1893 - State Library Information Center

CO-OPERATIVE BUILDING AND LOAN ASSOCIATIONS. 445COUftT OF ERRORS AND APPEALS.*The first objection made by the appellant to the decree belowis that interest was allowed to the complainant on the sum of$8,UOO, the appellant insisting that, as only $7,000 were advancedin cash, interest should be reckoned only on that principle.The answer to this contention is that in effect of the sum of$8,000 was paid to the obligors, and their contract calls forinterest on that sum. Their agreement with the association wasto borrow $8,000 and to pay therefor a premium of $1,000. Byforce of the statute the agreement to pay a premium was madelegal. Franklin Building Asso. v. Marsh, 5 Dutch. 225 5 FreeholdMutual Loan Asso. v. Brown, 2 Stew. Eq. 121. If, in exact performanceof its agreement the association had paid $8,000 to theobligors and had received therefor the present bond, no questioncould have been raised as to the propriety of the stipulation forinterest on the $8,000, but the obligors would besides have owedthe association the premium of $1,000, and this debt they mustat once have discharged by paying that sum to the association.Such a payment would not have aftected the obligations of theirbond, and would have left only $7,000 in their hands. The paymentby the association of $7,000 cash, and its release of theborrowers from the duty of paying the premium, were an equivalentfor the exact performance of their mutual obligations, andtke validity of the stipulation in the bond for payment of intereston the $8,000 is not impaired by such a change in the mere formof the transaction. Mechanics 9 B. £ L. Asso. v. Conover, 1McCart. 219; 8. C. on appeal, 2 C. E. Gr. 497, 504.Counsel for the defendant refers us to cases in other jurisdictions,where it has been held that what is described as interestupon the premium cannot be collected. But we think it clearthat when the -statute gives the parties a right to agree upon apremium for a loan without restriction, they have a right toagree that the-premium shall consist of a sum payable presentlyout of the amount loaned, or of a sum payable in the future, withinterest meanwhile, or without interest, and that it is for thecourt simply to give effect to their agreement. In the case now*J3owen v. Lincoln Association, opinion by Dixon, J., Nov. Term, 1893. (6 Dick. 272.)