Baltimore Permanent Building & Land Society v. Taylor

Miller,, J.,

delivered the opinion of the Court.

Hobartson s Case, 10 Md., 397, decides that mortgages to Building Associations, such as are contemplated and provided for by the Act of 1852, ch. 148, if executed in conformity to the provisions of that Act, are free from objection on the ground of usury. That was a general law authorizing the formation of such associations, and its provisions were embodied in the Code, Art. 26, secs. 30 to 39. This case does not require us to notice the changes in this law made by the general corporation Act of 1868, ch. 471. The appellant derives its existence from the special Act of incorporation of 1867, ch. 358. It maybe assumed argumenti gratia, that this latter Act, in respect to the question before us, is similar to the Act of 1852, and the provisions of the Code, and, upon this assumption, the point for us to decide is, whether the mortgage in this case is usurious, and that must be determined by the further question, whether it is a mortgage authorized by and in conformity with the Act incorporating the appellant. The mortgage recites that the “mortgagor being a member of said body corporate, has received therefrom an advanced loan of $3600 on nine shares of its stock held by him in liis own name,” and conveys to the mortgagee the described property, with the proviso, that if the mortgagor “shall make the payments and perform the covenants herein on his part contained, then this mortgage shall he void.” Then follows among others, the covenant that the mortgagor, “in consideration of the use, benefit and advantages derived to him through the mortgagee’s consent to accept repayment of said loan in said fractional proportions, extending through a period of ten years, in accordance with the table of rates,” will pay “the weekly sum of eleven dollars and sixteen cents lor 520 weeks, computing from the 10th of October, 1867, and ending on the 10th of October, 1877, the loan being repayable in ten years, by payment of the weekly dues upon nine shares, *418with weekly interest, at the rate of six per cent, per anmym upon the par value of said nine shares.” The proof shows the mortgagor received only $2700, and that the par value of the shares was $400 each, making for the nine $3600. One of the essential stipulations of the mortgage is, that he shall for ten years,.pay weekly interest on the par value of these shares, that is, upon $3600, being upon $900 in excess of the sum he actually received from the mortgagee. The Act of 1867, in its 6th section, permits the mortgage to stipulate for the payment of weekly instalments on the shares redeemed or sold, “together with interest on the sum so paid or advanced.” These latter terms clearly mean interest on the sum actually received by the mortgagor from the society, and not on the par value of the shares on which the advance was made. This is the construction we have placed upon the equivalent terms “amount borrowed.” Oak Cottage Building Association vs. Eastman & Rogers, 31 Md., 561. In this stipulation, most important as respects the question of usury, the mortgage fails to conform to the provisions of the law under which protection is claimed for it against the charge of usury. It must, therefore, be regarded in the same light as if it were a mortgage between individuals, and apart from any law relating to Building Associations. So considered, it is plainly usurious and was rightly so treated by the Court below. We rest our decision upon this ground, as it is quite sufficient to dispose of the case, and shall express no opinion upon other questions raised in argument, and in the Court below.

(Decided 11th February, 1875.)

Order affirmed, and cause remanded.