Sec. 653. Building and loan association mortgages -Usury. A penalty or fine for nonpayment of money is interest, and where a building and loan association by means of fines exacts more than the legal rate, the fines are usurious. Smith v. Old Dominion Bldg. & L. Ass'n, 119 N. C. 257 (26 S. E. Rep. 40). A building and loan association's loan, made at a legal rate of interest to a stockholder in the association, will not be held usurious on account of payments required from him on his stock. Richard v. Southwestern Bldg. & L. Ass'n, 49 La. 481 (21 So. Rep. 643); Black v. Tompkins, 63 Ark. 502 (39 S. W. Rep. 553); Equitable Bldg. & L. Ass'n v. Vance, 49 S. C. 402 (27 S. E. Rep. 274). The fact that a borrowing member of a building and loan association pays a per cent. as bonus or premium for his loan in excess of the legal rate of interest, such amount having been paid by him at a competitive sale of the loan, does not render the transaction usurious. Setliff v. North Nashville Bldg. & Sav. Ass'n, Tenn. (39 S. W. Rep. 546). Citing, Patterson v. Association, 14 Lea 677; Bank v. Cook, 60 Ark. 288 (30 S. W. Rep. 35; 46 Am. St. Rep. 200; 29 L. R. A. 761). A mortgage taken by a foreign building and loan association cannot be defeated on the ground of usury where the contract was permitted by the state where the association was organized and is not inconsistent with the laws of the state where made and it is sought to be enforced. Freie v. No. 4 Fidelity Bldg. & Sav. Union, 166 III. 128 (46 N. E. Rep. 784; 57 Am. St. Rep. 123).

Sec. 654. Building and loan association mortgages -Foreclosure for non-payment of fines. Where a mortgage given by a member of a building and loan association to it, authorizes a sale, if the mortgagor shall fail to "conform to all and singular, the provisions of the constitution, bylaws and regulations of said association as now existing or which may hereafter be modified," a sale may be had for default in the payment of fines where the rules of the association expressly provide for the assessment of a fine for the nonpayment of interest, the payment of which shall be secured by the mortgage of a borrowing member. Setliff v. North Nashville Bldg. & Sav. Ass'n.

Tenn.

(39 S.

W. Rep. 546). The court say: "It is competent for such associations, chartered under our laws, to establish by-laws for the imposition of fines upon their members for defaults in the payment of their contract dues and interest, as a method of securing their prompt payment. These fines go into the general funds of the companies, and aid in maturing the shares of stock held by the delinquents; and hence, under building and loan association laws, the delinquents share in the profits derived from them or created by them. Patterson v. Association, 14 Lea 677. Such fines, reasonable in their nature and amount, when authorized by law and the charter and by-laws of the association, have been upheld, and their payment enforced in the foreclosure of the mortgages given to it. 2 Am. & Eng. Enc. Law, 620, and note; Hagerman v. Association, 25 O. St. 187; Parker v. Association, 19 W. Va. 769; Association v. Mixell, 84 Pa. St. 313. A second fine for nonpayment of the same dues cannot be imposed. Society v. Lewin, 38 Md. 445; Association v. Gallagher, 25. O. St. 208. And, without special mention, they cannot be imposed for defaults in payment of interest on loans. Hagerman v. Association, 25 O. St. 187; Shannon v. Association, 36 Md. 383; Association v. Sullivan, 62 Cal. 394."

Sec. 655. Building and loan association mortgages -Insolvency and dissolution of association-Foreclosure. Upon the premature dissolution of a building and loan association, or upon its becoming insolvent and unable to carry out the purposes for which it was created, and passing into the hands of a receiver for the purpose of having its affairs wound up, which is, in practical effect and operation, a dissolution, the borrowing members may be compelled to pay forthwith the balance due from them on their securities although the latter in terms only provide for the payment by installments extending over a definite period of time. Curtis v. Granite State Provident Ass'n, 69 Conn. 6 (36 Atl. Rep. 1023; 61 Am. St. Rep. 17). Citing, Windsor v. Bandel, 40 Md. 172, 177; Association v. Buck, 64 Md. 338 (1 Atl. Rep. 561); Association v. Zucker, 48 Mo. 448; Association v. Martin, 13 N. J. Eq. 427; Strohen v. Association, 115 Pa. St. 273 (8 Atl. Rep. 843); Buist v. Bryan, 44 S. C. 121 (21 S.

