insolvency of associations, p. 203, note 1 ; p. 447, note. Interest upon, on withdrawing, 325 ; p. 340, note 1. Liability for, when begins, 188. purchaser of premises, 195. when ceases, 194. Lien on stock for, 192. Mortgage covers, 191, 288. Notice concerning payments due, 189. Number of shares a member is liable on, 196. Payments, application of, 169. how made, 187. on stock, not on loans, 168. place of, p. 198, note 2. proof of, 197. when made, 187. Premium not treated as, p. 232, note 1. Refusal of, access to books, p. 198, note 2. Secret agreement with promoters concerning, p. 202, note 1. Secretary cannot receive, when, 75. Suit, effect on payments, 190. Suspension of society, 394. Unincorporated association, 406. Usurious interest not applied to, p. 258, note. Usury, rule to as, p. 258, note. EARNINGS. Dividends declared out of, 181. Premium is note, 225. Value on distribution, p. 193, note 1. What includes, 225. EARLY BUILDING AND LOAN ASSOCIATIONS. A merican, 2. I Chinese, 1. English, 2. Met hods, 5. ELECTIONS. Adjournment . L9. tnbling fco bold, 49. INDEX. 925 ELECTIONS.— Continued. By-laws to regulate, 90, 144. Directors of, 90. How conducted, 52. Ineligible person, vote for last, 52. Inspector, who may be, 52. Mandamus to secure, 49. Meetings, see. Notice concerning, 49. Place of holding, 49. President of, 55, Proxy may cast vote, 51. Quorum for, 50. Right to vote for directors, 91. Time of. 90. Voting at. how determined. 51. pledgor, by, 51. who may cast, 51. "When may bs held, 49. ENTRANCE FEE. Not credited on loss, p. 179, note. ESTATE. Liable for society's loss, 862. ESTOPPEL. Acquiesence in improper conduct of society. 395. Borrower, to deny membership, p. 254, note 1. Borrowing money, p. 320, note 1. Contracting party to dispute validity of incorporation, p. 25, note 5. Corporate existence, 31. Dh'ector not estopped as a stockholder, p. 97, note 1. Dues received after foreclosure of mortgage, 175. Foreign borrower, bound by contract with, p. 35, note 1. Member estopped to deny membership, 33. 44. Money received by secretary, as to, p. 75, note 3. depositing, p. 75, note 4. Mortgagor to deny membership, p. 33, note. Name, contract made in wrong one, p. 30, note 4. Proxy acquiesing in decision as to his right to vote, p. 56, note 7. Society estopped to deny membership, 43. Ultra Vires contract, p. 314, note. EVIDENCE. Acceptance of office, 92. Act of board of directors, presumption as to, 98. as to place of meeting, p. 98. Burden on borrower, when, p. 284, note 1. 926 INDEX. EVIDENCE.— Continued. By-laws must be proved, 125. Declarations of president, 65. of directors. 94. Foreclosure of mortgage, 30-4. Loss of pass-book, 183. Membership, how proven, 45. Payments, proof of, 197. President, official character, 56. Presumptions, see. as to president's powers, p. 66, note 8. Proof of president's power to act, 61. EXECUTION. Judgment, see. Stock levied upon with, 173. Withdrawing member, right to, 327. EXECUTOR. May continue membership, 38. Vote may cast, 51. EXPENSE FUND. Credit for on withdrawal, 405. Maintaining, 405. EXPULSION. Board of directors cannot expel a member, p. 96, note 7. FEES. Receiver entitled to for transfers, p. 191, note 2. Transfer of stock, 180. FINKS. Additional for continued neglect, 209. A i mt of, 207. Arithmetical progression in, 210. By-laws may authorize, 203, 204. certainty as to, ill. may prescribe, 140. lien, 217. ( lertain, musl be, 205. < lharter may aul borize, 203. ( lolled ion of, bow made, 220. < londonal ion of, 219. < 'iiiniil.-it Lve, cannot be, 209, 210. Denned, L99. Enforcemenl . 202. i: toppel, 221. Qlegal, reduces debl . 216. INDEX. 927 FINES.— Continued. Insolvency, eHert upon, 221. p. 4-47, note. Interest, for non-payment, 211. on, not allowed, 212. Lien on stock, when, 218. Married women liable for, 214. Members only liable for, 208. Mortgage covers, 215, 288. Number of, 205. Penalties, not regarded as, 201. Personal obligation is, 215. Plan of association, as to, 200. Premium on. 213. not treated as. p. 232, note!. Reasonable, must be, 200. Receiver collecting. 