Cook v. Kent

Gray, J.

The nature and effect of the relations created between a loan fund association and its members under articles of association and bonds and mortgages, containing provisions like those in this case, are defined in many particulars by the express stipulations between the parties and by previous decisions of this court.

Every person becoming a member of the association pays an entrance fee, and is also obliged to pay, during the existence of the corporation, monthly dues of two dollars a share, and, in case of nonpayment thereof, the fines prescribed by the articles of association ; and, in consideration of these undertakings on his part, is entitled to the privileges of a member, the principal of which is the right to share in the final distribution of the fund accumulated by the corporation from the payments made by himself and other members. As often as the fund of the corporation amounts to the sum of five hundred dollars (which is assumed as the par value of one share) it is to be applied to the redemption of the share of that member who will bid the greatest sum by way of discount for the privilege of taking out his distributive share of the fund at once ; charging him, however, until the time of final distribution, by way of “ redemption fee,” with sums equal to interest at the rate of six per cent, annually on the amount actually advanced to him, being the sum of five hundred dollars deducting the discount; he thereupon gives a bond and mortgage for the payment to the corporation, its successors or assigns, of the sum advanced,-not at all events, but only in “the manner following,” namely, the stipulated monthly dues, “ to be applied in liquidation of the said principal sum,” and also interest monthly thereon, at the rate of six per cent, annually, until the monthly dues paid amount to the principal sum, pursuant to the by-laws of the corporation, and also all fines charged to him, pursuant to those by-laws, during that period; the member, whose share is thus redeemed, thereby ceases to be a member of the corporation, but continues liable to pay interest, monthly dues and fines according to the terms of his bond and mortgage; and neither his entrance fee, nor interest or monthly dues so paid, nor fines charged according to the by-laws for nonpayment thereof, are to be deducted in computing the amount due on his mortgage. Articles of Association, 2, 10,11,14,18, 24, 31, 34. Barker v. Bigelow, 15 Gray, 130. Delano v. Wild, 6 Allen, 1. Bowker v. Mill River Loan Fund Association, 7 Allen, 100. St. 1854, c. 454, § 7. Gen. Sts. c. 59, §§ 7, 8.

It follows that the plaintiffs, having acquired by purchase and descent the title in the land mortgaged by a member of the corporation upon the redemption of her share, are not entitled to redeem the land from the mortgage without paying the interest on the amount advanced and the monthly dues and fines until November 30, 1866.

But upon that day, as appears by the master’s report, the defendant, who was the secretary of the corporation, purchased and took assignments to himself of all the bonds, mortgages and assets of the corporation, and of all the unredeemed shares of its members. In this condition of things, there was no longer a quorum of members necessary for the transaction of business, no meetings could be held to which the plaintiffs might appeal from the entries of the secretary, which are declared by the bylaws to be primd facie evidence, nor for the election or removal of officers to whom the plaintiffs must apply for the redemption of their land from the mortgage, nor for any other corporate object or purpose. Articles 1, 3, 12, 18, 30, 31.

The liability to pay monthly dues, or fines, or interest on the amount advanced, cannot extend beyond the existence of the association. This was assumed in the opinion delivered by Mr. Justice Hoar in Bowker v. Mill River Loan Fund Association, 7 Allen, 100, and is the necessary effect of the contract between the parties. The transactions of November 30, 1866, amounted to a complete suspension, at least, if not to a final dissolution, of the corporation, by the unanimous consent of all the members. Angel! & Ames on Corp. §§ 768-770. It would be most inequitable to oblige one party, or those holding by assignment his interest, to continue to make the payments required of him by the contract, while the other party has incapacitated himself from carrying out the provisions made in the same contract for ascertaining the extent of the mutual obligations of the parties, &i¡ d for securing the performance1 thereof on his own part.

The result is, that the plaintiffs, upon paying the amount due oh November 30, 1866, with interest thereon, are entitled to a

Decree for redemption.