Opinion · Supreme Court of North Carolina
Overby v. Fayetteville Building & Loan Ass'n
81 N.C. 56
- Type
- Opinion
- Court
- Supreme Court of North Carolina
- Jurisdiction
- North Carolina
- Date
- 1879-06-05
- Topic
- general
Smith, C. J. The plaintiff, W. Overby, became the owner at different times of eleven and of eight shares of stock in the defendant corporation which were subsequently redeemed by the association at the price of $1,210 for the first, and $800 for the last lot of shares. The contract of redemption, under the regulations of the association, requires the continued payment of monthly instalments on the shares and other dues from stockholders, and the payment of interest on $200, the full par value of each share of stock, at the rate of eight per cent, per annum, until by the accumulated profits that sum cau be distributed among the holders of the unredeemed shares, when all further payments are to cease, and the former owner of the redeemed shares is permanently disconnected from the association and the business between them closed.
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OVERBYv. BUILDING AND LOAN ASSOCIATION,81 N.C. 56(1879)
W. OVERBY and wife v. THE FAYETTEVILLE BUILDING AND LOAN
ASSOCIATION.
Supreme Court of North Carolina
(June Term, 1879.)
1. An exception to the report of a referee that a party is not credited with a certain amount in the statement of accounts can not be made upon the trial of the action on the referee's report where the claim was not asserted before the referee and no evidence offered in its support.
2. A shareholder in a building and loan association, whose stock is redeemed, cannot participate in the profits of the business thereafter. To retain the property in his stock, he must conform to the general regulations and contribute as others are required to do; otherwise, he puts an end to his relations with the association and cases to have any further interest in its affairs.
3. Interest is allowed upon the items of an independent account when used as a set-off or counter-claim to extinguish or reduce a debt, but is not to be computed uponpaymentsas such, whose effect is to reducepro tantothe sum due, interest being first discharged.
4. Where a mortgage contained a covenant that the mortgagor should keep the mortgaged premises insured, and in case of his failure to do so, the mortgagee should have the privilege of insuring the same, etc.;Held, that any moneys paid by the mortgagee for insurance (the mortgagor having failed to insure), are properly chargeable against the mortgagor upon a settlement of account.
5. The right to a trial by jury of facts passed upon by a referee, does not extend to a reference by consent.
6. Where a plaintiff in his complaint expresses a readiness and willingness to come to a fair and equitable settlement, and the defendant in his answer submits to the account and settlement proposed by plaintiff, and where the matters of account are proper subjects of reference, and no opposition to the order of reference is made by either party;Held, to be a reference by consent.
(The manner of settling the affairs of building and loan associations announced inMills v. B. and L. A.,75 N.C. 292, affirmed.)
When the decision of the Court inMills v. Building and LoanAssociation,75 N.C. 292, and in the similar case ofVann v. Buildingand Loan Association(this defendant),75 N.C. 494, made at the same time, was known, the defendant determined, in conformity to the opinion in those cases, to close up its butiness [business] and divide its (59) funds among the shareholders, and was proceeding to do so by selling the mortgaged premises of the plaintiffs, when this action was instituted and further progress arrested by injunction.
The matters in dispute between the parties were referred to the Clerk, who has stated an account upon the basis of giving the plaintiffs credit for all moneys paid by them to the association for installments, fines or otherwise, and charging them with the money actually received, with interest. To this end monthly computations with deductions for monthly payments have been made, and the referee reports to be due upon both transactions from the plaintiffs the sum of $1,134.31, with interest on $969.87, principal, from January 29, 1877, the day to which the interest is computed.
The plaintiff appeared before the referee when he took the account, and objected to certain parol evidence of payments by the associationPage 57for insurance on the property, which is set out in the referee's report, but made no other objection until the report was returned to Court. He then filed several formal exceptions in addition to that taken before the referee, and demanded a jury trial of all of them. The Court permitted an issue to be drawn up and submitted to the jury as to the plaintiff's failure to insure, and the insurance and payment by the association of the premiums therefor, which were both found in favor of the defendant, and his Honor declined to submit other issues for reasons mentioned in the record, and which will hereafter appear. The exceptions were taken to the report after its return, and the correctness of the rulings of the Court thereon are before us for consideration. They will be disposed of in their proper order:
1. For that the plaintiff is not credited with a payment of $185, alleged to have been made by him.
No such claim seems to have been asserted before the referee, nor any evidence offered in its support. He has, therefore, made no ruling either on the admission or rejection of the claim. Its (60) character is not pointed out in the exception itself, nor any reason suggested why it should be allowed. It would defeat all the desirable objects and advantages of a reference if a party may slumber upon his rights, or, if present, fail to assert and sustain them by proof before the referee, and then complain of the omission of the latter to pass upon a claim of which he had no notice and no information. This cannot be allowed.Green v. Jones,78 N.C. 265.
2. For that the plaintiffs have no credit for the value of their stock.
It does not appear that this claim was made before the referee, and, if it had been, it should have been disallowed. The proposed adjustment between the parties, the proper mode of doing which is intimated in the opinion in the cases cited, is upon the basis of an actual loan of money and subsequent partial payments therefor by the plaintiff, and, upon the settlement of the balance due, of the retirement of the redeemed shareholder from the association. It is unreasonable to permit him to retain his original stock and participate in the profits of a business equally with those who have made their required and regular contributions to the common fund, while he withdraws and appropriates his own to the discharge of a debt, and actually pays nothing. To retain the property in his stock, he must conform to the general regulations, and contribute as others are required to do. Instead of this, he prefers to put an end to his relations with the association, and ceases to have any further interest in its affairs. He is thus, by his own voluntary act, a shareholder no longer.
3. That interest is not allowed on the plaintiff's successive payments.
Interest is allowed upon the items of an independent account whenPage 58used as a set-off or counterclaim to extinguish or reduce a debt, (61) but is not to be computed uponpayments, as such, whose effect is to reducepro tantothe sum due, interest being first discharged. This rule of computation is laid down inBunn v. Moore,2 N.C. 279, and inNorth v. Mallett,3 N.C. 151, and has been recognized and followed since. Same rule laid down inStory v. Livingston, 13 Peters, 359.
Fourth, fifth and sixth exceptions: For that the plaintiff is charged with premiums paid the defendant for insurance of the buildings upon the mortgaged land.
The jury find, upon issues submitted to them, that the plaintiff failed to insure the premises, and the defendant, in consequence, effected the insurance and paid therefor the several sums charged against the defendant in the account. The mortgage contains a clause authorizing this to be done. Among the covenants of the mortgagor are, that "he will keep the buildings on said premises during the said time in good repair, and insured"; and (in the third clause) "that the said association shall have the privilege of insuring the said buildings and paying all taxes and charges on the said lands in case of the failure of the party of the first part (the mortgagor) so to do." The charge is consequently a proper one, and was rightly allowed.
On the trial of the issue before the jury, a witness was permitted to prove the payment by the defendant of the insurance premiums, the plaintiff objecting to the evidence on the ground that the written receipt of the insurance company or its agent was the primary and only admissible proof. This objection is founded upon a misconception of the law applicable in this species of evidence. A receipt or memorandum in writing, acknowledging the payment of money, when executed by a stranger to the action, is not only not the best evidence of payment, but, if offered, is inadmissible proof of the fact. It is but an unsworn declaration of the person executing it, and would be properly rejected (62) by the Court for this reason. It was entirely competent to show the payment by any person present when it was made, and cognizant of the transaction. Such a writing given by one of the parties in the suit to the other is but an acknowledgment, and does not preclude direct testimony to the fact.Smith v. Brown,10 N.C. 580;Brown v.Brooks,52 N.C. 93;Wilson v. Derr,69 N.C. 137;Reynolds v. Magness,24 N.C. 26.
7. For that the plaintiff is charged with more money than he received by the sum of fifty dollars.
The vagueness of this as of the first exception is a sufficient reason for disregarding both, and what we have already said in considering the one applies with equal force and pertinency to the other. But a full and satisfactory answer is found in what is said by the Court belowPage 59as a reason for overruling it: "That the report of the referee showed that the plaintiffs were charged with no more money than in their complaint they allege they received from the defendant."