221. Remission of, 219. Second, not allowed, p. 217, note 1. Statute may authorize, 203. Usurious, when, 210, note 4. Who liable for, 208. FLORIDA. Statute concerning building associations, 689. FORECLOSURE. Lien upon stock, p. 161, note 1. Mortgage, see. FOREIGN ASSOCIATION. Banks, inspecting, 46. Comity, governed by principle of, p. 35, note 1. Mortgages, held by. 312. North Carolina, law as to, 32. Taxing, 382. Withdrawing from, 331. FORFEITURES. After death of member, 38. Infant's stock, 35. FORMS. Plans, see. FRANCHISE. Abandoning. 391. Forfeiting, 392. FRAUD. Association bound by secretary's, p. 255, note 2. Promoter's, p. 154, note. 028 INDEX. FRAUD.— Continued. Representations of association, 302. Secretary's act. association liable for, p. 75, note 4 ; p. 255, note 2. Subscription to stock secured by, 153. effect of, 153. revocation of, 153. waiver of, 153. FRAUDULENT REPRESENTATIONS. Association bound by directors', 112. FUNDS. Distributing, 396. GEORGIA. Loans not usurious in, 246. Statute concerning building association, 690. GIFT. Director cannot.give away assets, 106. HEIRS. Members in rigbt of ancestor, 39. HISTORY. American associations, 2. Chinese associations, 1. English 2, p. 472. Methods of associations, 5. HOMES. Building for, 401. Purchasing land for, 401. HOME OFFICE. Where may be, 25. IDAHO. Statute concerning building association, 695. ILLINOIS. Loans not usurious, 245. Statutes concerning building associations, 708. INCORPORATION. Amendments to charter, 17, 26. By art ides of association, 19. ( lourts may incorporate, L9. Defect i vr incorporation cured, p. 27, note 2. Exceeding stal ute, 23. Irregular and defective corporations, 30. Legislature may authorize, I I. INDEX. 929 INCORPOR ATION.— Cont inued. Name, wrong one used, 28. cannol be disputed, p. 30, note 4. Party contending with cannot set up illegality of, p. 25, note 5. Recording articles of association, 27. Special charter, by, 15. validity of, 16. what sufficient, 15. Specifying powers of, 24. Substantial compliance with statute required, 22. When complete, 21. failure to record charter, p. 26, note 6 ; p. 27, note 1. INDIANA. Loans not usurious. 253. Statutes concerning building association, 704. INFANT. Director liable for selling stock to, when, 112. Disaffirming membership, 35. Forfeiting stock, 35. Lessee liable for. 361. Member of association may become, 35. Ratifying subscription, 35. INJUNCTION. Increase of stock, to prevent, p. 156, note 1. Illegal act at corporate meeting prevented by, 51. INSOLVENCY. Abandonment of plan, association, 301. Defence to suit by withdrawal member, 322. Dissolution does not work, 385. by agreement, 390. Dissolves contract between members, p. 446, note. Dues, payment after insolvency sets in. 394, p. 203, note 1. Effect upon association, 385. p. 391, note 1. Fines, effect upon, 221. Liability for losses after notice of withdrawal given, 352. Mortgages, effect upon, 397. not assets when testing insolvency, 388. Receiver on maturity of shares, 386. who may demand, 386. What amounts to, 385. Winding up. if so. how done. p. 1 (6, note. Wiping out deficiency in assets, p. 432, note 3. Withdrawals, effect upon. :;•.»:;. 329, p. 433, note. INSURANCE. Contract with secretary as to. 7.1. Mortgage may cover, 298, note 1. 930 INDEX. INTEREST. Amount association may charge, 261. due on loan, 263. Appointment of receiver does not stop, 394. Bankruptcy, effect upon, p. 239, note 1. Ceases, when, 262. Compound, operations of, p. 477. During suit, 268. Fine for non-payment, 211. on, not allowed, 212. Mortgage overs, 288. Preferred stock, on, 326. Premium is not, 224, p. 228, note 1. upon, 226. Rebate of, 184. Ultra Vires, is not, 261. Validity of statute as to, 281. Winding up, allowed, when, 325. Withdrawals, on sums paid in, 325, p. 340, note 1. INTERPRETATION. Bydaws, how made, 124. INVESTOR. Denned, p. 8, note 1. IOWA. Statutes concerning building associations, 713. JUDGMENT. Confessing, president may, 60. Insolvency of society, effect, p. 351, note. On foreclosure, 305. Stands as security. 