
    BUILDING AND LOAN ASSOCIATIONS.
    [Lucas (6th) Circuit Court,
    1902.]
    Haynes, Parker and Hull, TJ.
    Haskel A. Spies et al. v. Southern Ohio Loan & Trust Co.
    1. Imposition by Building and Loan Association op Certain Fines, Dues and Premium not Usury.
    Premiums of 16J cents per mouth on each $100 share, and fines of ten cents per month during default of dues of fifty cents per month on each such share, imposed by a building and loan association upon a borrowing member in addition to six per cent, interest upon his loan, are not in the nature of usury or unreasonable in amount.
    2. Section 3836-3 Rev. Stat., Constitutional.
    Section 3836-3 Rev. Stat., in exempting building and loan associations from the operation of the usury laws, is not in violation of Secs. 1 and 2, Art. 1 iof the constitution. Mykrantz v. Globe Building & Loan Association, 10 Circ. Dec. 250 (19 R. 51), overruled.
    Heard on Error.
    Herbert Orr, for plaintiff in error, cited:
    Where the subscription to stock is merely a colorable compliance with the statute, the whole transaction is usurious. Falls v. Savings, L. & Bldg. Co., 13 So. Rep. 25, 29 [97 Ala. 417; 24 L. R. A. 174; 38 Am. St. Rep. 194]; Fidelity Sav. Assn. v. Shea, 55 Pac. Rep. 1022. (Idaho); Mutual Ben. L. & Bldg. Co. v. Lynch, 63 N.. Y. Supp. 835 [30 Misc. 499],
    • The amount imposed by way of fines must be reasonable. Hagerman v. Building & Sav. Assn., 25 Ohio St. 187, 201.
    Fines cannot be imposed for failure to pay interest. Forest City U. L. & B. Assn. v. Gallagher, 25 Ohio St. 208.
    Ten cents a month as a fine is unreasonable. Vierling v. Savings, L. & Bldg. Assn., 53 N. E. Rep. 979 [179 111. 524].
    Non-competitive bidding. State v. Building' & Sav. Assn., 29 Ohio St. 92, passed before statute amended is contrary to the legitimate scheme of building and loan associations. Western L. & Sav. Co. v. Houston, 65 Pac. Rep. 611 [38 Ore. 377]; Mechanics & W. M. Mut. Sav. Bk. & Bldg. Assn. v. Wilcox, 24 Conn. 147; Sokoloski v. Building & L. Assn., 26 So; Rep. 361 [77 Miss. 155], '
    Such transactions - are to be distinguished from those of legitimate associations, and are usurious. Western L. & Sav. Co. v. Houston, 65 Pac. Rep. 611 [38 Ore. 377]; Mechanics & W. M. Mut. Sav. Bank & Bldg. Assn, v, Wilcox, 24 Conn. 147; Sokoloski v. Building & L. Assn., 26 So. Rep. 361 [77 Miss. 155]; Endlich Bldg. Assns., Sec. 390.
    
