author: Mr. Justice Sterrett

text:
    Gass versus The Citizens’ Building and Loan Association.
    Iu a suit by a building association against a surety upon a bond given to said association, the surety defended on the ground that he had made a parol agreement with the agent of said association whereby he was to be released from liability in the event of a certain contingency : Held, that he was bound to show that the agreement was.made with the knowledge of the officers of the association, or that the agent was acting, at the time, within the scope of the authority confided to him by the board of directors, or that his declarations were made in the course of business which the board authorized him to transact, and that the contingency had arisen, and that the evidence in this case did not establish such a defence.
    June 8th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Error to the Court of Common Pleas of Northumberland county: Of May Term 1880, No. 144.
    Feigned issue, wherein Martin Gass, was plaintiff, and the Citizens’ Building and Loan Association of Centraba, was defendant, to try whether a certain judgment of the association against Gass had been' paid or satisfied, or whether he had been released or discharged from the payment of the same. The issue was framed upon the following facts :
    In February 1873 J. J. Hoagland applied to the association defendant for ten loans of $200 each, amounting in the aggregate to $2000, when the board of directors decided to grant him four loans, or $800 thereof, upon the security of his own property in Columbia county, but inasmuch as there was at that time a prior lien in favor of the Centraba Mutual Saving Fund Association against Hoagland’s property, the. association requested him to give them additional security, and he then offered them his father-in-law, Martin Gass, as surety, and the association, after an examination of his property, accepted him, and a bond and mortgage were executed, with Hoagland as principal and Gass as surety thereon. Judgment was afterwards entered on the bond by virtue of a warrant of attorney contained therein.
    On the 2lst of November 1877, Gass presented a petition to the court, asking that said judgment should be stricken off or opened, and he let into a defence, and the court, after hearing, opened the judgment and made the rule absolute as to Gass.
    At the trial Gass offered to show that at the time of the execution of the bond there was a parol agreement to the following effect: That when he agreed to become the surety of Hoagland the latter informed him that the association agreed to hold him liable as surety only until the lien of the Centraba Mutual Saving Fund Association had expired, or when the “old fund,” as it was called, ran out. To sustain this alleged agreement, he gave in evidence a certified copy of the record of the Court of Common Pleas of Columbia county, whereby it appeared that the judgment of this saving fund against Hoagland, entered March 13th 1871, had not been revived, and that, therefore, its lien had expired on March 13th 1876.
    J. J. Hoagland, a witness called for plaintiff, on cross-examination testified: “Mr. Gass was to be released when the old fund run out; the last payment on the old fund run out in January 1874; it has not run out; they are trying to make an assessment now; I am secretary of the company now ; the old association had run out in January 1874, as we supposed; there are debts now standing that we are trying to collect,- and there is some property to be sold; the old association has issued notices to members „to pay in one or two payments to pay off the shares ; our secretary made up a statement, and there is about $1400 to pay yet, as near as we can get at it; when I speak of the old association running out, I mean that it had started to run ten years, and that we found it was going to run out sooner, and that was about 1874; * * * I would not consider the old association finally settled until all the judgments and property had been sold and collected in; * * * I told Gass they agreed to release him when the old fhnd run out; all the information Gass had about this matter he received from me; I presume that this last loan was made on the strength of Gass going bail.”
    J. P. Hoagland, another witness called for plaintiff, testified: “ I was secretary of the association at the time the loan was made to my father, J. J. Hoagland; I think there were ten shares loaned to him, $2000. Martin Gass was offered as bail on six shares, or $1200 of the $2000; the board of directors decided to give J. J. Hoagland a loan of $800 upon his own security, and for the balance, $1200 (six shares), he was to give Martin Gass as security; that was the only thing that was embodied in the motion, though there was a general conversation taking place in the room that if the old saving fund should expire he would be released; Martin Gass was to be released; that was not embodied in the regular motion for the loan; that was the conversation through the room by the board of directors — directors of the Citizens’ Building and Loan Association; the old fund was called, I believe, the Centraba Mutual Saving Fund Association, * * * The board of directors did not authorize me to inform Mr. Gass on the subject of release at any time; I had no authority whatever from the board to go to him; I went at the request of their attorney, who was called out of town; I did not communicate to the other members of the board of directors at a meeting what my father had told me relative to the conversation he had with Mr. Gass ; I don’t think my father was a member of the board at the time of this conversation relative, to the release; Mr. Dyke is all I can recollect of the members who talked about this question of release; it was talked at a meeting of the board; the board was in session; J. J. Hoagland was not present at the time.”
    Gass, the plaintiff testified: “ J. P. Hoagland brought the bond and mortgage to me; I had no interest in them ; I got no portion of the proceeds of the loan; I was asked to execute the bond as bail for J. J. Hoagland; J. P. Hoagland came there for me to sign that bond and mortgage; I understood him .to say that the board (some of them) had sent him; he told me he ‘was secretary of the association’; I asked him whether the understanding was that I was to be released when the loan on the old saving fund expired, and he told me ‘Yes, if the old saving fund against J. J. Hoagland expired’; and he said ‘that was the understanding by the board,’ that he ‘heard them say so.’ I told him ‘under that arrangement, that I was to be released, I would sign it; if that was the case.’ I think these were the words I used, ‘if that is the case I’ll sign it.’”
    The 4th and 8th points of the defendant, both of which the court affirmed, are as follows :
    4. That no authority has been shown by the plaintiff to have ever been given by the defendant, either to the committee of investigation or to J. P. Hoagland, to represent to Martin Gass, that he would be released as bail of J. P. Hoagland, when the old fund ran out, or was paid, and without authority from the board of directors, such representations, if made, would not bind the defendant.
    8. That by plaintiff’s own showing, any representations made by J. P. Hoagland, who took the bond and mortgage to Gass for execution, were made without authority, and could not be binding on the defendant.
    In the general charge the court, inter aba, said :
    “I will say to you as a matter of law that it does not follow that it was necessary if there was an agreement by the board of directors to release Gass upon any condition, that it should be put in writing upon the books of the corporation. But it is necessary for Gass to show you clearly and satisfactorily, that there was such action on the part of the board of directors. A mere talk without coming to any conclusion or agreement between them would amount to nothing at all. Whether there was such a conclusion and agreement or not on their part we leave you to determine from all the facts and circumstances in evidence. * * *
    “ If you find from all the evidence in the case that at their meeting while they were an organized board of directors they agreed with Mr. Gass that if he became bail for Mr. Hoagland, he should be released upon the conditions he stated, and that after such agreement amongst themselves it was afterwards communicated by John P. Hoagland to Mr. Gass and Mr. Gass acted upon it then it would be binding upon the association. * *
    “ The counsel for Mr. Gass ask us to say to you as a matter of law, that if John P. Hoagland went there with the bond and mortgage for the purpose of procuring its execution by Mr. Gass, and made the representations as stated by him to Mr. Gass, without any authority, still Mr. Gass would be released. I do not charge you that this is the law.”
    Verdict for defendant, and after judgment thereon plaintiff took this writ, and alleged that the court erred, inter alia, in affirming the above points and in the foregoing portions of the charge.