306. Treasurer cannot confess, 83. JUDICIAL NOTICE. Bydaws not taken notice of, 125. KANSAS. Loans not usurious, 242. Statutes concerning building associations, 719. KK.NTUCKY. Loans usurious, when, '-'51. Statutes concerning building associations 720. KIM). Plans, see. INDEX. Jtol LACHES. Acquiescence, see. Usuiy, right to defend against, p. 266, note 1. LAWS. Of the states concerning building associations, p. 664. LEGISLATURE. Must authorize incorporation of association, 14. Special charter, may grant, 15. validity of, 16. What sufficient, 15. LEVY. Stock seized by execution, 173. LEX LOCI. Loan governs, 280. LIEN. Association's, upon shares of stock, 156. By-laws may give, upon stock, 156. Dues on stock are, 192. Effect upon rights of owner, 157. Fines, on stock, may be, 218. Foreclosure on stock effect, p. 202, note 1. Marshalling liens, 293. LIQUIDATION. Dissolution, see. Winding up, see. LOANS. Administrator carrying out, 38. Advance, what is, 236. Amount due on loan, p. 185, note. Canadian rule, 265. English rule, 267. Georgia rule, 266. Ohio rule, 264. shareholder can obtain, 289. Borrowing money, see. Cancelling, 237. Charges incident to not usurious, 260. Commission to secure, 260. Compelling, p. 236, note 2 ; p. 243, note 4. Defaulting member, to, 277. Due, when, 238. Dues, application to, 169, 198. when not applied to, 168, 169. Election to mature, p. 243, note 3. Entrance fee not applied to, p. 179. note 2. 932 INDEX. LOAXS. — Continued. Interest, see. during suit, 268. rebate, 184. Kinds of members who may make, 236. Lex loci governs, 280. Maturityof stock, effect, 182. Member, becoming, to secure, 41. Non-members, to, 273. Object of, 272, p. 33, note. Oppressive, borrower not relieved from. 279. Presumption as to usury, 250. Purchasing notes, 275. Relationship of borrower to association, 239, 240. Remedies to recover, 298. Returning, 237. Security, kind may take, 269, 271. more than one, 274. Set off against, of dues, 168, 169. stock assigned, 170. stranger's rights, 171. Stoaight loan, 270. Subscribing articles of association to obtain, 276. Tender of amount due, effect, 292. Usurious contract as to, effect, 257. is not, 241, 242. who may defend as against, 258. Value of stock applied to, 174. Vaiying contract of, 278. Withdrawals take precedence of, 318. LOSSES. Advance shareholder's liability. 357. All stockholders liable, p. 307, note 2. Amended rules imposing, 359. Borrower Liable on his note for. 360. Borrowers equally Liable with oon-borrowers, 355, 356. Compromise and release of member, 350. Contribution to, amount, 349. Creditors first paid, 363. Director may he Liable lor, 111. po fcponing hie righl to payment, 364. Estate's Liability for. 362. Evading Liability by transfer of stock, 351. Insolvency after notice of withdrawal given, 352. Married woman's Liability lor. 361. Member Liable for who ha wi1 hdrawn, 358. preferred . 35 ' . Minors' Liability for, 361. ijsdex. 933 LOSSES.— Continued. Mortgage covers, 300. Order, no priority of, p. 375, note 1. Paid-up slock liable for, 357. Preferred shareholders liable for, 338. Preference, officers cannot secure, p. 375, note 1. Subrogation of advanced shareholders, 365. Withdrawals, effect upon, 322. LOUISIANA. Loans of, not usurious, 243. Statutes concerning building associations, 724. MAINE. Statutes concerning building associations, 726; MANDAMUS. Books, to secure inspection of, 46. Election to compel, 49. Transfer of stock, to secure, 161. MARRIED WOMEN. Fines, liable for, 214. Liability for loans, 361. May become members, 36. status of husband, 37. May sign instrument for dissolution, p. 40, note 4. MARYLAND. Loans not usurious, 242. Statute concerning building associations, 732. MASSACHUSETTS. Loans not usurious, 242. Statute concerning building associations, 746. MATURED SHARES. Payment, 330. Suit to enforce payment of, 330. MECHANIC'S LIEN. Society cannot secure, 402. MEETINGS. Called, 50. Notice for, necessary, 50. held without, 50. Place of holding, 48. Right to vote in, 51. MEMBERS. Acquisition of membership, 33. Books of association may inspect, 46. Borrower may become, p. 33, note. 934 i^dex. MEMBERS.