{
  "id": 5621722,
  "name": "Concordia Building and Loan Association, Appellant, v. Roy E. Burton and Clara M. Burton, Appellees",
  "name_abbreviation": "Concordia Building & Loan Ass'n v. Burton",
  "decision_date": "1937-06-30",
  "docket_number": "Gen. No. 39,172",
  "first_page": "167",
  "last_page": "176",
  "citations": [
    {
      "type": "official",
      "cite": "291 Ill. App. 167"
    }
  ],
  "court": {
    "name_abbreviation": "Ill. App. Ct.",
    "id": 8837,
    "name": "Illinois Appellate Court"
  },
  "jurisdiction": {
    "id": 29,
    "name_long": "Illinois",
    "name": "Ill."
  },
  "cites_to": [
    {
      "cite": "187 Ill. 275",
      "category": "reporters:state",
      "reporter": "Ill.",
      "case_ids": [
        3230775
      ],
      "opinion_index": 0,
      "case_paths": [
        "/ill/187/0275-01"
      ]
    }
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  "analysis": {
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  "last_updated": "2023-07-14T14:37:39.529271+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [],
    "parties": [
      "Concordia Building and Loan Association, Appellant, v. Roy E. Burton and Clara M. Burton, Appellees."
    ],
    "opinions": [
      {
        "text": "Mr. Presiding Justice Denis E. Sullivan\ndelivered the opinion of the court.\nThis is an appeal brought by plaintiff, Concordia Building and Loan Association, from a decree entered July 16, 1936, in the circuit court dismissing the complaint for want of equity.\nConcordia Building and Loan Association, an Illinois corporation, organized on February 2,1889, under the building and loan association laws of Illinois, filed its amended complaint in equity for the purpose of foreclosing a certain mortgage executed by the defendants, Roy E. Burton and Clara M. Burton, his wife.\nAn answer was filed by the Burtons alleging misrepresentation by the plaintiff as to the terms and conditions of the mortgage and pleading usury.\n\u25a0 The cause was referred to a master in chancery who recommended a decree sustaining the right of the plaintiff to foreclose the mortgage and finding the amount due as alleged. Objections were filed thereto which were overruled. On a hearing of exceptions before the court, the same were sustained by the chancellor who found the premium charged on the loan to be usurious and entered a decree dismissing the complaint for want of equity. No point is raised by any of the parties as to the pleadings.\nThe theory of the plaintiff is: First, that parol evidence is inadmissible to vary or alter the express unambiguous provisions of a bond and mortgage executed under seal; Second, that an Illinois Building and Loan Association incorporated prior to July 1, 1919, may by its by-laws, dispense with the offering of its money for bids in open meeting and in lieu thereof provide for a loan of its money at a rate of interest and premium fixed by its by-laws and deduct the premium from the loan in advance. *\nThe theory of the defendants is: First, that parol evidence is admissible to show the terms intended by the borrowers to govern the repayment of a loan even though the same is contrary to the express provisions of the bond and mortgage executed under seal, securing the loan; Second, that when an Illinois Building and Loan Association has, by its by-laws, dispensed with the offering' of its money for bids in open meeting and in lieu thereof provided' for the loan of its money at a fixed rate of interest and a'fixed premium, unless the rate of interest and premium is' fixed by a resolution of the directors instead \u00f3f by the by-laws of the association, a loan is usurious if the interest and premium exceed a charge of seven- per' cent per annum on the loan. ,z\nNo briefs' were filed in this court by defendants, which necessitates additional work on the part of this court in. an endeavor to ascertain their version of the case.\nThe evidence before us shows that on December 13, 1924, Roy E. Burton, defendant herein, made application in writing to the Board of Directors of plaintiff association for a loan of $3,800 on 38 shares of the capital stock, 144th series of said association at a premium of $760, payable in advance, and offered as security therefor a first lien by bond and mortgage on certain real estate therein described.\nThe evidence further shows that on December 19, 1924, said defendants, Roy E. Burton and Clara M. Burton, his wife, became members and stockholders of plaintiff association, and a stock certificate for 38 shares of stock of the 144th series of plaintiff association was issued to them, subject to the payment of 50 cents per month on each share until fully paid, either from earning's or payments thereon, and subject to the charter and by-laws of the association.\nThe evidence further shows that thereafter the said defendants did execute and deliver to the plaintiff their bond, in which they acknowledged themselves indebted to the plaintiff in the sum of $3,800 for money loaned to defendants under the by-laws of said association on account of such shares of capital stock and bound themselves to pay to the plaintiff the sum of $3,800, together with interest at six per cent per annum in monthly instalments of $19 each, on or before the 14th day of each and every month succeeding the date thereof, and also to pay on the said 14th day of each month succeeding the sum of $19 on the 38 shares of the 144th series, which were on December 19, 1924, transferred and assigned by the said defendants to the said association as collateral security for the indebtedness evidenced by said bond; that said payment of interest and instalments were to be made promptly as they became due, until the sum of $3,800 was fully paid, or until each of the shares of stock aforesaid should have attained the value of $100; and to pay all fines assessed by said association on each of said shares of stock, or any of them, and to pay all taxes and assessments upon the property conveyed by a certain mortgage of even date therewith, given to secure the payment of the said indebtedness, and to keep the buildings on said property insured in accordance with the terms of said mortgage.\nThe evidence further shows that said bond provides that said association should at the consummation of the loan aforesaid, in accordance with the requirements of the by-laws of said association, withhold a sum equal to 20 per cent of the loan, as a premium, of which there should be retained and charged by said association as earned premium, one thirty-second part of said premium for each quarter year or fraction thereof, beginning December 1,1924, until the entire amount so withheld should have been so retained and charged; and that if, at any time, default should be made in the payment of interest when due, or in the payments due on the said shares of stock, or in the payment of fines due under the by-laws of said association, for the space of sixQmonths after any payment thereof should fall due, the said 38 shares of stock of the 144th series, which were transferred to said association as collateral security as aforesaid, might at any time thereafter be declared forfeited to said association for nonpayment of dues and revert to said association as forfeited stock, and the withdrawal value thereof, at the option of the association might be applied to the satisfaction of said indebtedness, and in such case or cases the whole principal debt aforesaid should, at the option of said association, immediately thereupon become due and payable, and the payment of said principal sum and all interest thereon, and all fines as aforesaid, then due, might be enforced and recovered at once.\nThe evidence further shows that at the time the application for the loan was made the defendants executed and delivered their certain mortgage, whereby they conveyed and warranted to plaintiff certain premises situated in the county of Cook and State of Illinois, and released and waived all their rights under and by virtue of the Homestead Exemption Laws of the State of Illinois, Ill. State Bar Stats. 1935, ch. 52, \u00b6\u00b6 1-12; Jones Ill. Stats. Ann. 107.124-107.135, which mortgage was duly acknowledged by the mortgagors and was thereafter filed for record in the office of the recorder of deeds of Cook county, Illinois on January 6,1925, as Document No. 8729223.\nThe evidence further shows that at the time of the execution of the said bond and mortgage the defendants paid.to the plaintiff association as a premium therefor, in accordance with the by-laws, the sum of $760.\nThe evidence further shows that the defendants defaulted in their monthly payments of dues and also defaulted in the monthly instalments of interest, as well as in the payment of fines, general taxes for the years 1931 to 1934, and certain special assessments; that the defaults in the payment of dues, interest, fines and taxes, continued for a period of more than six months immediately preceding October 15, 1935, and still continue.