Shannon v. Howard Mutual Building Ass'n

Stewart, J., delivered the opinion of the Court. An ex parte decree had been passed by thé Circuit Court of Baltimore City, at the instance of the appellee, The Howard Mutual Building Association, for the foreclosure of the mort ³⁹¹ gage of the appellant, a member of the society, by reason of his alleged default. The appellant filed a petition, representing that the account exhibited with the application for the decree was erroneous, and that he had offered 1o pay the true amount due, and praying to have the matter referred to the auditor to state an account of his indebtedness, and to be allowed to bring the amount he owed into Court, and that the decree be stayed. The Court ordered a day for the hearing, with leave to the parties to take testimony.

Upon the return of the-commission, with the testimony taken, the cause was referred to the auditor to state an account of the indebtedness of the appellant. The account was accordingly made out, and excepted to by the appellant; his exceptions were overruled, and the account ratified, and he has appealed from that decision. He complains that he is overcharged, and the main question in dispute is, as to the correctness of the auditor’s account. He also alleges that he has made a sufficient offer to pay what was due, either upon his application to be released from the mortgage; or from the payment of the amount of the Weekly dues, interest and fines remaining unpaid, and claims the benefit of having tendered himself ready to pay each on different occasions.

A point is also made in the argument of the case, that a Court of Equity ought not to afford relief to the appellee in the collection of any fines that may have been imposed. By the 16th Article, 1st and 2d sections, of the association, it is provided that any member may obtain a release of his mortgage by paying back the difference between the dues paid and the amount borrowed, together with a bonus, graduated by the number of years it has run, and before the unredeemed shares are worth $250; and upon the release being effected, he ceases to be any longer a member. The mode of settling the indebtedness under such circumstances is explained in the law of the Oak Cottage Building Association vs. Eastman & Rogers, 31 Md., 556 . ³⁹² It is alleged by the appellant that he made application to be released, and tendered himself ready to' comply with the required terms, and was refused by the appellee. This is denied by the company.

The proof is so conflicting, that the tender cannot be considered as made out; whilst, in actions at law, to constitute a legal tender, considerable formality is required, and the money must be actually produced, unless the claimant dispense with its production, by express declaration or other eqivalent act, as if a party declare beforehand, that if tender is made, it will not be accepted, that will dispense with a formal tender; Buel vs. Pumphrey, 2 Md., 268 ; yet such strictness is not necessary, in cases of this sort, to be determined by the principles of equity and good conscience. The application to be released, and an offer to comply in good faith, with the ability to pay whatever might be due, where the party did not know the precise amount, and sought to ascertain in a reasonable way from the company, and the officer of the company, in charge of the books and entries, shewing the state of the account, could furnish the proper information, and refuses or omits to do so, without justifiable excuse, would have constituted a sufficient tender, if such a state of things had been clearly proved. See Smoot, et at. vs. Rea & Andrews, 19 Md., 398 . The inexcusable refusal or omission of the officer, in cases where he could furnish the desired information sought by an applicant in good faith, would excuse the formal tender, and subject the company to the consequences of a rejection of the proposition to settle.

It seems, however, that the appellant waived his offer to be released from the mortgage entirely, according to the 1.6th Article, and afterwards proposed merely to settle the balance due on account of the weekly instalments, the interest, and all legitimate fines incurred by his default, but in regard to this offer there is the same contrariety of testimony as in the former application, and the same construction as to the matter of tender is applicable, and it is not satisfactorily proved. ³⁹³ In regard to the question that a Court of Equity does not enforce the payment of penalties and forfeitures, according to the principle regulating its jurisdiction, this is true in cases where the doctrine is applicable. Where, in strictness, nothing but forfeitures and penalties are sought to be claimed and enforced in a Court of Equity, it will not lend its aid for their collection, but the parties must resort to the Courts of Law for the purpose. The sum stipulated to be paid by a member of a building association, under by-laws or regulations authorized by its charter, for a default in settling his weekly dues, is not such a forfeiture, but is simply an amount conventionally due upon the accruing of the weekly instalment, and the failure to pay it accordingly. It is in the nature of liquidated damages, agreed to be paid for the non-performamce of a promise or covenant; and where they are not unconscionable or disproportioned to the exigency of the case, a Court of Equity will award their payment, more especially when incidentally involved in a matter confided to its peculiar jurisdiction and control.

From the character of these building associations, the imposition of adequate fines, as agreed upon by the by-laws, is justified in order to prevent default in the punctual payment of the weekly dues, upon which the success of the company depends; or in case of default, that some reasonable equivalent for the consequent damage sustained, may be provided. The law authorizing the formation of the company, expressly provides for the imposition of such fines, and the mortgage given by the appellant recognizes their obligation, and stipulates for their payment; and the Court of Equity is required, where a case occurs justifying its interposition, to foreclose the mortgage ex parte or otherwise, to allow in the ascertainment of the indebtedness of the party, such reasonable and legal fines incurred by the party, by his own consent, where he has been in default. See 2 Story’s Eq. Juris., sec. 1318. ³⁹⁴ ■We see no difficulty in a Court of Equity compelling a party, under such circumstances, to meet all his engagements, where it is authorized to exercise its jurisdiction over the subject matter of the mortgage.

Without the power to collect such fines through a Court of Equity, where the mortgage- is enforcible, the anomaly would be presented o'f compelling the company also to resort to a Court of Law