Eastern Building Loan Association of Syracuse v. Williamson

This action was commenced on January 12, 1898, in the circuit court of Darlington county, South Carolina, by Bright Williamson against the Eastern Building & Loan Association of Syracuse, New York, to recover the face value of twenty-five shares of stock in the defendant association, less a sum theretofore borrowed by the plaintiff from the association. Judgment in his favor for the full amount claimed was rendered in the trial, affirmed by the supreme court of the state (62 S.C.. 390, 38, S. E. 616), and thence brought here on this writ of error.

The case is similar to that of the same plaintiff in error v. Ebaugh, 185 U.S. 114, 46 L. ed. 830, 22 Sup. Ct. Rep. 566. Here, as there, the stock certificates contained an absolute promise to pay 'the sum of one hundred dollars for each of said shares at the end of seventy-eight months from the date hereof.' Here, as there, circulars were shown to the plaintiff to induce his subscription, one of which contained this statement:

For the investor.

This association issues three classes of certificates, designated as instalment, paidup, and fully paid. All of which are guaranteed to mature in six and one half years.

Amply secured by first mortgages on real estate.

Paid-up stock doubles in six and one half years.

Fully paid certificates guaranteed.

Quarterly dividends, 7 per cent per annum.

For the borrower.

This association has no auction sales.

No bidding for loans.

And a definite time for repaying a loan.

Another, the following:

"Only association giving investor and borrower definite maturity contract in seventy-eight months. Only association issuing definite contracts."

The defendant pleaded that there was no absolute promise to pay at the end of seventy-eight months, but only an estimate of the time at which the stock would mature; that an absolute promise to pay at the end of seventy-eight months was inconsistent with the nature of the corporation as a mutual company, and against the provisions of its charter and by-laws, and also illegal by the laws of New York, under which the company was incorporated.

On the trial before a jury, defendant, in support of its answer, introduced the charter and by-laws of the company, the statutes of New York under which it was incorporated, certain decisions of the courts of that state, and the testimony of the assistant secretary and actuary of the defendant that the shares of stock had not, in fact, matured; also the deposition of its general attorney, who, after affirming his familiarity with the law of that state regarding building and loan associations, of which, as he said, he had made a special study, testified that, under the defendant's articles of incorporation and by-laws, and the laws and decisions of New York, the heretofore-referred-to clause in the certificate of stock 'is not to be construed or held as a guaranty period of maturity, but, on the other hand, an estimated period,' and that the association is not required to pay the face value of the certificates until 'the amount paid by the plaintiff on his shares of stock, augmented by the earnings apportioned and credited thereto, equal the par value.' Upon this testimony, the defendant asked the court to charge the jury that full faith and credit must be given to the laws of New York as construed by its courts, and that by reason thereof, 'under the terms of the contract of membership, and the contract of loan, by-laws, and charter, the transaction between the plaintiff and defendant does not terminate merely upon making a fixed number of payments, but only when the dues paid in by him, with the profits apportioned to his shares, make them equal their par value of $100 per share.' Other instructions of a similar nature, or looking to the same result, were also asked, but all were refused.

Messrs. William Hepburn Russell, William Beverly Winslow, and D. A. Pierce for plaintiff in error.

Mr. H. E. Young for defendant in error.

Mr. Justice Brewer delivered the opinion of the court: