
    WILLIAM A. MULLOY, APPELLANT, vs. FIFTHWARD BUILDING ASSOCIATION, APPELLEE.
    In Equity. —
    No. 4321
    I. When a member of a building association obtains an advance upon a pledge of his shares, agreeing to pay a legal interest for its use, and besides to pay two dollars a month on each of his shares until their whole nominal value has been paid, the contract is lawful, and is not usurious.
    II. Where fines at the rate of ten per cent, permonth are imposed upon default being made in paying the monthly dues, chancery will interpose to prohibit the collection of these penalties, and will restrain a sale of real estate by virtue of a deed of trust given to secure the amount advanced, when the account between the parties shows that nothing is owing the society except the fines.
    STATEMENT OF THE CASE.
    The complainant is a member of said Fifth-Ward Building Association, and obtained an advance from tbe association on tbe 31st day of March, 1870, amounting to the sum of $895, on ten shares of his stock. And on the 19th of August, in the same year, he received a further advance of $550 on five other shares, and executed the usual deeds of trust to secure the same upon certain pieces of land in the city of Washington. Under the constitution of the society the members pay one dollar per month on each share when there is no advance, and two dollars per month on each share when an advance has been received. If these monthly dues are not paid, a fine of ten per cent, a month is imposed, and the profits of the association consistof the extra dues and fines afterdeducting all expenses. The complainant made default in the payment of his monthly dues, and fines were imposed amounting to $103.67. The complainant, as appears from the auditor’s account, received from the association $1,445, and had paid in the form of dues and fines the sum of $1,820, leaving an excess over what he had received.
    
      In consequence of the dues and fines not being paid, the association procured the property in the trust-deeds to be advertised for sale, and the complainant has filed his bill to enjoin such sale. Th© auditor allowed the dues and fines according to the constitution of the society. Complainant excepted. The exception was overruled, and the bill dismissed. The cause is now here on complainant’s appeal.
    
      Merrick and Linton for complainant:
    The auditor allows, under the constitution of the association, one hundred and three dollars and seven cents, ($103.07,) 'as unpaid fines, contrary to law. McKim vs. Whitehall Co,, 2 Md., Ch., 516; Story’s Eq. Plead., see. 521; Story’s Eq. Jur., sec. 1319ib.; 1MacA., 401, 402.
    
      R. K. Mliot for defendant :
    
    Record shows that complainant is a stockholder in defendant association, and as such obtained, at different times, advances of money upon fifteen shares of stock, amounting in the aggregate to $1,445. This sum was advanced to him upon his bid at a discount from the nominal value of each share, viz, $200, His obligation under the constitution of the society, after receiving these advances upon his stock, was to pay two dollars per month on each share thereof until the close of the association, &c.
    If complainant had not received an. advance upon his stock, his monthly dues would have been one dollar on each share. The additional dollar per share each month constitutes the profits of the association, whereby it shall be enabled to close whenever the net earnings shall equal one-third of the joint stock.
    Complainant’s obligation, as aforesaid, is secured by the two deeds of trust and the bonds filed with the auditor’s report.
    He alleges that he has returned the money received by him, but that allegation rests upon a claim of credit for two dollars per month on each share instead of one dollar, and herein is the error.
    The fines for default in the regular payment of the monthly dues claimed by the defendant and allowed by the auditor are prescribed by the constitution of the society. They swell the common fund, by which all stockholders are benefited, more especially those who have received advances upon their stock, for the reason that the larger the revenues the earlier the association will close, and thereby those who have obtained such advances will be relieved from further payment of dues, whether they have repaid all they received or not The fact, therefore, is, in the practical operation of a building association, such as the defendant, each stockholder in effect pays to himself and receives from himself. There are no lenders or borrowers. It is a commercial venture or speculation, and may turn out good, bad, or indifferent for the individual stockholder, but is not obnoxious to any rule of law or equity.
    The stockholder who receives money in advance upon his stock, according to the rate of discount or premium he may bid with reference to the nominal value of such stock, retains all his rights as a member of the society, excepting, as a matter of course, the right to get the money again, the same as though he had not received it in advance.
    He shares, however, in common with his fellows, in the beneñts resulting from an early close of the association, and it frequently occurs that he repays less than he receives.
    For example: A stockholder purchasing au advance at a moderate discount on fifteen shares would receive $1,500. If such purchase were made three years prior to the close of the association he would repay but $1,080; if six years prior to the close, he would repay over $2,000.
    The complainant’s case assumes the existence of an unlawful contract, affected by the statutes against usury and the conscience of a court of equity. Neither have anything to do with it.
    Parties are sui juris, and as the contract is lawful, a court of equity'has no jurisdiction to declare it otherwise.
    The court is not called upon to enforce “ fines or penalties.” ■ Application made by the bill is to aid a delinquent stockholder in the non-performance of his lawful obligations.
    In such a case, although “fines” are charged in the record, equity will, and ought to, refuse relief, and leave the parties to their remedy at law or otherwise.
   Mr. Justice Wylie

delivered the opinion of the court:

Complainant was a member of the Fifth-Ward Building Association, and had obtained certain advances on his shares, to secure which he gave a deed of trust upon real estate situate in this city. Having defaulted in paying his monthly dues, fines were imposed at the rate of ten per ceut. per month on the accumulating monthly defaults, until at last the association made an attempt to have his property sold to pay these fines. The account between the parties shows that, exclusive of the fines, Mulioy owed the society nothing. An injunction was obtained to stay a sale of the property till final hearing, and the sole question in the court below was, and now is in this court, whether chancery in snch a case will interpose to prohibit the collection of those penalties.