\nThe evidence further shows that at a regular meeting of the board of directors of the plaintiff association held on October 15, 1935, it was ordered that said 38 shares of the 144th series of the capital stock-'of plaintiff association issued to said defendants her\u00e9in\u00a1 be forfeited unto plaintiff by reason of the defaults \"hereinbefore mentioned and -that proceedings be instituted upon and against \"the securities of said loan according to law.\nAccording to the testimony of one Gereke, secretary of the plaintiff association, the balance due on the loan as of October 15, 1935, was $1,371.58.\nThe master\u2019s report found that the balance due on loan as of October 15, 1935-, was as follows:\n\u201cBalance due on loan as of October. 15,. 1935, as aforesaid..................; .$1,364.58\nInterest thereon at 6% per annum from October 15, 1935, to June 27, 1936, date of this report........................ \u2018 57.31\nPaid for estimate of taxes................ 1.60\nPaid for minutes of foreclosure.......... 51.00\nPaid for November 1, 1935, for insurance premium............................ 7.00\nInterest thereon at 6% per annum from November 1, 1935, to June 27, 1936.... .28\nPaid December 16, 1935, for divers tax . items as aforesaid...................148.14\nInterest thereon at 6% per annum from December 16, 1935, to June 27,1936.... 4.71\nPaid December 23, 1935 for divers tax items as aforesaid................... 24.89\nInterest thereon at 6% per annum from . ; December 23,1935, to June 27, 1936.... .76\n. $1,660.27\nAttorneys\u2019 Fees.......'................ 200.00\nStenographer\u2019s Fees................... 20.50\nTotal Amount Due Plaintiff including attorneys\u2019 and stenographer\u2019s fees. .$1,880.77 together with interest thereon,'\u201d\nThe defense contends, so far as we have been able to ascertain from the answer and the objections filed before the master and other documents, that they are entitled to the credit of $760 retained by the association for premiums with interest thereon, as being usurious and illegal; that by giving defendant the proper credits there would be nothing due plaintiff but would leave a balance due defendants of $61.24.\nAs before stated there is nothing before us on behalf of defendant, except as we may fathom from the master\u2019s report, showing on what basis these figures were compiled.\nWhen the master\u2019s report came before the court, the chancellor found, as follows:\n\u201c1. The evidence fails to disclose that the premium of Seven Hundred and Sixty Dollars ($760), and rate of interest and interest on premium claimed by the plaintiff was fixed by the board of directors as provided in the statute.\n\u201c2. That said premium rate of interest, and interest on premium is illegal, usurious and void.\n\u201c3. That plaintiff is entitled to recover the amount actually paid defendants, to-wit, Three Thousand and Forty Dollars ($3,040) with interest at five per cent (5%) per annum.\n\u201c4. It appears that the defendants have paid the plaintiff Four Thousand Five Hundred and Ninety-eight Dollars ($4,598),. and said sum amounts to more than the sum hereinbefore stated as being the amount the plaintiff is entitled to recover.\n\u201cIt is therefore ordered adjudged and decreed\n\u201c1. That the objections of the defendants herein to the Report of the Master are sustained and the bill of foreclosure herein is dismissed for want of equity.\u201d\nWhen the cause was before the master the defendant offered evidence as to what transpired between the secretary of the company and himself relative to the loan and how it should be paid, which differed from the terms of the bond and mortgage. This evidence offered was properly excluded as parol evidence and will not be heard to vary the terms of a written bond and mortgage under seal. Cantwell v. Welch, 187 Ill. 275.\nThe next point which the defendant made before the master was that the premium charged by the Concordia Building- and Loan Association was invalid for the reason that, in deducting the premium of $760, it became usurious and illegal.\nWhen a building and loan association, incorporated prior to July 1, 1919, has, by its by-laws, dispensed with the offering of its money for bids in open meeting, and in lieu thereof provided for a loan of its money at a fixed rate of interest and premium, the interest and premium may properly be charged by the association even though the same were fixed by its by-laws in accordance with amendment of July 1, 1891 to the \u201cHomestead Association Act\u201d under which the association was organized.