
    *Winchester Building Association v. Gilbert & als.
    September Term, 1872,
    Staunton.
    1. Building Fund Associations — Redemption of Shares. —-When the shares of a building fund association are redeemed, it is not a security for the sum advanced for their redemption, but it is an absolute sale to the association, -whereby the association acquires an absolute right of property in the shares redeemed, and they are sunk and extinguished.
    2. Same — Same—Lien under Deed of Trust. — The sum advanced for the redemption of the shares is no part of the debt of the stockholder whose shares are redeemed to the association. The only debt from him which is a lien under his deed of trust, is the monthly dues, and interest upon the money advanced, to be paid monthly, and continuing until the unredeemed shareholders have received the amount the articles of the association provide for.
    3. Same — Same—Election.—H, whose shares were redeemed, gives another deed to secure a debt to Gr upon the property conveyed to secure the association; and he ceases to pay his dues and interest, and his property is sold by the trustees of the association. H and G may elect to have the proceeds of the sale invested, a.nd the unpaid monthly dues and interest paid monthly out of the Interest and as much of the principal as may be necessary, or to have the present value of these monthly dues and interest ascertained, and paid out of the proceeds of the sale to the association.
    The Winchester Building Association was organized under the acts of Assembly of Virginia in relation to such associations, in November 1867, and went into operation in January 1868. The constitution of the association was similar to that of the Mechanics Building Fund Association of Lexington, which is set out in the report of the case of White against that association, ^reported in 22 Grattan 233. The number of shares was limited to one thousand, and the par value of the share was fixed at two hundred dollars.
    In November 1868 George H. Haines, was the owner of ten shares of the association; to which the dues, amounting to eleven dollars a share, had been paid; and he then obtained an advance on his shares of $880, or $88 a share; and he executed his bond, by which he bound himself to the Winchester Building Association in the sum of ten dollars a month as dues, and the further sum of four dollars and forty cents a month as interest on $880, advanced by said association on ten shares of stock of said association held by him, the payment whereof to the Secretary of the association he promised, &c.
    The condition of the bond was that Haines should pay to the Secretary of the Association the sum of fourteen dollars and forty cents on or before the first Friday night of every month, beginning on Friday the 4th of December 1868; the payment to continue until each member of the association shall have received the sum of $200 on each of his or her unredeemed shares of stock, over and above all losses and expenses of the association.
    At the same time Haines and wife conveyed to the trustees of the association a house and lot in Winchester, in trust, to secure the payment of the sums mentioned in the bond, at and for the times mentioned in the same, and with power to sell upon his failure for three months to pay all or any of his dues to the association.
    Haines paid all dues up to October 1869; but he ceased to pay them after that time; and in December 1869, he and his wife conveyed the same house and lot to J. H. Shields, in trust to secure first, a debt due to Wm. T. Gilbert of $500, and then two other debts *mentioned in the deed. In this deed the previous deed to secure the Winchester Building Association is recognized.
    In March 1869 the trustees in the deed to secure the Winchester Building Association, proceeded to sell the house and lot under the deed to them, when it was purchased by Gilbert at the price of $1,050, upon the terms of one-third cash, and the balance upon a credit of one and two years, with interest at ten per cent, per an-num. And he made the cash payment, and gave two bonds each for $350, and a deed of trust upon the property to secure them.
    In stating the amount due from Haines to the association, he is charged with the amount advanced on the ten shares, $880, and the dues, interest and fines since October 1869, $89, and additional interest on $880, from March 5th to March 25th,. of $3.08, the whole amounting to $972.08.