      Such statutes as are now under consideration afe usurious. Mykrantz v. Building & L. Assn., 10 Circ. Dec. 250 (19 R. 51); Gordon v. Building & A. F. Assn., 75 Ky. (12 Bush) 110; Simpson v. Building & R. Assn., 41 S. W. Rep. 570, 574 [42 S. W. Rep. 834; 101 Ky. 496]; Association v. Uhler, 48 Md. 455 ; Rowland v. Building & R. Assn., 22 S. E. Rep. 8 [116 N. C. 877]; James v. James, 55 S. W. Rep. 193 [21 Ky. Raw 1401]; Meroney v. Building & R. Assn., 21 S. E. Rep. 924, 933 [116 N. C. 882]; Mechanics’ & W. M. Mut. Sav. Bk. & Bldg. Assn. v. Wilcox, 24 Conn. 147 ; Sokoloski v. Building & R. Assn., 26 So. Rep. 361 [77 Miss. 155]; Western R. & Sav. Co. v. Houston, 65 Pac. Rep. 611 [38 Ore. 377].
    Where the transaction is usurious, all payments, whether made as premiums, dues, fines, or assessments, must be credited on the principal. Western R. & Sav. Co. v. Houston, 65 Pac. Rep. 611 [38 Ore. 377]; Hale v. Stenger, 63 Pac. Rep. 554 [22 Wash. 699]; Hale v. Barker, 62 Pac. Rep. 168 [129 Cal. 419]; Stevens v. Savings & R. Assn., 51 Pac. Rep. 986 (Idaho); Fidelity Sav. Assn. v. Shea, 55 Pac. Rep. 1022 (Idaho) ; Gray v. Building & R. Assn., 37 S. E. Rep. 533 [48 W. Va. 1G4]; Sokoloski v. Building & R. Assn., 26 So. Rep. 361 [77 Miss. 155]; White v. Williams, 45 Atl. Rep. 1001 [90 Md. 719]; Johnson v. Bush, 65 S. W. Rep. 158 (Ky.); Pacific Bldg. Co. v. Hill, 67 Pac. Rep. 103 (Ore.); Hollowell v. Building & R. Assn., 26 S. E. Rep. 781 [120 N. C. 286]; Meroney v. Building & R. Assn., 21 S. E. Rep. 924 [116 N. C. 882]; Miller v. Insurance Co., 24 S. E. Rep. 484 [118 N. C. 612] ; National Bldg. & R. Assn, v. Glover, 58 S. W. Rep. 418 [22 Ky. Raw 535]; Strauss v. Building & R. Assn., 23 S. E. Rep. 450 [117 N. C. 308 ; 30 R. R. A. 693; 53 Am. St. Rep. 585].
    Orville S. Brumback, for defendant in error, cited :
    Upon the constitutionality of the building and loan statutes of Ohio (Section 3836 Rev. Stat. et seq.; 88 O. R. 469), and especially of that portion of Sec. 3 of the act which confers power upon building and loan associations as follows : “ To assess and collect from members and depositors such dues, fines, interest and premium on loans made, or, other assessments, as may be provided for in the constitution and bylaws. Such dues, fines, premiums or other assessments shall not be deemed usury, although in excess of the legal rate of interest.” Mykrantz v. Building & R. Assn., 10 Circ. Dec. 250 (19 R. 51); Insurance Co. v. Carpenter, 40 Ohio St. 260; Ra Dow v. Bank, 51 Ohio St. 234 [37 N. E. Rep. 11]; McRaughlin v. Building, R. & S. Assn., 62 Ind. 264; Security S. & R. Assn. v. Albert, 54 N. E. Rep. 753 [153 Ind. 198]; Juniata B. & R. Assn. v. Mixwell, 84 Pa. St. 313 ; 4 Ency. Raw., 1067; Montgomery Bldg. Assn. v. Robison, 69 Ala. 413; West Winstead Sav. Bk. & Bldg. Assn. v. Ford, 27 Conn. 282 [71 Am. Dec. 66]; West Winstead Sav. Bk. & Bldg. Assn. v. Rice, 27 Com. 293; Concordia S. & A. Assn. v. Read, 93 N. Y. 474 ; Sweeney v. Building & R. Assn., 26 S. W. Rep. 290; Blakely v. Building & R. Assn.. 26 S. W. Rep. 292 4 Ency. Raw 1073; Security Roan Co. v. Rake, 69 Ala. 456; Vermont R. & T\ Co. v. Whithed, 49 N. W. Rep. 318 [2 N. Dak. 82]; Holmes v. Smythe, 100 111. 413; Freeman v. Building, H. & S. Assn., 28 N. E. Rep. 611 [114 111. 182]; Winget v. Building & H. Assn., 21 N. E. Rep. 12 [128 111. 67]; People’s S. & R. Assn. v. Roberts, 5 Dec. 489 (5 N. P. 86); Bedford v. Building & R. Assn., 181 U. S. 227 [21 Sup. Ct. Rep. 597]; Manship v. Building & R. Assn., 110 Fed. Rep. 845; Bates v. Savings & R. Assn., 42 Ohio St. 655; Ra Dow v. Bank, 51 Ohio St. 234 [37 N. E. Rep. 11]; Insurance Co. v. Carpenter, 40 Ohio St. 260; Clarksville B. & R. Assn, v. Stephens, 26 N. J. Eq. 351; Interstate B. & R. Assn. v. Brown, 29 So. Rep. 656 [128 Ala. 462]; Hagerman v. Building & Sav. A^sn., 25 Ohio St. 186; Risk v. Building & Sav. Assn., 31 Ohio St. 517, 519; Pfister v. Association, 19 W. Va. 676; McGannon v. Building Assn., 19 W. Va. 726; Parker v. Butcher, 3 R. R. Eq. 762; 16 R. J. Ch. 552; Middleborough, In re, 54 R. J. Ch. Div. 592; Voisey, Ex parte, 52 R. J. Ch. Div. 121; Ricks v. Building & R. Assn., 18 So. Rep. 359 (Miss.).
    The Southern Ohio Roan & Trust Company, a building and loan association organized under the laws of the state of Ohio, brought suit against Haskel A. Spies et al., to foreclose its mortgage executed by said Spies and wife to said company on or about February 7, 1900. The said mortgage was given to secure a contract obligation of said Spies, by the terms of which he agreed to repay to the company the sum of $1,000, advanced to him on his stock for that amount in the company, and also to secure the payment of interest, premium, fines and other charges, which might be levied and assessed against Spies by the company. Default was alleged by the plaintiff in the payment of the premiums, interest and fines, by reason of which plaintiff prayed for judgment against Spies in the sum of $1,000 principal Indebtedness, $17.71 interest and premium, and $3 fines; and plaintiff'further alleged that there would become due and payable from and after July 13, 1900, fifty cents per month as dues on each $100 share of stock, also interest at the rate of six per cent, per annum, premiums at the rate of 16§ cents per month on each share¡ and fines at the rate of ten cents per month on each share, so long as defendant was in default for payments.
    Counsel for Spies claimed in defense that the fines were unreasonable, and set up the unconstitutionality of the Ohio statute (Sec. 3836-3 Rev. Stat.) under which building and loan companies assume to collect premiums without competitive bidding on the amount of premiums to be paid by the borrowing members.
    Judge Pugsley, of the Tucas county common pleas court, sustained the constitutionality of the statute and entered judgment for the full amount claimed.
   HAYNES, J.

In this case suit was brought to foreclose a mortgage upon a loan made by the defendant company, which is an incorporated building and loan association, of the city of Cincinnati. A judgment was taken for the full amount prayed. The case is brought up on error raising questions as to whether certain payments made by way of premiums and fines charged by the company are in the nature of usury; and whether the law of Ohio regulating these companies is unconstitutional. The case of Mykrantz v. Building and Loan Assn., 10 Circ. Dec. 250 (19 R. 51), has been cited by plaintiff in error. We have not time to discuss this case at length, but we have investigated this matter fully and carefully under the decisions of the Supreme Court, and are satisfied that the decisions of the Supreme Court are in favor of the companies. We have heretofore sustained cases in which the building and loan association law has been held constitutional; and now sustain these charges in this case as being reasonable under a constitutional law.

The judgment of the court of common pleas will be affirmed.  