      William, C. Packer, for plaintiff in error.
    The association received the benefit of the contract made by their agent, and are bound by his declarations which induced said contract, although he exceeded his authority: Chartiers Railway Co. v. Hodgens, 4 Norris 507; McCarty v. Railroad Co., 6 Id. 332; Pittsburgh & Connellsville Railroad Co. v. Stewart, 5 Wright 55; Musser v. Hyde, 2 W. & S. 319.

      L. H. Kase and S. P. Wolverton, for defendant in error.
    J. J. Hoagland was not a member of the board of directors nor an officer of any kind, and surely had no power to bind the association. He did not even hear the running conversation that his son J. P. Hoagland says he is under the impression he heard, and he (J. J. Hoagland) says “all the information Gass had about this matter he received from me.” His son took the mortgage down1 for Gass to sign. He says “he had no authority whatever from the board to go.” None of the directors ever said anything to him on the subject, and he “ did not communicate to the directors what his father told him, nor any conversation with Gass.” Taking these statements as true they show that the “ old fund” has not run out nor has the claim been paid. On the other hand all the members of the board and the committee testified that there never was any such agreement or understanding as alleged by Gass and Hoagland, and that no such conversation was ever had as J. P. Hoagland says he is under the impression he heard. Surely in these transactions there can be no presumption of authority to bind the association.
    October 4th 1880.
    [See Jones v. The National Building Association, 13 Norris 215. — Rep.]
   Mr. Justice Sterrett

delivered the opinion of the court,

The verdict, in favor of the defendant in the feigned issue, if not demanded was fully justified by the uncontradicted testimony of the plaintiff’s principal witnesses ; and there appears to be nothing in the instructions complained of that could have unduly prejudiced the plaintiff’s case. His contention was that, as surety for his son-in-law, Hoagland, he executed the bond on which judgment was entered, with the verbal understanding or agreement that he should be released from all liability as soon as the loan of the Centraba Mutual Savings Fund Association to Hoagland, or “ old fund,” as it is termed, ran out or was paid. To maintain the issue, on his part, it was necessary for him to prove not only that the alleged understanding or agreement existed, and that he became a party to the bond on the faith of it, but that the savings fund loan had by its terms expired or was fully paid; and, if either of these essential facts was not clearly established by the testimony the issue was justly determined against him. It is v.ery evident from an inspection of the testimony that he not only failed to show that the loan referred to was paid or in any manner satisfied; but, on the contrary, he actually proved that it was still unsettled and payment of additional instalments had been demanded by the company. His son-in-law, Hoagland, for whom fie became surety in the bond held by the defendant, testified that the loan from the Centraba Mutual Savings Fund Association was not fully paid. Speaking of that association he says, “ it has not run out; they are trying to make an assessment now. I am now secretary of the company. The old association had run out, as we supposed, in January 1874; but there are debts that they are now trying to collect, and there is some property to be sold.” He further testified in substance that formal demand had been made on the members, of which he was one, for additional instalments to pay off the shareholders, and they would be compelled to pay, unless a sufficient amount was realized from collections and sales of property; and that he did not consider the association finally settled until all the judgments are collected and property sold. It was impossible for the jury, with such testimony before them, to escape the conclusion that the condition on which the plaintiff claimed he was to be released as surety had not yet been fulfilled.