    In May 1870, Win. T. Gilbert presented to the judge of the Circuit court of Frederick county, his bill for an injunction to restrain the trustees from delivering to the Winchester Building Association the bonds he had executed for the deferred payments of the purchase money of the house and lot he had purchased at their sale. After setting out the foregoing facts, he insisted that the claim of the association for $972 was unwarranted by the bond and deed of trust, and could not be sustained by the articles of association; and that there was no provision in the deed of trust for the repayment of the $880, or any part thereof, in' any event; and that no such claim could be sustained by the constitution and bylaws of the association. He insists that when the shares of the association are redeemed, it is not understood that the sum advanced shall be paid any further than, the same may be paid by monthly payments of one "dollar on each share redeemed; that the advance is made in consideration of the assignment of the shares to the association, and the promise to pay interest on the advance; the shareholder undertaking to make his shares good by continuing his monthly payment of dues until the unredeemed shares are worth $200 each; and to pay these dues and interest the bond and deed of trust were given by Haines. And making the Winchester Building Association, the trustees in both deeds, and the creditors in the last deed, parties, he prayed for an injunction; that the funds might be brought into court; that the purchase money might be distributed under the direction of the court; and for general relief. The injunction was granted.
    The Winchester Building Association answered the bill; and insisted that it was clearly the purpose of the articles, and is the clear effect of the said bond and deed of trust, to secure the punctual payment of the monthly dues and interest so long as the association should continue to exist, (which was until it could pay to each unredeemed stockholder $200 on each of his shares); that if, however, there should be a failure for three consecutive months or more, to make such payments, then the property conveyed in trust should be sold, and after the expenses of sale, its proceeds applied to repay all moneys that might be owing from such former stockholder to the association, whether the same should have matured and become payable at the time of such sale or not, and whether owing for advances made, for monthly dues or interest.
    In August 1870, the cause came on to be heard, when the court referred it to a commissioner, to take an account of the sale of the real estate in the proceedings mentioned, and of the liens thereon, their amount and priorities; and he was directed also to state an account *of the charges under the second section of article 13, of the articles of the association, upon the stock of the said Haines. (This section provides that all shares on which no payment has been made for six months shall be forfeited to and sold by the association, and the surplus of proceeds, after deducting therefrom the dues, fines, &c., owing to the association, shall be paid over to the delinquent member.) And he was further directed to ascertain the rate at which the shares of the stock of the association were being redeemed at the date of the sale under the deed of trust.
    The commissioner made his report. He does not state the amount due under the deed to secure the association, except by an extract from the deed expressing what it was intended to secure. The charges against Haines for dues, interest, fines, and interest on fines, up to March 29, 1869, the date of the sale, he reports at eighty-nine dollars, and up to the first Friday in April 1870 at $108.60. The sale of shares on the 4th of March 1870 was $100 per share, and on the 1st of April following $99.50 and $98.
    The cause came on to be finally heard on the 4th of July 1871, when the court taking the amount advanced to Haines, $880, with interest charged monthly to the day of the sale of the property, and deducting therefrom the dues and interest paid by him up to October 1869, $115.50, leaving $767.21, made a decree that the trustees should collect the purchase money due upon the bonds of Gilbert, and should pay to the Winchester Building Association the sum of $767.21, with six per cent, per annum interest thereon, from October 1st, 1869 until paid, to be credited by $288 as of March 26th 1870; that being the net amount of the cash payment for the property, which had been paid over at the time to the association ; and the balance of the purchase *money was directed to be paid to Gilbert the preferred creditor in the deed to Shields.
    And holding that the ten shares of stock which had been redeemed, was liable under the second section of Article 13, of the articles of association to be sold, for the payment of the dues which had been credited upon the sum advanced, and also for dues and interest which should have been paid up to the day of sale, decreed further, that the trustees should sell the said stock, and out of the proceeds pay to the association the sum of $294.20, and also the monthly dues, exclusive of interest and fines, accruing since the first Friday night in March 1870; and the balance, if any, pay to said Haines or his assigns.
    From this decree the Winchester Building Association applied to a judge of this court for an appeal; which was allowed.
    