— Continued. Borrowed money, not liable for, 374. By-laws bind, 118, 119. amending, 134. presumed to know, 120. rules of an American association, p. 653. rules of an English society, p. 541. signing, 132. Ceasing to be a member, when he does, 320. Certificate of membership, not necessary, 33. Corporation, may be a member, 40, p. 91, note 4. Depositor, as a member, 42. Different relations to society, 348. Directors elect, 90. Elections, see. Estoppel, to deny membership, 44, p. 254, note. Evidence of membership, 45. Foreclosure of mortgage does not release, 307. Forfeiture of stock, effect, 193. Heirs may become, 39. Infants may be, 35. Kinds of memberships, 236. Liable for fines. 208. Married woman may become, 36. status of husband, 37. Meetings, when held, 48. Non-resident may vote, 51. Object in joining any society, 41, p. 33, note. Partners, members are, p. 38, vote 1 ; p. 207, note 1. Personal representative continuing membership, 38. Pledging shares, effect upon membership, 166. Proxy may give, 51. Release of by secretary void, 75. Right to vote, 51. Shares, see. Signing articles of association, 33, 276. Society estopped to deny membership, 43. Status after notice of withdrawal given, 319, 320. Stock, see. Subscription to secure loan, 41, p. 33, note. Supreme power, has, 47. Vol in;.', righl I", 91 . number "f votes may cast, 53. without ceri ificate, 33. Who i :i member. :::'.. p. 37, note 5. Who may acquu - e membership, 34. METHOD • Remark . cone 'rning, 18 p. 462. INDEX. . 935 MICHIGAN. i .dans not usurious, '-' 18. Statute concerning building associations, p. 711. MINNESOTA. Loans not- usurious. 'J 15. Statute concerning building associations, p. 707. MINOR. Infant, see. MISSISSIPPI. Loans not usurious. 'J is. Statutes concerning building associations, 700. MISSOURI. Loans not usurious, '354. Statutes concerning building associations, p. 7';;). MONTANA. Statute concerning building associations, p. 770. MORTGAGES. Abandonment of plan of association, effect upon, 301. Advancing money to pay off prior mortgage, p. 452, note. Appointment of receivers, effect upon, 397. Assets, are not, when, 294, 388. Assignment of, 290. Attorney, power to cancel, 87. By-laws a part of mortgage, 287. Cancelling, 310. revocation of when improperly made. 311. Chattel, taking to secure loan, p. 291. note 3. Decree on foreclosure of mortgage, 305. stands as secui'ity, 306. Deeds secure payment of, 191, 288. application of to, 169. when not applied to, 168, 169. Evidence on foreclosure, 304. Fines, secures, when, 15. First or second, taking, 284. Foreclosure of, 299. defence to, 300. Foreign associations, 312. Fraud, effect upon, 302. Insurance may cover, p. 298, note 1. Interest covers, 288. Loans, see. Laws, members liable for, under, 360. Marshalling assets. 293. Power to take. 282. 936 INDEX. MORTGAGES.— Continued. Premium covers, 288, p. 235, note 4. Reformation of, 286. Remedies on, 298. Right of purchase under, 308. Sale on decree, 3C5. Security, kind may be taken, 283. power to take, 282. Set off on foreclosure, 303. Stock, effect upon of foreclosure of mortgage, 175. Subrogation to, p. 293, note 1. Taking in foreign state, 48. Taxes may secure, p. 596, note 3. Taxing, 380. Unincorporated association taking, 406. Validity of, 285. What it secures, 288. NAME. " National" use of not unlawful, p. 30, note 4. Necessary to a corporation, 28. When cannot be disputed, p. 30, note 4. NEBRASKA. Loans not usurious, 249. Statutes concerning building associations, p. 784. NEGLIGENCE. Directors liable for, 109, 110. NEVADA. Statutes concerning building associations, p. 789. NEW BRUNSWICK. Loans not usurious. 254. NEW EAMPSHIRE. i . ns not usurious. 2 I I. Statutes concerning building associations, p. 793. NEW JERSEY. Loans nol usurious. 