\nChapter 32, par. 78, sec. 11, Starr & Curtis\u2019 Staff, Vol. 1, under which the plaintiff association was incorporated, provides as follows:\n\u2018 \u2018 Corporations organized under this Act being of the nature of co-operative associations, therefore no premiums, fines, nor interest on such premiums that may accrue to said corporation, according to the provisions of this Act, shall be deemed usurious and the same may be collected as other debts of like amount may be collected by law in this State, . . .\nThe \u201cHomestead Association Act\u201d of July 1, 1879, as amended (Hurd\u2019s Ill. Rev. Stat. 1893, ch. 32, par. 85, sec. 8) provides in part as follows:\n\u201cProvided, that any such association may, by its bylaws dispense with the offering of its money for bids in open meeting, and in lieu thereof loan its money at a rate of interest and premium fixed by its by-latvs, and either with or without premium, deciding the prefcrence or priority of loans by the priority of the applications for loans of its stockholders.\u201d\nIn 1933, the Legislature passed a law (Ill. State Bar Stats. 1935, ch. 32, \u00b6\u00b6 420 (12), 420 (13), sections 1 and 2; Jones Ill. Stats. Ann. 139.112, 139.113) validating* all loans which had been made prior to that time, in the following language:\n\u201cSection 1. In any case in which a mutual building, loan and homestead association organized under the laws of this State, and now doing business in this State, has heretofore and since July 1, 1919, made a loan of its money to a borrowing member or members thereof, and at the time of the mailing of such loan such association had by its by-laws dispensed with the offering of its money for bids in open meeting, and in lieu thereof provided for the loan of its money at a rate of interest, or interest and premium, as fixed by its by-laws, deciding the preference or priority of the right to a loan by the priority of the approved applications therefor of its shareholders, although the statute provides for the rate of interest, or interest and premium to be fixed by the directors, such loan, if otherwise legally made is hereby validated and legalized.\n\u2018' Section 2. Because the \u2019 validity and legality of large numbers of loans made by many mutual building, loan and homestead associations organized under the laws of this State, and now doing business in this State, which loans were made under by-laws dispensing with competitive bidding in open meeting, is now attacked in pending litigation, on the ground that the rate of interest, or interest and premium, was fixed by the by-laws instead of by the directors, and a great number of other loans by many such associations are subject to similar attack, an emergency exists, and this Act shall take effect upon its passage.\u201d\nWe do not believe from the evidence in this case and the law applicable thereto, that the court was justified in arriving at its conclusions and should not have sustained the exceptions to the master\u2019s report. The loan was made by the association to one of the members on his application and, so far as we are able to determine, was in conformity with the law and the by-laws of the association of which he was a member. No evidence was offered to the effect that he was imposed upon or that he was in any way overreached. The evidence shows that he was an intelligent man who understood fully the contract which he made.\nFor the reasons herein set forth the decree of the circuit court is hereby reversed and the cause remanded with directions to enter a decree as recommended by the master and in harmony with the views expressed in this opinion.\nDecree reversed' and cause remanded with directions.\nHebel and Hall, JJ., concur.",
        "type": "majority",
        "author": "Mr. Presiding Justice Denis E. Sullivan"
      }
    ],
    "attorneys": [
      "Rathje, Hinckley, Barnard, Kulp & Tucker, of Chicago, for appellant; Francis E. Hinckley and Joseph J. Sullivan, Jr., of Chicago, of counsel.",
      "No appearance for appellees."
    ],
    "corrections": "",
    "head_matter": "Concordia Building and Loan Association, Appellant, v. Roy E. Burton and Clara M. Burton, Appellees.\nGen. No. 39,172.\nHeard in the third division of this court for the first district at the October term, 1936.\nOpinion filed June 30, 1937.\nRathje, Hinckley, Barnard, Kulp & Tucker, of Chicago, for appellant; Francis E. Hinckley and Joseph J. Sullivan, Jr., of Chicago, of counsel.\nNo appearance for appellees."
  },
  "file_name": "0167-01",
  "first_page_order": 223,
  "last_page_order": 232
}