      Parker, for the appellant.
    Barton & Boyd, for the appellees.
    
      
      See monographic note on “Building & Loan Associations” appended to White v. Mech. Building Fund Association, 22 Gratt. 283; also, foot-note to same case.
    
   BOUBDIN, J.,

delivered the opinion of the court.

A preliminary motion has been made in this case by the appellee, to dismiss the appeal as improvidently awarded, on the ground that the amount in controversy is below the jurisdiction of the court. It is certainly a matter 'of no small difficult}' to ascertain what is the exact pecuniary sum in controversy between the parties: but in the view taken of the case by the court it will be unnecessary to decide that question; for in addition to that, the title to the ten shares of stock which were redeemed by the association is also involved. These ten shares were ordered to be sold as the property of Haines to satisfy his debt to the association, whilst they were claimed by the latter as belonging absolutely to it. The *value of these shares shortly before the date of the sale of Haines’ property, to wit: on the 4th of March 1870, appears by a commissioner’s report in the cause to have been $100 each, and from SO cents to $1.50 a share less, a month or two afterwards. Either value would be far above the sum required to give this court jurisdiction, independently of the uncertain pecuniary demand. The motion is therefore overruled; and we come to the merits of the appeal.

Since the cause was heard and decided in the Circuit court, this court in the case of White v. The Mechanics Building Fund Association of Lexington, 22 Graft. 233, has had under consideration the operation and effect of the acts of Assembly authorizing the organization of Building Eund Associations, and has settled some principles which, had they been established before the decision of this cause in the court below, would have rendered the labors of that court, and of counsel, far less arduous.

The articles of association in the two cases are substantially, indeed in most respects identically, the same; and in construing the effect of the redemption of shares, this court, in the case in 22 Graft, (consisting of four judges) held unanimously “that the Building Fund Association, by the redemption of the appellant’s shares of stock, acquired the right of property therein; and that the assignment of them to the association by the appellants for the price he received, was not an hy-pothecation for a loan, but an absolute surrender of them to the association, whereby they were sunk and extinguished.” See decree of the court, ibid. p. 251.

The contract of redemption in the case before us, is in all respects the same in effect with that before this court in the case referred .to. The shares redeemed, like those in that case, became the absolute property of the association; *they were “sunk and extinguished” for value received; and consequently, they could in no respect be treated as a security for a loan. The Circuit court erred, therefore, in so treating them. If they continued in existence for any purpose whatever, they could only so continue as the absolute property of the association, and of course could not be sold for a debt due to it.

Such being now the established law in such cases, the only remaining question is, what was the debt of Haines to the association, secured by his bond and deed of trust, and what is now due thereon in cash? The $880 “advanced to him by the association for the redemption of his stock does not constitute the debt or any portion of it. That sum was merely the consideration paid to him by the association for the shares of stock assigned by him to the association, and for his undertaking to make certain monthly payments secured by bond and deed of trust on property. The bond and deed of trust to secure it .show what these payments are. They are $14 40-100, monthly, until the association shall be able to divide $200 to each unredeemed share. That covers his entire indebtedness secured by the deed; for fines to accrue are not included therein; and as the deed provides that the whole debt secured, due, and to become due, shall be paid out of the proceeds of the property conveyed in trust, the difficult question is presented: what is the present value of the debt thus secured? What is the present value of $14.40, payable monthly, until the association shall be able to divide $200 to each unredeemed share. As that time, unless it has occurred during the pendency of the appeal, is necessarily uncertain, any calculation to fix it must be of necessity conjectural and approximate only. There can in such cases be no mathematical certainty. If the sum must be worked out, it can only be done by resorting to some approximate estimate, ^analogous to the valuation of life estates, annuities for life, &c., &c. We think it probable that in this case an estimate sufficiently certain for all practical purposes may be made by the Circuit court through its commissioner, when the case goes back. The association appears to have been in operation between five and six years. The exact date of its organization does not appear; but as Haines’ first monthly payment appears to have occurred in January 1868, we suppose the organization of the company took place about that date. If so, the shares rose to the value of $100 in two years and three months; for on the the 4th of March 1870, they are proved by a commissioner’s report, to have been worth that sum. Three years and six months have elapsed since that time; and at the same rate of advance the shares would already have reached the par value. Whether that be so or not, the Circuit court can have before it the present value of the shares, and their value at the end of each year from the organization of the association ; and with this material, it is presumed that an approximate estimate of the debt, sufficiently accurate, can be made.