2 1 1. Statutes concerning building associations, p. 799. NEW MEXICO. Stat utes concerning building associations, p. 805. NEW Y<) Loans nol usurious. 246. Statutes concerning building associations, p NON INT. Voting al tings, 51. i^dex. 937 NORTH CAROLINA. Loans usurious, when, 250. Statutes concerning building associations, p. 883. NORTH DAKOTA. statutes concerning building associations, p. 848. NOTE. President may execute, 60. NOTICE. Changing by-laws, 133. Directors' meeting, of, 104. Directors' power to make contract, p. 93, note 4. Election of officers, lit. President served with for corporation, 66. Secretary to, binds corporation, 76. Waiver, as to form of, p. 329, note. Waiver by member, 316. Withdrawal, cancelling, 316. liability for losses after given, 352. OFFICE. V. nere may be located, 25. OFFICER. Preference cannot secure, p, 375, note 1; Usual, what are, 54. OHIO. Loans, when usurious, 254. Rule as to amount due, 264. Statutes concerning building associations, p. 840. OHIO PLAN. Of building associations. 12 a. OKLAHOMA. Statutes concerning building societies, p. 845. OREGON. Statutes concerning building associations, p. 850. PAID-UP STOCK. Defined, 10. Liable for losses, 357. PARTNERS. Members are, p. 38, note 1 ; p. 142, note 1 ; p. 207, note 1. PASS-BOOK. Loss of, effect, 183. Tendering back on withdrawal, p. 324, note 1. PAYMENTS. Applying to loan, 109. 938 INDEX. PENNSYLVANIA. Loans not usurious, 252, 254. Statutes concerning building associations, p. 855. PERMANENT BUILDING ASSOCIATIONS. Defined, 9, PLAGE OF BUSINESS. Where may be, 25. PLANS. Bowkett societies, 11. Dayton plan, 12 a. Distributing profits, pp. 623 to 648. Early Englisb, 5. Modern, 5 Original charged, 366. Permanent society, 9. Premiums, pp. 601 to 629. Serial society, 9. Starr-Bo wkett, 12. Terminating society, 7. Withdrawal plans, pp. 648 to 663. PLEDGED STOCK. Withdrawing, 328, p. 337, note 2. PLEDGEE. Right to vote stock pledged, 51, 91. PLEDGOR. Right to vote stock pledged, 51, 91. POWER OF ATTORNEY. Stock transferred on forged power, 164. liability as to, 165. PREFERRED STOCK, [nteresl on, 326. PREFERENCE. Withdrawing member, as to losses, 329, 354, p. 351, note 1. PREMIUM. Adding 1" amount loaned, 227. Bankruptcy does not prevent collecting, 2:>. r >. Bills, iiiiiiiiiuiiiis. 229. uprising, ' ( lhange us to in bj -laws, effect, 231. Collecting after maturity of loan. Deducting from sum loane I, Define.!, 222. INDEX. PREMIUM.— Continued. I discounting is not, p. 228, note 1. Dues are not, p. 232, note 1. Earnings are not, 225. Ei ncs are not, i>. 232, note I. for non-payment of, 213. Interest is not. 224, i>. 228, notel. upon, 226. Minimum bids, fixing, 229. Mortgage covers, 288, |». 235, note A. Number allowed. Plans for, differ, 223. various, in appendix, pp. 601 to 629. Pleading usury, as to p. 228, note 1. Return of. upon withdrawal, 234. Usury is not, p. 237, note. Usurious, credited on loan, p. 232, note 1. PREPAID STOCK. Defined, 10. PRESIDENT. Acting for himself, 59. Acting in manifest violation of duty, 58. Admissions as evidence, 65. Agent for third person, 59. Attorney, may employ, 86. Custom enlarging powers, 62. Deposit of funds, changing place of, 58. Director acts as, 101. Duties of, other officers performing, 64. Election of, 55. Implied powers, 60. theories concerning, 60. Liability for acts of, 67. - Loaning to irresponsible person, liability of, 58. Note, may execute, 60. Notice to, as affecting corporation, 66. Official character, proving, 56. Power to bind association, 57. theories as to, 60. Presumption as to. 55. Proof of power to act, 61. Salary, 68. Usage enlarging his powers, 62. PRESUMPTIONS. Appearance in suit by attorney, as to, 85. Director's act, as to, 98. President's power to act, p. 66, note 8. !>:]<> 940 INDEX. 1SUMPTI0NS.