delivered the opinion of the Court:
When we first considered this case we were under a. misapprehension, resulting from the meagreness of the statement in regard to the facts. We then assumed that the promissory note was payable, at all events, for the amount expressed upon its face, together with ten per centum per annum interest thereon, and that the premium bid had, also, in good faith been paid, and we thereupon concluded that the transaction was usurious, and in so far as any law, applicable alone to such corporations, purported to give sanction to and legalize it, it should be held void because in conflict with certain clauses of sec. 22, art. 4, of our constitution. That conclusion can not be sustained upon what we now understand to be the facts.
The appellant association was organized under the general law authorizing the formation of such associations, approved April 4, 1872, and in force July 1, 1872. (2 Gross’ Stat. p. 67.) The sixth section of that act provides, that the shares of the stock shall be $100 each; that subscriptions therefor shall be made payable to the corporation in such periodical installments, and at such time or times, as shall be determined by the charter and by-laws, but no periodical payment to be made exceeding two dollars on each share; and that every share of stock shall be subject to a lien for the unpaid installments and other charges incurred thereon under the provisions of the charter and by-laws. And the eighth section provides, that 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 over §100, 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 $100 for each share of stock held by said stockholder; and that in case of non-payment of installments or interest by borrowing stockholders for the space of six months, payment of principal and interest, without deducting the premiums paid or interest thereon, may be enforced by proceeding against their securities, according to law. The ninth section provides, that the borrower may repay a loan at any time, and in case of the repayment thereof before the expiration of the eighth year after the organization of the corporation, there shall be refunded to such borrower one-eighth of the premium paid for every year of the said eight years then unexpired.
Smythe became a member of the association in February, 1875, subscribing for eight shares of stock, and on the 4th of October, 1875, desiring to obtain money on six of his shares' of stock, he bid as premium therefor $30 on each share. This bid was accepted by the association, and the par value of his six shares of stock, less the premium bid, ($70 on each share, and §420 in all,) was advanced to him, and he thereupon executed the note and mortgage in controversy. This note, it is expressly shown, although for §600, is only to secure the payment of the interest to accrue upon the par value of the shares, and dues of fifty cents on each share monthly, as also fines, penalties and forfeitures, etc., and upon liquidation of the association the note was to be surrendered to Smythe, and accepted by him in full for his six shares of stock. This would happen when the shares of stock would reach their par value, so the transaction was, in fact, an advancement by the association in anticipation of that time. The transaction is in the nature of a sale by Smythe of his shares of stock to the association, and it has been so held by other courts. Hoboken Building Association v. Martin, 2 Beasley, 427; Clarksville Building Association v. Stephens, 26 N. J. 351; Delano v. Wild, 6 Allen, 1; Merrill v. McIntyre, 13 Gray, 157.
But if the transaction be treated as a loan, it is not, from what here appears, necessarily usurious. When the money was obtained the association had but five years and seven months to continue under the statute, it having been organized two years and five months previous to that time, and its duration being limited to eight years. The dues and interest, which the note secured, amount to $8 per month ($3 dues and $5 interest). At the end of five years and seven months (sixty-seven months) this would amount to only $536. The rate of interest then authorized for money loaned was ten per cent per annum. The amount received ($420), at ten per cent, in five years and seven months, would bring $234.50, which, added to the principal, would make $654.50, that would have had to have been paid, treating the money received as a loan, at ten per cent. This, of course, requires that Smythe should have kept his contract, but that- is what we must assume was the intention of the parties when the contract was made. It was his duty to keep his contract, and it was legally within his power to have done so. Being compelled to pay the face of the note, as well as accumulating interest, etc., is simply the result of the failure of Smythe to comply with his contract, and for which, it would seem, he had reasonable time; and this obligation may be regarded as one in the nature of liquidated damages, such as all parties were, at that time, at liberty to annex as a condition of the non-performance of their contracts,, and it is, in no sense, under the law then in force, as held by previous decisions of this court, a regulation of interest upon money, or obnoxious to the charge of usury. Lawrence v. Cowles, 13 Ill. 577; Gould v. Bishop Hill Colony, 35 id. 324; Davis v. Rider, 53 id. 416; Witherow v. Briggs, 67 id. 96. This is still further manifest by reference to the ninth section of the charter, which, it has been seen, authorizes the borrower to repay the loan at any time, which would restore his shares of stock to him, and have refunded one-eighth of the premium bid for each year of the eight years unexpired of the life of the association. And for like reason, as has been held by this court in Bane v. Gridley, 67 Ill. 388, the case is not one in which relief will be granted by a court of equity, as against a penalty.
In other respects we perceive no valid objection to the transaction. The statute under which the association was organized is a general law, applicable to all the citizens of the State who choose to bring themselves within the relations and circumstances provided for by it. We are of opinion that it is free of constitutional objection, in so far, at least, as it has any bearing upon the facts now before us.
The decree of the court below is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.
Tr. 7 Decree reversed.
Walker and Dickey, JJ., dissent.