The neces

E. Rep. 537); Towle v. Society, 61 Fed. Rep. 446; End. Bldg. Assn's (2d Ed.), § 523. When a building and loan association is put into the hands of a receiver because of its insolvency, the mortgages held by the association become due at once and the receiver can foreclose and the mortgagor can redeem. Weir v. Granite State Provident As'sn, 56 N. J. Eq. 234 (38 Atl. Rep. 643). The court say: "It seems to be entirely settled that upon the insolvency of a corporation of this class its receiver is at once empowered to collect the amount loaned to any borrower by the association, and that he can, for that purpose, proceed to foreclose a mortgage held by such association, although there had been no default by the mortgagor in the payment of any installment of interest or dues previous to the insolvency of the company. The collapse of the scheme renders it impossible to carry out the object of the association. The debtor cannot pay according to the terms of his contract with the association. sity of winding up the affairs of the insolvent company involves the right to immediately collect its assets and distribute the fund to its stockholders and creditors. End. Bldg. Ass'ns, par. 523; Cook v. Kent, 105 Mass. 246; Curtis v. Association, 69 Conn. 6 (36 Atl. Rep. 1023; 61 Am. St. Rep. 17); Rogers v. Hargo, 92 Tenn. 35 (20 S. W. Rep. 430). If the debts of the borrower become due by the fact of insolvency, it must follow that, if those debts are secured by a mortgage which can be foreclosed, then from the fact of insolvency the right of the mortgagor to redeem his property from the incumbrance of such mortgage must accrue. Until its mortgage debt is due, there can be no redemption. Brown v. Cole, 14 Sim. 427; Kingman v. Pierce, 17 Mass. 247; Abbe v. Goodwin, 7 Conn. 377; Moore v. Cord, 14 Wis. 231. But the moment the debt matures any one interested in the land is entitled to discharge the property from the incumbrance. Indeed, the right to foreclose and the right to redeem may be said to be reciprocal. I am therefore of the opinion that the mortgagor need not await the foreclosure proceedings of the receiver, but can now pay off the amount which could be recovered against him by a sale of his property."

66

Sec. 656. Building and loan association mortgages -Insolvency and dissolution of association-Determining amount due. The agreement of a borrower in a building and loan association to pay its interest and premium is made upon the implied condition that the association shall remain a going concern," and will not be enforced against him after the association has passed into the hands of an assignee and receiver. Curtis v. Granite State Provident Ass'n, 69 Conn. 6 (36 Atl. Rep. 1023; 61 Am. St. Rep. 17). Upon the dissolution of an association on account of insolvency, premiums or bonuses previously paid by borrowing members shall be applied on the mortgage debt, but dues on shares of stock belong to the association to be used in the payment of its expenses. Curtis v. Granite State Provident Ass'n, 69 Conn. 6 (36 Atl. Rep. 1023; 61 Am. St. Rep. 17). Where a building and loan association mortgage has become due on account of the insolvency of the association and the appointment of a receiver, in computing the amount then due upon a mortgage, the borrower should receive credit for all his payments of interest or premium, but not of dues. When all the premium was deducted when the loan was made the borrower should be charged with the amount of money actually paid. to him, with interest thereon, and credited with all interest paid by him, including interest paid upon the premium. When the premium was not deducted when the loan was made, but was paid in subsequent installments, he should be charged with the amount received and interest, and credited with interest and premiums paid, including interest on the installments of premium from time of their payment. Weir v. Granite State Provident Ass'n, 56 N. J. Eq. 234 (38 Atl. Rep. 643). The rules enunciated in this case are approved and followed in Moran v. Gray, N. J. Eq. (38 Atl. Rep. 668). For particular case determining application of payments upon a mortgage executed to a building and loan association, see Sawtelle v. North American Sav., L. & Bldg. Co., 14 Utah 443 (48 Pac. Rep. 211).

Sec. 657.

Statutes amended and new statutes. Bonds, mortgages and assignments of mortgages recorded in Delaware before July 1, 1898, without investment tax affidavit

required by Laws Vol. 21, ch. 21, § 10, are validated by Laws 1899, p. 571. For acts legalizing defective foreclosure sales in Minnesota, see Laws 1899, pp. 10, 414, 423. Neb. Code Civ. Proc,. § 852-foreclosure sales under decree in chancery -by whom made-amended, Laws 1899, p. 345. New Hampshire has a new statute regulating sales under powers of sale contained in real estate mortgages. Laws 1899, p. 257. N. Y. Code Civ. Proc., § 1627-who may be made parties to action of foreclosure-amended, Laws 1899, p. 1080. Washington has a new statute regulating sales under decree of foreclosure. Laws 1899, p. 85. Wis. Stat. 1898, § 3526-service of notice of foreclosure of mortgage upon mortgagoramended, Laws 1899, p. 655, § 40.

NOTICE.

EPITOME OF CASES.

Knowledge sufficient to charge one with

Sec. 658. notice. A purchaser of land must look to the title papers under which he purchases, and he is chargeable with notice of the facts appearing upon their face; also with knowledge of all facts suggested therein, and which he might, with the exercise of reasonable prudence and diligence, have ascertained. Knowles v. Williams, 58 Kan. 221 (48 Pac. Rep. 856); Simms v. Freiherr, 100 Ga. 607 (28 S. E. Rep. 288). The fact that the agent of a mortgagor for procuring a loan, examines the abstract of title and represents to the mortgagee that the mort. gagor had a perfect title, does not make him the agent of the mortgagee so as to charge the latter with knowledge of facts concerning the title, known to such agent. Farmer v. American Mortg. Co., 116 Ala. 410 (22 So. Rep. 426). Structures erected upon land under a parol license are notice of the rights of the licensee. Joseph v. Wild, 146 Ind. 249 (45 N. E. Rep. 467).

Sec. 659. Notice by publication. An action to cancel a deed of real and personal property may be prosecuted