— Continued. iretary's power to act, 74, p. 66, note 8. Vice-president's act, as to, 69. PROFITS. Apportioning in serial association, 395. Plans for distributing, pp. 623 to 648. PROMISSORY NOTE. Deposit note not negotiable, p. 422, note 3. President may execute for corporation, 60. PROMOTER. Fraud of, p. 316, note 1. Fraudulent representations binding, p. 154, note. Secret agreement with, p. 202, note 1. PROXY. Acquiescence in decision of his right to vote, 52. Director cannot use, 96. Voting by, 51, 91. PURCHASER. Rights on purchase at mortgage sale, 308. QUORUM. Directors of, what is, 97. powers, 97. Election, to hold, 49. Electors of, necessary, 90. QUO WARRANTO. Election of directoi's, to test, 90. RATIFICATION. Directors' illegal act of, 99, 106. REAL ESTATE. Building houses upon, for members, 413. Desirability of purchasing, 413. Freehold societies in England, 413. I jeases of, power to execute, 413. I ■«• . er bo hold, 413. Purchasing on decree of foreclosure, 413. Rules of society must authorize, 413. Selling. U3. Texa rule, 413. RECEIVER. V.bandonmen1 of corporate existence. 391. A mo nni due on loans, p. 171, note I. \ ppoinl menl of, termii ; ty, "'••!. [NDEX. '.ill RECEIVER.— Continued. By .1 . 390. in olvency', rigb.1 to because of, 386. Mai urity of shares, Mo upon, of appointment, 397. RECORDING. Articles of asso nation, SI, 27. failui-e to record, p. 26, note 6 ; p. 27, note 1. RECORDS. Secretary keeps, 73. REDEMPTION. American scheme, 338. Costs of action for, 343. Discouraged, 339. English cases, 334. Equitable scheme for, 337. Losses, provisions for, 342. Permanent society in, 333, 340. Premium charged with interest, 341. Property released, 335. Right to a valuable one, 332. Rules concerning, 336. Terminating society in, 333. REGULATION. A by-law is not, 117. REMEDY. To recover amount of loan, 298. RETROACTIVE. By-laws cannot be, 123, 131. RESIGNATIONS. Directors', 92. RESOLUTION. A by-law is not, 116. RHODE ISLAND. Statutes concerning building associations, p. 863. RULE. A by-law is not, 117. SALARIES. Attorney's, 86, 87. Directors'. 113. President's, 68. Secretary's, 79. 942 INDEX. SALE. Effect on debt, 309. Membership does not terminate, 307. On decree of foreclosure, 305. Remainder due on loan, 309. SEAL. Secretary keeps, 72. Use of, when necessary, 403. SECRETARY. Bill of exchange, cannot accept, p. 75, note 4. Declaration of not binding, p, 320, note 3. Dues, when cannot receive, p. 73, note 12. Fraud of association liable for, p. 75, note 4 ; p. 255, note 2. Fraudulent representations to bind association, p. 59, note. Liability on bond, 78. for records, 73. Medium of communication, 74. Money, power to receive, 75. Notice to, when binds society, 76. Power to bind society, 75. President may serve as, p. 68, note 5. Presumption as to acts, 74. Records, keeps, 73. Release of stockholder by, void, 75. Salary, 79. Seal keeps, 72. Status, 70. Term of office, 71. Transfers stock, 77. SECURITY. Kind association may take, 269, 271, 283. Mortgage, see. Persona] security may take, p. 292, note 3. Power to take, 282. 1,'i't urned, when, 182. Several may take, 274. Surety, see. SERIAL \SSOCIATION. \ pporl ionmenl of profits in, 385. Defined, s. SET-OFF. Debt due from withdrawing member, p. 342, note. Dues (in stock, against Loan, His, 169. Foreclosure, on, 308. Si<><-k assigned, no. Stranger cannd mm pel application of dues, 171. [ndex. 943 SHARES. ( !erl ificate, lost, 1<>:!. Entrance fee nol applied to debt, 179, note 2. Extinguishment by assignment, p. 175, note 1 ; p. 186, note ; p. is?, note 1. Stock, see. Transfer of stock pledged for debt, p. 178, note 4. SOLICITOR. Attorney, see. SOUTH CAROLINA. Loans usurious, when, 250. Statutes concerning building associations, p. 869. SOUTH DAKOTA. Statutes concerning building associations, p. 872. STARR-BO WKETT SOCIETIES. Described, 12. STATUTE. By-laws cannot contravene, 129. Charter, see. Incorporation, see. Of the several states, p. 676. STATUTE OF LIMITATIONS. Depositors right of action, p. 425, note 1. Director may plead in suit against himself, 111. STOCK. Acquisition, 151. Advance payment upon, 147. All must be subscribed for, 152. waiver of, 152. Assessment upon, how made, 106. Attaching, 173. Borrower having assigned, 170. Building association's is peculiar, 146. By-laws may regulate transfer of, 136. Cancelling without consent of owner. 177. decree in foreclosure, p. 189, note 2. Certificate and force, 158. by-law as to transfer of. 159. proceedings to secure, 161, p. 165, note 4. suit to compel transfer, 160. transfer of, 159. Damages for refusing to make transfer, 162. Defined. 145. Demand for transfer. 161. 94-1 INDEX. STOCK.— Continued. Dividends on, 181. declaring, 181. how computed, p. 191, note 3. Dues, see. Extinguishment through error, p. 194, note 1. Fee for transfer, 180. Foreclosure of mortgage, effect upon, 175. Forfeiture, 176. for non-payment of dues, 193. notice of, 176. waiver of, 176. Forged power of attorney, 165. Fraud in obtaining subscription for, 153. Increasing, 154. by board of directors, 106. serial association in, 154. Infant, failing to pay dues, 35. Ledger, as evidence of transfer, 159. Levy upon, 173. Lien of association upon, 156. effect upon rights of owners, 157. for dues, 192. Matures when, 182. Number of shares member may hold, 179, 196. Paid-up shares, 10. Payments upon, enforcing, 167. application of dues, 169. dues not applied to loans, 168. Personal property arc, 145. Pledged shares, 106. substituted, p. 175, note 1. Preferred, 149, 150. statute must authorize, 149, 150. Prepaid. 10. I 18. Purchase l>y association of its own, 178. Re-assignment, p. 391, notel. when. ]>. 375, note 1. Reduction by board of directors, 105. Secretary transfers on books, 77. Serial, 1 16. St i compel application to loan, 171. Subscripl ion Cor, 151. Surety's righl to, 172. Taxing, 381. Transfer of, 155. ■ din-- liability for losses, by, 351. evidence of, 159. fee for making, 180. INDEX. 945 STOCK.— Continued. on forged power of attorney, 164. rights of transfers, 155. suit to compel, 161. when not allowed, 179. Trover for conversion, 161. Value when applied to debt, 174. STOCK-BOOK. Evidence as to membership, 45. STOCKHOLDER. Denned, p. 38, note 1. ^Members, see. Stock, see. STRANGER. Applying stock of member to payment of debt, 171. SUBROGATION. Advanced shareholder on paying losses, 365. Loan to society illegal, subrogation as to, 370. Taking up prior mortgage, p. 293, note 1. SUBSCRIPTION. Effect of fraud upon, 153. For stock, 151. Member, see. Necessary that all stock be taken, 151. Stock, see. SUITS. After society has reached its limit, 389. Amendment of complaint as to name, 404. Assumpsit for withdrawal, amount due, p. 338, note6. Averments as to incorporation, 404. By-law restricting right to bring, 138. Certificate of stock, to obtain, Hi I. Depositor, postponing Lis right of action, 379. Director cannot bring for his own purpose, 106, 107. Dues, assumpsit to recover. 189. effect on payment, 190. Extinguishment of stuck erroneously, p. 194, note 1. Fines enforced by, 202. Foreclosure oi mortgages, 299. defences. 300. Interest does not stop, 268. Matured stock, suit concerning, 330. Member may sue directors for losses, 112. Payments upon stock, enforcing. 167. Power to bring. 404. 946 INDEX. SUITS.— Continued. Remedies to recover amount of loans, 298. Transfer of stock, to compel, 161. Treasurer may bring, 83. "Winding up society, to, 383. Withdrawing members, 319, 322. SURETY. Right to stock pledged, 172. SURVEYOR. Duties, 88. TAXES. Covenant in mortgage to pay, 384. Exemptions, 383. Foreign building association, 382. Mortgages, 380. may cover, p. 296, note 3. Stock, 381. War revenue, 410, 411, 412. TENDER. Amount due, effect, 292. On withdrawal, p. 337, note 3. Pass-book on withdrawal, p. 324, note 1. TENNESSEE. Loans, not usurious. 242. Statute concerning building associations, p. 878. TERMINATING SOCIETY. Denned, 7. TEXAS. Loans usurious, when, 251. Statutes concerning building associations, 885. THEORY OF BUILDING ASSOCIATIONS. I discussion of, p. 469. TREASURER. attorney may employ, 86. Compromise, cannot make, 82. Duties, 80. Electors, Judgment, cannol confess, 83. Liability on bond, 84. Power to coni racl . s l . Suit may bring, 88. INDEX. 