Merrill v. McIntire

Merrick, J.

It was agreed by the parties at the trial that the Merrimac Mutual Loan and Fund Association of which the plaintiffs are the alleged trustees, originally consisted of pro-, prietors united with each other under written articles, copies of which were furnished to the court at the argument, and that they subsequently became incorporated under the provisions of the St. of 1854, c. 454. After the plaintiffs had proved and put into the case the bond declared on, the defendants contended that it was void upon its face for uncertainty, and also because it was made upon a usurious consideration, and because, the association having ceased to exist, there was no longer any party in existence competent to prosecute the suit. These objections were all overruled by the court.

1. The ruling in relation to each of these particulars was correct. The object and purpose of the statute, in authorizing voluntary associations to organize themselves into bodies corporate, were not to dissolve or destroy, but to afford them increased facilities in the transaction of their business, and to secure the durability essential to the accomplishment of the end for which they were designed. In availing themselves of the provisions of the statute, the associates therefore lost none of the rights which they had previously acquired. The choses in action which belonged, and the debts which were due to them, were, in legal effect, and by operation of law, transferred and assigned to the *164corporation, and were to be enforced and collected for the mutual benefit of the associates in the new relation to each other which they assumed. The assignment of a chose in action is a complete transfer of the contract to the assignee, and entitles him to all the benefits and advantages to be derived from it; but does not confer upon him the right to enforce the performance of it by any legal proceeding in his own name. But, as a legal and necessary result of the assignment, he may institute and pursue suitable and appropriate suits in the name of the assignor, who cannot, by any act whatever, deprive him of its use for that purpose. An action may therefore well be maintained upon the bond declared on, in the name of the assignors, for the recovery of the money for which the defendants still remain indebted. Brigham v. Clark, 20 Pick. 43. Jones v. Witter, 13 Mass. 304.

2. There is no ground for affirming that there is apparent upon the face of the bond any such uncertainty in its terms as would render the performance of its condition impracticable, or as would even make it difficult for the obligor to ascertain the extent and limit of his responsibility and the means of obtaining his discharge. It provides for the monthly payment of a specified sum of money during the continuance of the association. The only uncertainty, which is apparent upon a perusal of the terms of the bond, is in relation to the period of time, during which the association is to continue in existence, and the monthly payments are to be made. But these are facts which may be determined upon a resort to extrinsic evidence. If it should be objected that no such evidence could be found, or, if found, would be indefinite and unsatisfactory, the answer is, that if in such a contingency the parties should be left in entire uncertainty in relation to their respective rights and obligations, this difficulty does not arise upon the face of the bond, but upon the imperfection of the proofs resorted to for explanation.

But without relying upon this answer, it is sufficient that, upon referring to the articles which constitute the written agreement between the parties, provision is made for the termination of the association; art. 30. That end may be reached at an ear*165lier or later day, as the business to be transacted shall be more or less profitable and successful. But though subject to contingencies which may perhaps create embarrassments and disappointment, still the termination of the association and the winding up of its affairs are distinctly provided for; and when those take place, the condition of the bond will be performed, and no further payments under it can be required.

The same articles also contain other provisions which may be resorted to by the obligor for relief against the supposed uncertainty upon which his objection is founded. They provide that all loans shall be secured by mortgage of real estate; art 13; and that estates mortgaged as security for the payment of a debt, or, as in this case, for the performance of the condition of a bond, may be redeemed ; art. 17. Redemption of a mortgage is a payment of the debt for which it stands as collateral security. If the debtor shall not be satisfied with the claim which the officers of the association may decide to be due, he is not concluded by their determination; but may appeal to the proper legal tribunals to adjust the matters in controversy between them. On a bill in equity, if there were occasion to resort to it, the rights of the respective parties might be investigated, and such decree entered as would secure to each whatever they were respectively entitled to require.

3. If it distinctly appeared, upon examination of the bond, that it was executed upon and for a usurious obligation, it would not follow that therefore it should be declared void. That is not the legal effect which follows upon the taking or reserving of a greater rate of interest than is allowed by law. The contract is valid, and still remains in force, although the securing or attempting to secure an unlawful compensation for the use of money loaned may subject the lender to the loss and penalties prescribed by the statute. Rev. Sts. c. 35, § 2. St. 1846, e. 199. The defendant’s objection therefore, that the bond was void for usury upon its face, was very properly overruled.

But in truth, in looking at the actual transaction between the parties, the loan to the defendant does not appear to have been made upon any usurious consideration The monthly payment *166which he stipulated to pay as long as the association should continue to exist was not simply for the use of the money, or forbearance of repayment of the principal, but for the privilege accorded to him of becoming an owner of a certain number of shares, and of eventually taking the dividend to which, by the articles of agreement, he would, upon the winding up of the affairs and general settlement of the concerns of the association, be entitled. Whether the arrangement made was one which would be likely to result advantageously was a question upon which he was to exercise his own judgment. All the associates had the same right. Bach one would determine for himself what was the value of the prospective .benefit to be enjoyed, and would make his offer for the money to be loaned, according to his estimate of the worth of the shares which he was allowed to take and of which he became an owner. He could not have more than fifteen shares in the whole; nor become a borrower of the association except in the proportion of his own to the whole of its stock; art. 13. Upon the close of the whole concern, all the owners of shares were to have their just and equal proportions of the profits acquired. Whether the advantages anticipated will finally be obtained may perhaps be questionable; but since the borrower, under such circumstances, is to have his full proportion of the benefit of all the gain which may be made, he cannot assert that he has contracted to pay, or that the lender has reserved to himself, a usurious rate of interest.

4. After these questions had been severally disposed of by correct rulings of the court in relation to them, and a verdict under its direction had been taken for the plaintiffs for the penalty of the bond, the defendant proposed to go to the jury, that they might determine the amount due on the bond, and offered to prove that since its execution he had made sundry payments upon it. This, upon the objection of the plaintiffs, he was not allowed to do, for the reason that he had set up no such matters in his answer.

In this particular, we think the ruling of the presiding judge was erroneous. In actions brought for breach of the condition of a bond, when it is found, by verdict or otherwise, that there *167has been a breach of it, judgment is to be entered in the common form for the whole penalty; but execution is to issue only for the sum which is then due and payable in equity and good conscience. This sum is to be ascertained by a jury, if either party shall think proper to have the question so decided. Rev. Sts. c. 100, §§ 8, 9. That was the claim which was preferred by the defendant, and it should have been allowed. The provisions of the practice act, in reference to the filing of answers to the declaration, were not applicable to this question, nor to this action in the stage of it when the question arose. St. 1852, c. 312, §§ 12, 18. The defendant had attempted to interpose a defence upon his answer, duly filed in pursuance of the requirements of the statute, and had failed. A verdict was rendered and judgment entered against him. He then sought to have the sum for which execution should issue ascertained by the jury. He had a right to insist upon this, and therefore the evidence of payments upon the bond which he offered to produce should have been received. Its exclusion was just ground of exception.

The conclusion is, that judgment is to be entered on the verdict for the penalty of the bond. All the exceptions other than those in relation to the damages are overruled. In relation to the damages the exceptions are sustained, and the verdict to that extent is set aside, and a new trial is granted as to the amount of damages, that is, as to the sum actually due on the bond, but upon no other question.