But, as it is very probable, indeed almost certain, that the claim of the association and that of the appellee, Gilbert, the next incumbrancer, will consume the entire trust fund, the court is of opinion that unless the present value of the appellant’s claim can be agreed on between the appellant, the ap-pellee Gilbert, and Haines the debtor, then the said Gilbert and Haines shall have the option of requiring the net proceeds of the trust, after satisfying dues actually accrued (not including fines) to be invested at interest, under an order of the court; and that the monthly dues shall, from time to time, be paid out of the accruing interest, and so much of the principal as may be required to meet them, until *the unredeemed shares shall reach the par value of $200, should the fund be sufficient for that purpose. But, should said Gilbert and Haines prefer that the debt to the association shall be at once discharged at its present value, then the Circuit court will proceed, as nearly as it can, to estimate that value. This court not having sufficient data before it, will not attempt to prescribe a formula to govern the Circuit court. It is presumed, however, that such facts will be accessible to that court as will enable it to make an approximate estimate which will be just and satisfactory.

The decrees complained of must be reversed, with costs to the appellant, and the cause remanded to the Circuit court, to be proceeded in according to the principles above declared.

The decree was as follows:

The court having maturely considered the motion made by the appellee at the last term, to dismiss the cause for want of jurisdiction, doth overrule the same: and having maturely considered the transcript of the record of the decree aforesaid, and the arguments of counsel, is of opinion, for reasons stated in writing and filed with the record, that the Circuit court erred in treating the. redemption by the appellant, of the ten shares of stock in the proceedings mentioned at the price of $880, as a loan at that sum, with a transfer of the shares as a security for its payment, instead of treating it as an absolute sale and transfer of these shares to the association, whereby the association acquired an absolute right of property therein, and the same were “sunk and extinguished.”

The court is further of opinion, that the sum of $880, advanced for the shares, was the price thereof, and constituted ño part of the debt of Haines to the association; *that the only 'debt from him which constituted a lien on the property conveyed to Shields, trustee, is the debt mentioned in the bond of Haines to the association and the deed of trust given to secure it, viz: the sum of $14 40 cents, for dues and interest, not including fines, to be paid monthly, beginning on the 4th day of December 1868, and continuing until the association shall be able to divide $200 to each unredeemed share, credited by such monthly payments as have been heretofore made. The balance of the accrued instal-ments, and the present value of those yet to fall due, constitute the entire debt of' Haines, secured by his bond and deed of trust; and unless the appellant, the appel-lee Gilbert, and Haines, the debtor, can agree among themselves as to the present value of the future instalments, the said Gilbert and Haines shall have the option of requiring the net proceeds of the trust property, after discharging the dues aforesaid actually accrued, exclusive of fines, which are not charged on the trust fund, to-be invested under an order of the Circuit court, and the accruing interest and so much of the principal as may be necessary to be applied, from time to time, to the payment of the monthly dues and interest aforesaid, as they may accrue, until the debt shall be discharged, should the fund be sufficient; and the residue, if any, to Gilbert’s debt.

But should said Gilbert and Haines elect to have the unaccrued quotas reduced to their present value and paid in cash, then the Circuit court will proceed to ascertain, as nearly as practicable, that present value. The time when the association will be able to divide the requisite amount (unless it has arrived already) being wholly uncertain, any calculation which may be resorted to to fix it, must, like cases of life estates, annuities for life, &c., be approximate and conjectural merely. There can be, from the nature of the case, no mathematical ^certainty. But the Circuit court can have before it the value of the shares at the end of each year from the organization of the association, showing their progressive advance in value for a series of years; and with such materials, that court can, with a reasonable approximation to accuracy, ascertain the period of final distribution. The sum will then be simple. Some such calculation as that suggested should have been made by the Circuit court, instead of treating the price of the shares as a loan, and proceeding on that basis.

It is, therefore, decreed and ordered, that the decrees complained of, so far as they are in conflict with this decree, be reversed and annulled; and that the appellee Gilbert do pay to the appellant, its costs in this court expended. It is further ordered, that the cause be remanded to the Circuit court, to be further proceeded in according to the principles above declared; which is ordered to be certified to the said Circuit court of Frederick county.

Decree reversed.  