947 IROVER. Conversion of stock, i'or, 161. TRUSTEES. Nature of office, 114. ULTRA VIRES. Charge of interest is not, 261. Director's power, 106. liability for acts of, 110. Estoppel to set up, p. 314, note. Illegal vote restrained, 51. UNINCORPORATED ASSOCIATION. Partnerships, are, 406. Subsequent incorporation, 406. USAGE. Enlarging powers < if president, 62. USURY. Borrower recovering back usurious interest, 259. Charges incident to loans is not, 260. Commission to secure loan, 260. Effect on loan, 2.">7. Fines do not make, p. 210. note 4. General laws apply to, p. 257, note 1. Interest see. Loans, when not, 241. 242. Pleading, as to, p. 228, note 1. Premium, is not, p. 237. note. Retroactive statute, effect, p. 289, note 1. Rule as to, in Alabama, 243. Arkansas, 243. California. Canada. 255. Connecticut, 254. District of Columbia, 'JIT. England, 240, 241. Illinois, 245. Indiana, 253. Iowa. 25 !. Kentucky. 251. Louisina,243. Maryland, 242. Massachusetts, 248. Michigan, 248. Minnesota, 248. Mississippi, 2 18. Missouri, 254. 9 18 INDEX. Nebraska, 249. New Brunswick, 255. New Hampshire, 244. New Jersey, 244. New York, 246. North Carolina, 250. Pennsylvania. 252. South Carolina, 250. Tennessee, 242. Texas, 251. Virginia, 247. West Virginia, 254. Validity of statute, as to, 281. Who may defend against, 258. UTAH. Statute concerning building associations, p. 885. VERMONT. Statute concerning building associations, p. 890. VALUE. Stock of, 174. rule as to, p. 184, note 1. VESTED RIGHT. On withdrawal notice given, 320. VICE-PRESIDENT. Nature of office, 69. Presumption as to, 69. VIRGINIA. Loans not usurious, 247. Statutes concerning building associations, p. 893. VOTINC Executor may cast, 51. Members without certificates may, 33. Number of votes member may cast, 53. Right t<> east . 51. hew determined, 51 , 52. WAIVER. laws cannot be waiveil. 122. Notice of withdrawal may be waived, 316. Of form, waived, p. 829, note. WAR REVEN1 E. Application to building associal ions, 110, 411, 412. INDEX. 949 WASHINGTON. Statute concerning building associations, p. 895, WEST VIRGINIA. Loans not usurious, 254. Statute concerning building associations, p. 902. WILL. May authorize carrying out stock, 38. WINDING UP. Apportioning profits in serial association, 395. By agreement, 390. Distributing assets. 396. how made, 396. Insolvency changes relation of members, p. 446, note. Interest allowed, when, 325. Limit of charter reached, 389. Suit to wind up, 393. WISCONSIN. Statute concerning building associations, p. 993. WITHDRAWALS. Amount to be withdrawn, 323, 324. Assets, what members entitled to, 396. Assumpsit for amount due. p. 338, note 6. By-law cannot change right of. 131. Competition for, by-law requiring void, 317. Date for estimating value of shares, p. 342, note 1. Effectof, 321. Execution to enforce collection, 327. Expense fund, credit for, 405. Foreign associations. 331. Insolvency a defence to suit for, 322, 3'29. fear of no defence to suit for, 323. Interest on amount paid in, 325 ; p. 340, note 1. Lack of funds, effect, 319. Liability of members withdrawing for cause, 353. preferences as to, 354. Loans, preferring to withdrawals, 318. Matured stock. 330. payment, 330. suit to enforce payment, 330. Mortgages not ass :ts for purposes of, 291. No funds to pay, effect. 318. Notice oi ry, :!lo. cancelling, .'!!<>. how given, 315. Order in which paid, :>17. Pass-book, tendering, p. 324, note 1. 950 INDEX. WITHDRAWALS.— Continued. Paymeut of amount due, 326. Plans for, pp. 648 to 663. Pledged stock, 328 ; p. 337, note 2. Postponing, 318, p. 330, note 5. Preferences, 317. not allowed, 329 ; p. 351, note 1. Premium, returning, 234. Pirating funds, 321. Right to determine, 313 ; p. 353, note 2. cannot be restricted, 313, 314. Status of member giving notice, 319, 320. Suit for money due on, 319, 322. Surrender of certificate, p. 337, note 3. Transferring right to withdraw, 319, 320. Vested right to payment, 320. Waiver of right to withdraw, 320. LAW LIBRARY UNIVERSITY OF CALIFORNIA LOS ANGELES