We have held in other cases that when a member of a building association obtains mouey on a pledge of his shares, agreeing to pay legal interest for its use, and besides to pay into the treasury of the association two dollars a month on each of his shares until the whole nominal value of the shares has been paid up, this is a lawful contract and not usurious, and we adhere to that opinion in thepresent case.

Bat these fines are another matter altogether. They are penalties at the rate of 120 per cent, per annum for default in paying certain monthly dues to the association. These dues compose a debt which by fair .contract the member agrees to pay at stated times into the treasury of the society. If he pay them, a debt is paid, and it is satisfied. Beyond this the association has no claim upon him. Bat if he fail to pay at the time, his default is followed by this most oppressive penalty. We perceive nothing in the character of these associations to relieve them from the doctrine of equity which we apply to other cases of penalty for the non-payment of money, which is to prohibit its enforcement upon condition that the primary debt be paid with interest.

Hothiug is better settled than that whenever the injury inflicted by a breach of contract is susceptible of being compensated, equity will restrain the injured party from recovering more thau a fair compensation, and will prevent him from exacting or enforcing a penalty or forfeiture legally incurred by the opposite payment of a debt. 3 Lead. Ca. in Equity, 923, and cases cited.

It is true, indeed, that these fines, -which are provided for in the articles of building associations, have been fruitful sources of profit, and that the members of the association who remain such to the end will all share in the profits. But that is not an answer which will satisfy the oppressed member at the time, or lighten the load he. is called upon to bear. If all the members owned the like number of shares, and all obtained the same amount of advances, and all were to make default together and then pay their several fines simultaneously, the prosperity of such association by these means would bring it speedily to a winding up and a common division of the profits, when each man would find his penalties returned to him, slightly diminished perhaps by expenses. Bat these circumstances are not likely to occur in the history of any of these societies.

The shares held by the members respectively are unequal. Some of the members obtain advances, others do not. Some, through misfortune in business, or sickness, or other causes, are unable to make their monthly payments$ and it so happens that, at the winding up, those members who have asked for no advances, met with no misfortunes, and have incurred no penalties, gather most of the profits derived from the fines collected from their less fortunate brethren.

The advantages are for the strong; the losses fall upon the weak. This, however, is only the experience of mankind in every department of life. But it often becomes the duty of courts to check the power of the former aud to protect the latter even from the consequences of their own voluntary contracts.

Cartier, Ch. J., and MacArthur, J., concurred. Humphreys, J., concurred in the judgment, but was of the opinion'that the contract was usurious.

Olin, J.,

read the following dissenting opinion:

I feel constrained to dissent from the opinion of the majority of the court, aud assign for such dissent, briefly, the following reasons:

It appears to me that there can be but two or three questions in this case—

1st. Is the contract into which the plaintiffs entered usurious and void ? This court has repeatedly held the contrary, and that decision but follows the authority of the highest courts in New York, Maryland, and every other State in the Union, so far as I am informed, where these associations have existed and their legality has been questioned. These, in the main, are voluntary associations; their constitution and by-laws constitute the agreement into which the members enter. It is difficult to see how usury can be predicated of an agreement in which the borrower as well as the lender has a fall interest in the fruits of the alleged usury. But I believe that we are nearly all agreed that the contract between the association and its members is not usurious.

2d. No one has argued that these associations are against public policy. On the contrary, I think, when properly conducted, they are far more beneficial than the ordinary institutions of savings-banks. The only ground of interference with these contracts by a court of equity is, as I understand it, that the constitution and by-laws, which constitute the contract between the association and its members, makes a very hard contract for the stockholder who fails to perform it by paying up his monthly dues at the time agreed upon, and a very good contract for the stockholder who does pay up his monthly dues, inasmuch as in the former case the stockholder who fails to pay his monthly dues (usually one dollar on each share) agrees to pay the additional sum of ten cents per month for each share unpaid by him to the association. This latter agreement is regarded, as I understand it, by a majority of the court, as a fine or penalty, which, it is said, a court of equity is empowered to relieve against. In my judgment, it is in no proper sense what is commonly understood to be a fine or penalty, but is simply a provision of the contract, made as much for the benefit of the stockholder as for that of the association.

3d. The grounds upon which this court, in the exercise of equity jurisdiction, assumes to interfere is, that the contract entered into by becoming a member of the association is a very good contract for one who takes shares in it and pays up the monthly dues at the time he agrees to pay them, but a. hard contract for one who omits to do that. This may be true, and it may be an unwise contract for any one to enter into who does not intend to perform it, or who is unable to do so; but in either event there is no ground for equity interfering to set the contract aside. If men, able to contract and be contracted with, enter into a contract which is not in violation of the common or statute law, or against public policy, I know of no power in a court of equity or other court to set that contract aside, in case where no mistake had been made or fraud or imposition practiced. To hold otherwise would subject every contract to the crucible of an equity court; and, if the justice should conceive that he could have made a better contract for one of the x>arties, he is authorized to declare the contract void,, and relieve one of the parties from the obligations of it. Such is neither the rule of the common law nor of a court of equity. A court of equity, as well as a court of common law, is bound to' enforce the terms of a contract in all cases where such contract is entered into by parties competent to contract, and which contract is not void by statute, and is n.ot against public policy, and has not been obtained by mistake, fraud, or imposition.  