The plaintiffs further except that other matters of controversy in regard to the report were not permitted to go to the jury. It is perfectly well settled that the right to a trial by jury of the facts passed on by the referee does not extend to a reference by consent.Lippard v. Roseman,70 N.C. 34, and same case72 N.C. 427;Atkinson v. Whitehead,77 N.C. 418, and other cases. Was this a reference by consent? We are inclined to think it was, and for these reasons:
1. The plaintiff in his complaint (Art. 13) expresses a readiness and willingness to come to a fair and equitable settlement.
2. The defendant submits in his answer (Art. 12) to the account and settlement proposed by the plaintiff.
3. The matters of account are a proper subject of reference, and no opposition was made to the order by either.
InAtkinson v. Whitehead, supra, an order was made in these words: "Referred on motion of plaintiffs to B. W. Brown to (63) state account." BYNUM, J., discussing the character of this order, says: "After the pleadings were all in and the issues joined upon the motion of the plaintiffs themselves, the reference was ordered by the Court to take and state the account between the parties. This motion wasnot opposed, that is, it wasassentedto by the defendant. The reference was, therefore, by consent, and is the mode of trial selected by the parties, and is a waiver of the right of trial by jury." The plaintiff was here demanding a jury, while at his instance the reference was directed, but it could only be by consent, when the consent was mutual, concurred in by both. The rights of the contesting parties are not varied because one of them asked for the order. It is binding equally on both or on neither, and the same consequences follow to each.
The right, however, to have issues framed for a jury trial of facts contained in the report, must be confined to such controverted facts as were presented to the referee and required his decision, and the verdict is a mode of reviewing his findings. This is an anomalous practice, and should not be extended. Indeed, it may be questioned, as the correctness of the opinion inArmfield v. Brown,70 N.C. 27, was in the dissenting views of a member of the Court at the time, whether the recant amendments of the Constitution do not change the law, as then declared, and restore the power exercised by the courts of equity under the former system of disposing of exceptions to a referee's report without the intervention of a jury. But we are not required, and we forbear to express an opinion of the full extent and measure of these constitutional changes.Page 60
There have been other points brought into the argument, such as the legal capacity of the defendant to make loans and collect interest, and the presence of usurious taint in the transactions themselves, (64) which are not essential to the determination of the cause. There was in fact no lending of money, but a redemption or calling in of stock at an agreed price, on the terms and under the regulations adopted by the shareholders and carried out substantially in the provisions of the mortgage deeds. The only interest stipulated to be paid was at the rate of eight per cent upon the future contemplated value of the stock, until the maximum was reached. As the rate of interest is thus established by the contract, and the consideration received for redemption was in fact money, in the view of the Court which decidedMills v. Building and LoanAssociation, supra, the solution of the controversy was to be attained by treating the vendor as borrower, the vendee as lender, and the sum received as money loaned, and adopting the conventional interest allowed by law. The Court in that case say: "If the parties should desire to settle upon the basis of what we have intimated, there will be an account stated, charging the plaintiff with $379 and interest at six per cent, that being the rate agreed on up to the time of stating the account. He will then have credit for all the interest, dues and fines, and all other payments, if any, which he has made, with interest thereon from the time the payments were made, and the balance will be the amount due the defendant. This will be a charge upon the land under the mortgage, and for it the land may be sold after a reasonable time." Upon this principle the account is stated, and by this the defendant is willing to abide. Surely the plaintiff can find in it no just ground of complaint.
The plaintiffs seek relief from what they deem an oppressive and usurious contract, and a court of equity grants it only on condition that they pay what they owe, with lawful interest.
This is the full measure of relief to which they are entitled, (65) and this is secured to them by the referee's report.
Affirmed.Cited: Grant v. Reese,82 N.C. 74;Currie v. McNeill,83 N.C. 181;Hoskins v. B. and L. Asso.,84 N.C. 838;Carr v. Askew,94 N.C. 211;Vaughan v. Llewellyn, Id., 478;Wiley v. Logan,95 N.C. 362;Yelverton v.Coley,101 N.C. 250;Rowland v. Loan Asso.,115 N.C. 829;Meroney v.Loan Asso.,116 N.C. 909;Aiken v. Cantrell,127 N.C. 417.Page 61