Lumpkin v. Durham Building & Investment Co., 204 N.C. 563 (1933)

April 26, 1933 · Supreme Court of North Carolina

204 N.C. 563

MRS. D. LUMPKIN v. DURHAM BUILDING AND INVESTMENT COMPANY

(Filed 26 April, 1933.)

1. Building and Loan Associations D a—

A borrowing stockholder of a building and loan association occupies a dual relationship to the association, and his rights and liabilities in each capacity are independent and must be determined by his contracts with the association.

2. Same — Borrowing’ stockholder held entitled to have payments made prior to specified date applied to loan under the terms of his contract.

Where the deed of trust executed by a borrowing stockholder of a building and loan association provides that the monthly sums paid by the borrower and entered on his pass book should be credited to his indebtedness on the last days of June and December of each year, and the parties have so construed the contract by applying the payments in accordance therewith, and the stock subscribed to by the borrower was its optional payment stock issued under its by-laws which imposed no fine for failure to make regular payments thereon, O. S., 5177: Held,, upon the placing of the association in the hands of a liquidating agent, during the first part of December, 1932, the borrower was entitled to have all monthly payments made by him prior to 1 July, 1932, applied on his loan, and all subsequent payments after 1 July, 1932, should be applied to the payment of the stock subscribed for by him. Rendleman v. Stoessel, 195 N. C., 640, distinguished on the basis of the contract between the parties.

Clarkson, J., concurs in the result.

Appeal by Claud Currie, liquidating agent of tbe defendant, from Small, J., at January Term, 1933, of Dueiiam.

Affirmed.

This action was begun by tbe plaintiff, a stockholder of tbe defendant corporation, in tbe Superior Court of Durham County on 30 November, 1932. At December Term, 1932, of said court, Claud Currie was appointed liquidating agent of tbe defendant. He is now engaged in tbe performance of his duties as such liquidating agent under tbe orders of tbe court.

Tbe action was beard at tbe January Term, 1933, of said court on tbe petition of Dr. Eoy Eoberson, a stockholder and borrower of tbe defendant, for an order authorizing and directing tbe liquidating agent to accept from tbe petitioner tbe balance due on bis indebtedness to tbe defendant in full discharge of tbe same, and upon tbe payment of tbe said sum by tbe petitioner, to cancel tbe deed of trust by which the said indebtedness was secured.

On tbe facts agreed upon at the bearing, it was adjudged by tbe court that tbe balance due by tbe petitioner on bis indebtedness to the defendant, secured by tbe deed'of trust, is $18,083.99, with, interest from 1 July, 1932.

It was ordered by tbe court that tbe liquidating agent be and be was authorized and directed to accept from tbe petitioner, in full discharge of bis indebtedness to tbe defendant, tbe sum of $18,083.99, with interest from 1 July, 1932, and upon tbe payment by tbe petitioner of said sum, to cancel tbe deed of trust by which said indebtedness was secured.

From this order, Claud Currie, liquidating agent of tbe defendant, appealed to tbe Supreme Court.

Morehead & Murdoch for the petitioner.

McLendon & lledrich for the liquidcding agent.

CoNNOR, J.

Tbe defendant is a corporation organized under tbe laws of this State, and prior to tbe commencement of this action, engaged in business as a building and loan association, O. S., 5169-5193. As authorized by its by-laws, which were duly adopted by its board of directors, tbe defendant issued three classes or kinds of stock: Serial stock; (2) prepaid stock; and (3) optional payment stock. Tbe defendant was authorized by statute to issue as many series, or classes and kinds of stock as were provided for in its charter or by-laws. C. S., 5177. No entrance or withdrawal fee was charged to subscribers for its optional payment stock, nor were any fines or penalties imposed upon tbe holders of such stock for failure to make regular payments on their shares.

During February, 1927, Dr. Foy Roberson subscribed for 290 shares of tbe optional payment stock of the defendant, and thereby became a member of the defendant association. As such stockholder and member, he applied to the defendant for a loan of $29,000, to be paid in accordance with the provisions of defendant's by-laws, and to be secured by a deed of trust executed by Dr. Roberson and his wife. The loan was made on 12 March, 1930, in accordance with the application, and the deed of trust was duly executed, and recorded. The terms upon which the loan was made, and upon which it was to be paid are fully set out in the deed of trust.

In accordance with his contract with the defendant, Dr. Roberson paid to the defendant, each month after the loan was made, the sum of $290.00. These monthly payments were entered in the pass book issued to Dr. Roberson by the defendant, and also on the books of the defendant, as they were made by him. On the last days of June and December of each year, in accordance with the provisions of the deed of trust, the aggregate amount of these monthly payments for the preceding six months, was applied by,the defendant as a payment on the loan. No part of such amount was applied as a payment on the shares of stock for which. Dr. Roberson had subscribed. The amount due by Dr. Roberson on his loan on the first days of July and January of each year, was thus ascertained and determined in accordance with the provisions of the deed of trust. Interest was computed on such amount at the date of each subsequent payment.

The amount due on the loan, as shown by the pass book in the hands of Dr. Roberson, and by the books of the defendant, on 1 July, 1932, was $18,083.99. None of the monthly payments made by Dr. Roberson after 1 July, 1932, and prior to the commencement of this action, had been applied as a payment on the loan. The aggregate amount of such payments is $1,449.99.

It does not appear from the statement of facts agreed submitted to the court at the hearing of the petition filed by Dr. Roberson in this action, that the defendant corporation was insolvent at the date of the commencement of this action, or that it is now insolvent.

The court was of opinion and so adjudged that Dr. Roberson, as a borrower of the defendant, was entitled to have all the monthly payments made by him prior to 1 July, 1932, applied as credits on the amount of his indebtedness to the defendant but that payments made since 1 July, 1932, and prior to the commencement of the action, should be applied on the shares of stock for which he had subscribed. In this, there was no error.

The petitioner, Dr. Roberson, at the date of the commencement of the action, occupied a dual relation to the defendant. He was both a stockholder and a borrower. These relations are independent, the one from the other. His rights and liabilities growing out of each of these relations are determined by his contracts with the defendant. Only his rights and liabilities as a borrower of the defendant are involved in this appeal. Both are fixed by his contract, as appears in his deed of trust. Under this contract all the monthly payments made by him were to be applied on the last days of June and of December of each year, as credits on the amount of his indebtedness to the defendant.

This case is readily distinguishable from Rendleman v. Stoessel, 195 N. C., 640, 143 S. E., 219. In that case, all payments made by the defendant were made on the shares of stock for which he had subscribed, while in the instant case, all payments made by the petitioner were made on the amount of his indebtedness to the defendant, and were apiplicable to such indebtedness on the last days of June and December of each year. This is the construction of the contract made by the piarties thereto prior to the commencement of this action. Lewis v. Nunn, 180 N. C., 159, 104 S. E., 410. There is no error in the order. It is

Affirmed.

Olakksok, J., concurs in result.