The plaintiff’s testimony, tending to prove the alleged understanding or agreement on the faith of which he became surety for Hoagland, was received and submitted to the jury with appropriate instructions. The learned judge charged, in substance, that it was necessary for him to show clearly and satisfactorily that the board of directors had assented to the condition on which he proposed to become surety; that a mere talk on the subject among members of the board without arriving at any conclusion or agreement among themselves would amount to. nothing; that, if from all the facts and circumstances in evidence they found that the board of directors did agree that in case he should become surety for Hoagland he should be released upon the condition alleged; and if this consent of the board was communicated to him and he acted on it, the association would be bound thereby. This instruction was certainly quite as favorable to the plaintiff as he had a right to ask. Indeed the court, with great propriety, might have instructed the jury that, upon his own showing, the plaintiff was not entitled to a verdict.

The .only persons with whom the plaintiff appears to have had any communication on the subject of the suretyship, prior to the execution of the bond, were his son-in-law, J. J. Hoagland, and J. P. Ploagland, the secretary of the association defendant. It is not pretended that the former, by. his acts or declarations, could bind the association ; but it is claimed that it was bound by the statements of J. P. Hoagland, alleged to have been made at the time plaintiff signed the bond. This might have been so if it had been shown that, at the time the declarations were made, Hoagland was acting within the scope of authority confided to him by the board of directors, or that they were made in the course of business which the board authorized him to transact; but such was not the case. He himself testifies that he was not authorized by the board of directors to make any statement-to plaintiff on the subject of the loan or his release as surety, and that he had no authority from them to call upon him for any purpose. This is the only testimony on the subject of his authority to make any statement to plaintiff or transact any business with him on behalf of the board. It cannot be pretended that corporate rights may be thus frittered away, or liabilities created by loose and unauthorized declarations made by persons who at the time are not authorized to represent the cor poration in relation to the subject concerning which the declarations or representations are made.

There is nothing in any of the assignments of which the plaintiff has any just reason to complain.

Judgment affirmed.


source: Caselaw Access Project

author: Mr. Justice Trunkey

license: Public Domain

text:
    Clement versus Commonwealth ex rel. Beula Mettler.
    1. While the Act of June 14th 1836 prohibits separate actions by differ-' ent plaintiffs on the same official bond, there is no prohibition therein against the bringing of a separate suit in the name of the. Commonwealth against each obligor in the bond.
    2. Suit was brought on the official bond of a prothonotary in the individual name of the party seeking redress, instead of in the name of the Commonwealth suggesting the name of the party as the Act of Assembly prescribes, although the precipe and summons recited that the suit was on the official bond. An appeal was entered and a declaration and plea filed, and meantime the original cause of action was barred by the Statute of Limitations. The court, however, permitted the record to be amended by making the Commonwealth the party plaintiff, as directed by the act: Held, that the amendment was proper, as it introduced no now cause of action and worked no injury to the defendant.
    June 8th 1880.
    Before Sharswood, C. J., Merour, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Error to the Court of Common Plea§ of Northumberland county: Of May Term 1880, No. 112.
    Debt on an official bond by the Commonwealth of Pennsylvania ex relatione Beula Mettler against Ira T. Clement. The suit was originally brought in the name of Beula Mettler, plaintiff, against Ira T. Clement.
    The praecipe was “ issue summons in debt founded on official bond of William D. Haupt,” &c., and the summons recited “to answer Beula Mettler of a plea in debt on official bond” of said Haupt. The defendant appealed, _ and a declaration in debt on official bond was filed, and on August 20th 1879, defendant was ruled to plead. On September 4th he pleaded non est factum.
    On November 18th 1879, the plaintiff moved the court to amend the title of the case so as to read' “ The Commonwealth of Pennsylvania, suggesting Beula Mettler.” The defendant objected, because by the 4th section of the Act of April 4th 1798, Purd. Dig. p. 933, pi. 29, the time for the bringing of a suit or action on any official bond is limited to seven years, to be computed from the time the cause of action shall have accrued. The declaration filed in this ease avers that the cause of action in this case accrued on the 25th of April 1872. The proposed amendment, therefore, would be in point of law or fact equivalent to the bringing of a new suit, barred by said Act of Assembly.
    The court overruled the objection and allowed the amendment.
    Upon leave granted, the defendant then withdrew the plea of non est factum, and pleaded specially, that previous to the amendment, Beula Mettler was not entitled to bring an action in her individual name, as plaintiff, on said official bond; that prior to the amendment the action was barred by the Statute of Limitations; that there were other persons on said bond, and equally bound, two of whom are dead and one living, who are not joined as defendants; and the said Beula Mettler has a prior action in the name of the Commonwealth for her use, in which her name is suggested for the same penalty, on said official bond, against Haupt, on which the Commonwealth, for her use, has recovered the full amount of the penalty on the said bond; and neither she, nor the Commonwealth for her use, can maintain two actions, or make two recoveries upon the same official bond, contrary to the specific directions of the said Act of Assembly of April 14th 1836.
    The plaintiff filed a replication, to which defendant demurred, and after argument the court, Elwell, P. J., of the Twenty-sixth District, holding a special court, ^overruled the demurrer in an opinion, saying:
    “ The question raised by the pleadings is, whether separate actions may be brought against the obligors on a joint and several official bond of a prothonotary to recover for the negligence of the latter, by reason of which the party at whose instance the suit was brought lost the amount of a judgment.
    “ Official bond of prothonotaries and their sureties are required by Act of 14th April 1834, to be joint and several. The general rule in respect to joint and several obligations is, that the obligee may elect to bring a separate action against each obligor, or a joint action against all: Walter v. Ginrich, 2 Watts 204; 1 Chitty PL 37. The parties are bound according to the tenor of the instrument to which they put their signatures. Per Woodward, J., Miller v. Reed, 3 Casey 244.
    “Before the passage of the Act of 14th June 1836, joint and several actions were maintainable on joint and several official bonds by each person claiming a several interest. Especially was this the case in actions upon sheriff’s bonds under the Act of 1803: Beeson v. Commonwealth, 13 S. & R. 249.
    “ It is contended that the Act of 1836 prohibits the bringing of separate actions against the obligors in official bonds on the ground that it provides that there shall be but one judgment in favor of the Commonwealth upon such bonds. This contention is no doubt correct to the extent that separate judgments cannot be entered against the same party at the instance of different parties. Nor can two judgments be entered either against all of the parties'jointly nor against any one separately. In other words there can be but one suit and one judgment, for the penalty against any of the obligors. The cases Commonwealth v. Straub, 11 Casey 187, Commonwealth v. Cope, 9 Wright 161, decide that the pendency of a prior suit upon an official bond may be pleaded in bar of a second action. But these cases do not touch the question raised by this record. In these cases the plaintiff attempted to recover a second judgment against the same party, which the court held he could not do. In no case has it been held that suit may not be brought and judgment recovered against a party to a bond according to the terms of his bond. Estates of deceased co-obligors are not discharged by their death. But their representatives cannot be sued jointly with the survivors : 1 Chitty PI. 50 ; Beeson v. Commonwealth, supra. Here then is one case where the action must be separate. The Act of 1836 cannot, I apprehend, be construed, as implied, by changing the common law in this respect, and requiring a joint action on such a case ; no case has been cited on the argument, nor can any be found which hold that an action brought against them and the survivors would lie. But a separate action may be maintained against them.
    “ It follows that the Act of 1836 was not intended to change the law further than to prevent repeated actions against the same person, and at the same time to afford ample .remedy to all persons interested. In doing this there is manifested no intention to prevent the parties upon official bonds being subject to a recovery of the penalty by action according to their contract.
    “ It is admitted by the demurrer that at the time it was filed no judgment had been rendered in favor of the Commonwealth in any other suit on the bond. There had been a verdict, but no judgment entered thereon. But if there had been a judgment, the right to maintain a suit against a several obligor would have been preserved to the plaintiff by the Act of 11th April 1848, Purd. Dig. 1121, which provides that a recovery .against one or more joint and several’obligors without any plea in abatement that all were not joined, shall not be a bar to any subsequent suit against any person who might have been joined in the action in which judgment was obtained. This act is general in its terms, and is applicable as well to official bonds as to other obligations. It has never been the law in this state that the bringing of separate suit against a joint and several obligor operates as a discharge of another obligor or of the estate of a deceased obligor. Formerly where suit was brought against all the obligors jointly and severally bound, and one died, his estate was discharged: Miller v. Reed, 3 Casey 244. This was remedied by the third section of the Act of 1848.
    “ The defendant has not denied the cause of action set forth in the declaration. The plea is essentially a plea in bar. The replication is in effect an admission of the facts alleged in the .plea with one or two additional facts admitted by the demurrer. The parties have chosen to stake the result upon the question whether a separate action can be sustained against the defendant, after suit brought and verdict rendered against another co-obligor, two other of the co-obligors being dead. Upon the admitted facts I am of opinion that the action is rightly brought, that the demurrer of the defendant cannot be sustained, and that the plaintiff is entitled to judgment for the'penalty of the bond, and that Beula Mettler, at whose instance the suit is brought, is entitled to judgment for amount of the judgment set forth in the declaration.
    “Demurrer overruled, and judgment is entered for the Commonwealth for the sum of $5000, and in favor of Buela Mettler for $1458. Interest to b.e computed after judgment from November 19th 1879.”
    The defendant took this writ, and alleged that the court erred in allowing the amendment to the record; in overruling the demurrer of the defendant, and in entering judgment as above.

      S. B. Boyer and T. H. Purdy, for plaintiffs in error.
    We submit that the filing of the praecipe and issuing of the writ, in the manner and form they were done in this case, have not tolled the Statute of Limitations. The Act of 14th of April 1836, s. 6, pl. 1, is directory and must be strictly pursued. It provides “ that the writ shall in such case be issued in the name of the Commonwealth and the names of the persons by whom the same shall be sued out shall be suggested as plaintiff therein.”
    Was not the issuing of the writ in the name of Buela Mettler a compliance with the directions of the Act of Assembly ? The fact that the praecipe and summons recited that it was “ on the official bond of William D. Haupt, prothonotary,” is certainly a compliance with the Act of Assembly. We do not deny the power of the court to make amendments if they work no injury, but when the amendment changes the cause of action or revives a cause of action barred by limitation, we contend that the court has no such power: Kaul v. Lawrence, 23 P. F. Smith 410; Trego v. Lewis, 8 Id. 463; Kille v. Ege. 1 Norris 102; Leeds v. Lockwood, 3 Id. 70.
    Under the Act of 28th March 1803, as many suits might be brought on an official bond as there were different parties in interest, but the Act of June 14th 1836 abolished that right. The remedy of a party interested in the official bond of a sheriff is exclusively under the provisions of the Act of 14th June 1836. It contemplates only one suit, and gives to all persons who have several interests the right to join in that suit or to make use of the judgment recovered if their cause of action occur after judgment: Com. v. Cope, 9 Wright 161; Same v. Straub, 11 Casey 142.

      S. P. Wolverton, for defendant in error.
    In allowing the amendment, the court below simply brought to the record the legal plaintiff, who held the legal right for the other plaintiff already on the record, who was beneficially interested. The status of the parties was in no way changed. The narr. to which the defendant pleaded the general issue, was properly drawn in the name of the plaintiff as the record subsequently stood when amended. By the writ and declaration, he had full notice of the claim before pleading the general issue.- It is submitted that this estops him from complaining of any error on the part of the court in allowing the amendment. In Pennsylvania Railroad Co. v. Keen and Wife, 17 P. F. Smith 300, this court held that the Act of May 4th 1852 fully authorized the amendment if made apparent to the court, that there was an error in the original institution of the suit. In that case the identical question was raised, and it was held that the amendment was proper, although made after the claim would have been barred by the Statute of Limitations and a new suit been brought, and the case was properly tried in the name of the party placed on the record by the amendment, the same as if the suit had originally been brought in their name.- See also Wilson v. Mechanics’ Savings Bank, 9 Wright 488.
    June 22d 1880.
    We do not claim that more than one action on the official bond of a prothonotary can be maintained against any one surety or against any one of the obligors, but we do contend that any party injured may bring suit severally against each obligor until he has obtained satisfaction or payment of his claim under the bond. The general rule with respect to joint and several obligations has always been that a suit may be brought jointly against all the obligors, or severally against each one.
   Mr. Justice Trunkey

delivered the opinion of the court,

Judicial authority has not abridged the benefits of the statutory provision, that in all actions the “ courts shall have power, in any stage of the proceedings, to permit amendments by changing or adding the name or names of any party, plaintiff or defendant, whenever it shall appear to them that a mistake or omission has been made in the name or names of any such party.” Adding the name of the Commonwealth as legal plaintiff was within the letter and spirit of the statute, and an amendment which the court had no power to refuse.

Beula Mettler commenced suit “ on the official bond of William D. Haupt, as prothonotary of the county of Northumberland, in the sum of five thousand dollars,” as appears in both praecipe and summons; and the declaration, filed before the end of seven years from the date of the cause of action, was drawn in the name of the Commonwealth of Pennsylvania suggesting Beula Mettler as plaintiff. The ground of the suit and the name of the plaintiff in interest were explicitly set forth in the original writ and pleadings, and have not been changed; the omission of the. uninterested but necessary legal plaintiff has been supplied. Surely no real injury was done to the defendant, he was served with process, appeared to the action, and knew the law permitted amendment. This is not the case of a change in the subject of the action, nor of the name of the actor in bringing the suit, nor of the addition of a defendant, but of adding a mere legal plaintiff who had nothing to do in the commencement or conduct of the suit. Therefore, the principle stated in Kaul v. Lawrence, 23 P. F. Smith 410, relied on by the defendant, will not avail him. Had the name of Beula Mettler been struck out and the name of another inserted, or another plaintiff in interest added, or the description of the subject of the suit changed, then, indeed, the defendant could have well insisted on the principle that no amendment should deprive him-of the benefit of the Statute of Limitations or other meritorious defence, as against the actor added, or the subject newly described.

The second question presented is, whether separate actions may be brought against the obligors on the official bond of a prothonotary, which is joint and several, as it is required to be by statute. This is clearly answered in the opinion of the learned judge of the Common Pleas. The rule is, that when the obligation is joint and several, the obligee is at liberty to sue all the obligors jointly or each of them separately. Unable to gainsay the general application of the rule, the defendant contends it is abrogated by the Act of June 14th 1836, Pamph. L. 639, as respects actions on official bonds. Prior to this statute, as many suits might have been brought on an official bond, as there were persons holding several interests, as often as damages were sustained, and that was the mischief it was intended to remedy by permitting but one suit to be so conducted as to give every person having a claim the advantage of a trial as fully as if he had a separate action. The act defines and regulates the remedy on official bonds so as to require every person interested to join in the suit commenced, instead of bringing one for himself. The pendency of a suit on such bond is a bar to a subsequent action on the same instrument against the same parties, and may be so pleaded: Commonwealth v. Straub et al., 11 Casey 137; Commonwealth v. Cope et al., 9 Wright 161. In those cases the actions were against the same parties as in the former suits, and there was no question as to the right to bring a separate action against each obligor. Had the legislature intended to take away such right, it would have been easy to say so and also highly proper to have defined the procedure where one or more of the obligors had died. A right at common law is not abrogated by statute, unless there be clear repugnancy. The act contains no prohibition of separate suits against the officer and each of his sureties. It provides that the obligors may plead performance of the condition of the bond so far as respects the person or persons conducting the suit; and that may be done as readily when sued separately as jointly

Judgment affirmed.


author: Mr. Justice Paxson

text:
    First National Bank of Lock Haven versus Mason.
    1. It is clearly against public policy to permit a bank that has received money from a depositor, credited him therewith upon its books and thereby entered into an implied contract to honor his cheek, to allege that the money deposited belongs to some one else. This may be done by an attaching creditor or by the true owner of the fund; but the bank is estopped by its own act.
    2. In a suit by a depositor against a bank for the balance to his credit, the bank offered to prove that the depositor was the clerk of a firm, and that the money deposited was the money of the firm and was only deposited in the name of the depositor for the convenience of the firm, and that the depositor had so declared when he made the deposit. Also, to prove that said firm was indebted to the bank in excess of the deposit, in order that the bank might set off the indebtedness of the firm against the claim of the depositor: Meld, that the, evidence was properly rejected.
    June 8th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Error to the Court of Common Pleas of QUnton county: Of May Term 1880, No. 96.
    Assumpsit by James D. Mason against the First National Bank of Lock Haven, to recover a balance of deposits to the credit of the plaintiff in said bank.
    At the trial plaintiff produced and offered in evidence his bank book, wherein it appeared that he had made a number of deposits and drawn numerous checks, and that he had a balance to his credit of $1254.90. He then testified that he had. drawn checks against this balance which had been dishonored, and that he had personally gone to the bank and made demand for said balance and been refused payment.
    He also offered in evidence the following letter:
    “ Lock Haven, October 25th 1875.
    “ Thomas & Mason, \
    “ Jas. D. Mason. j
    “We charge your account with note Thomas & Mason $378.11, in favor of Kintzing & Zeller, which will be retained out of your funds deposited in the name of James D. Mason.
    “ Please do not issue any checks, as the balance to the credit of.
    J. D. Mason will be retained on account of bank claims.
    “ Yours, very respectfully,
    “ G. Kintzing, Cashier.”
    The defendant made the following offers:
    Defendant offers to prove that the moneys deposited with the bank in the name of James D. Mason, the plaintiff, and for the recovery of which this suit has been instituted, was deposited by the plaintiff, who was the bookkeeper of Thomas & Mason at the time he deposited the same, and at the time of depositing the said money he stated to G. Kintzing, the cashier of the defendant, that the said moneys thus deposited by him in his own name were, the moneys of Thomas & Mason, and that he deposited them in his own name for the reason that he might check the same out in the business of Thomas & Mason, on checks drawn in his own name; that there was a necessity of drawing checks in his own name from the fact that Thomas & Mason were absent so much, and that he had not power to sign checks in their name; that the plaintiff had deposited other moneys of Thomas & Mason in the same way with the defendant, to wit, in his own name previously, and had checked the money out thus deposited in the business of Thomas & Mason, on the checks of plaintiff drawn in his own name; that the money of Thomas & Mason was thus deposited with the defendant and checked out in the name of the plaintiff, with the knowledge and consent of Thomas & Mason, and was a course adopted for their convenience (paying their bills by checks drawn in the name of James D. Mason, the plaintiff, in their absence from home).
    That Thomas & Mason kept their bank account with the defendant in the name of James D. Mason, for several months previous to October 25th 1875, when this suit was instituted by the plaintiff for the recovery of the balance standing to the credit of James D. Mason, and that the defendant’s understanding from conversation had with James D. Mason, was that the money then standing to his credit, belonged to Thomas & Mason, and was not the money of the said plaintiff.
    The defendant further offers to . prove that James D. Mason did pay by checks in his own name out of the money deposited in his own name with the defendant, debts due from Thomas & Mason exceeding $1000, and did this by the express directions of Thomas & Mason, and took receipts for such payments on their account, in their receipt book in the presence of John S. Mason, one of the firm of Thomas & Mason.
    The defendant further offers to prove that on and previous to October 25th 1875, Thomas & Mason were indebted to the defendant by two notes, one of which was for $2000 and the other $378.11, the aggregate of which two notes exceeded the amount of money belonging to Thomas & Mason standing on her books to their credit with their consent in the name of the plaintiff. This offered for the purpose of showing that the money claimed by the plaintiff in this suit belonged' to Thomas & Mason at the time of the institution of this suit, and to whom it still belongs, and that the said Thomas & Mason were indebted to the defendant in an amount at the institution of this suit exceeding the amount thus claimed, and which sum the said Thomas & Mason still owe to the defendant.
    Plaintiff objected to the offers for the following reasons:
    1. Because the proposed testimony being offered by the defendant, a depositee, for the purpose of defeating this action brought by a depositor to recover the amount actually deposited by him with the defendant, and by the defendant credited upon the books of the bank to him, is inadmissible, the said defendant being estopped in law from questioning the ownership of the depositor. 2. Because the ownership of the funds in question, or the indebtedness of the bank (defendant) to the depositor not being called in question,’ or claimed in any manner by a third party, cannot be appropriated by the bank as the property of a third party and applied without the consent of the depositor to the payment of debts.due by a third party to said bank. 3. That in a suit by a depositor against a bank with whom he had deposited funds, which funds were actually placed to his credit on the books of the bank from time to time, and the said credit thus recognised by the bank, the said bank can not “set-off” notes or debts due by a third party to said bank against the claim of the plaintiff. 4. Because the testimony is irrelevant.
    Objections sustained and offers overruled. (1st assignment of error.)
    The plaintiff being called, as for cross-examination, the defendant proposed to ask him the sources from which he derived the money deposited, for the purpose of showing that the true ownership of the money was in Thomas & Mason, and not in the plaintiff at the time of deposit. Objected to on the ground that the bank could not question the ownership of the fund deposited. Objection sustained and offer overruled. (2d assignment.)
    The court, Orvis, A. L. J., instructed the jury that if they believed a demand was made by the plaintiff, as he had testified, he was entitled to recover. The verdict was for plaintiff, and after judgment thereon defendant took this writ, and alleged that the court erred in rejecting the above offers of evidence.

      G. S. McCormick and Cline G. Furst, for plaintiff in error.
    The question is whether, in a case of moneys deposited in a bank in his own name by the bookkeeper of an insolvent firm and so deposited with their knowledge and consent and for their benefit, it is competent for the bank, the depositary, when the creditor of such firm, to prove the true ownership of such moneys for the purpose of defeating a suit brought therefor in the name of the bookkeeper.
    A deposit of money in a bank creates no relation of trustee or quasi trustee, but the money deposited is simply loaned to the depositary — this the cases abundantly show: Bank of Northern Liberties v. Jones, 6 Wright 538. A deposit may be shown to belong to a third person; the credit given in the book for the same is nothing more than prima facie evidence of ownership : Arnold v. Macungie Savings Bank, 21 P. F. Smith 290; Stair v. York National Bank, 5 Id. 368; Farners’ and Mechanics’ Nat. Rank v. King, 7 Id. 208 Against a depositor’s balance a bank has the right of lien or set off for notes of the depositor past due: Morse on Banks and Banking 27, 34; Waterman on Set-off 143, 144; Reed v. Penrose, 12 Casey 235, and the authorities there cited. The court will search out the actual plaintiff and fix on him the responsibility of a party by subjecting him to a set off, where that may be necessary, to protect the defendant from loss: Armstrong v. Lancaster, 5 Watts 68. It is plainly taught by the authorities referred to that the true owner of a fund deposited by and in the name of his agent may maintain an action at law for the recovery of such property or fund, but in such suit the depositary has the right to detain because of lien or set off. And we submit when the suit chances to be in the name of the agent instead of the principal, that no valid reason can be assigned why, if the principal, the true owner of the fund, is the debtor of the depositary, the latter shall not be allowed to defeat such action by showing such ownership and indebtedness; and, moreover, with a denial of the 'right to make such proof, if the principal in such case be insolvent, thé depositary must suffer irreparable loss. The possession of the agent being the possession of his principal; his acts being not his own, but the acts of his principal, it is equally difficult to see how the agent can recover by suit in his own name where his principal for the same cause of action cannot recover. A set off of Thomas & Mason’s indebtedness lying in the way of a suit in their name, the suit is in the name of James D. Mason, their agent, but what will prevent a recovery by the former must defeat the action when it is, as here, by the latter; for there exists because of the system of rules and usages relating to banking, national, state or private, no “ estoppel in law” that will help out such an enterprise.

      S. R. Peale, for defendant in error. —
    As between the depositor and the bank, the latter has no right to refuse to pay checks of the depositor. The bank received the money as that of James D. Mason, and it was so deposited, and it was of no consequence what were his declarations at the time. And in all the cases cited by the plaintiff in error the plaintiff was the claimant to the ownership of the money. But certainly there is no authority for the position that in the absence of notice or claim by a third party the bank can set up an absolute title in a stranger to the plaintiff’s deposit for the purpose of appropriating it to a note due by said stranger to the bank. The bank contracts with the depositor only, and to permit it to question his title to the fund deposited would destroy all banking and commercial- transactions. The rightful owner of the fund as against the depositor might raise the question but not the bank : Jackson v. Bank of United States, 10 Barr 67 ; United States Bank v. Macalester, 9 Id. 481.

      June 19th 1880.
   Mr. Justice Paxson

delivered the opinion of the court,

The plaintiff below brought his suit against the First National Bank of Lock Haven, to recover the amount of moneys he had deposited with said bank. The defendant offered to prove that the money deposited in the name of James D. Mason, the plaintiff, was, in fact, the money of the firm of Thomas & Mason, of which firm the plaintiff was a clerk; that the plaintiff had admitted at the time the deposits were made that the money belonged to said firm, and were placed in his name as a matter of convenience in paying small bills; and that the said Thomas & Mason were indebted to the said bank in excess of the amount standing on its books to the credit of the plaintiff. The bank claimed to set-off the indebtedness of Thomas & Mason against the claim of plaintiff in this suit. This evidence was rejected by the court below, and forms the subject of the first assignment of error.

Thomas & Mason made no claim to this money. The said firm having failed, the bank seeks to protect itself by setting up their title to the funds in question.

It is well settled that money deposited in a bank to the credit of A. may be shown to be the property of B. It may be reached by attachment on the part of the judgment-creditors of B., or its payment by the bank to A. may be stopped by a proper notice on the part of B. that the money belongs to him. The credit on the books of the bank is but prima facie evidence of ownership: Harrisburg Bank v. Tyler, 3 W. & S. 373; Frazier v. Erie Bank, 8 Id. 18 ; Jackson v. The Bank of the United States, 10 Barr 61; Bank of Northern Liberties v. Jones, 6 Wright 541; Stair v. York National Bank, 5 P. F. Smith 368; Arnold v. Macungie Savings Bank, 21 Id. 290. These were cases, however, in which the true owner set up a claim to the fund. We have here a very different question. The bank, the depositary, sets up an adverse title to defeat the suit of its own depositor. The bank held its claim against Thomas & Mason when the plaintiff made his deposits, and they knew, or at least they allege they knew when the deposits were made that the money so deposited in plaintiff’s name belonged to said firm. Yet under these circumstances and with this knowledge they permitted the plaintiff to make the deposit in his own name. Having received it as the money of the plaintiff and given him credit therefor, the bank is estopped, in the absence of any notice from, or claim by the real owner, from disputing the plaintiff’s title. Having received the money as the money of the plaintiff, they are bound to pay it to him or upon his order. Such a contract is implied from the fact of the deposit. In Jackson v. The Bank, supra, the funds in the bank to the credit of Warwick were attached. The bank paid the money to Warwick notwithstanding the attachment, and was held liable therefor. It was said by Mr. Justice Coulter, in delivering the opinion of the court: “ The first question that occurs is this: could the bank, if the attachment had not been served, have resisted the claim of Warwick to the money he had deposited with them ? They received it and the bills as his, entered them on their books as his, and were bound, in the absence of any attachment, to have paid the funds to him. How then were they placed in any better position by the service of the attachment ? The attaching-creditor stands in the place of Warwick. If they could not allege as against Warwick that the funds were not his, neither can they allege as against the attaching creditor that they are not his, and yet turn round and pay the money to Warwick to enable him to defeat his creditor.”

It is clearly against public policy to permit a bank that has received money from a depositor, credited him therewith upon its books,' and thereby entered into an implied contract to honor his check to allege that the money deposited belonged to some one else. This may be done by an attaching-creditor or by the true owner of the fund, but the bank is estopped by its own act. A departure from this rule might lead to novel results and embarrass commercial transactions.

We are of opinion that the evidence referred to in the first and second assignments was properly rejected.

Judgment afiirmed.


author: Mr. Justice Mercur

text:
    Tanner’s Appeal.
    The ruling in Wolbach v. The Lehigh Building Association, 3 Norris 211, that a building association cannot recover from a married woman more than the sum borrowed and six per cent interest, is not to be extended to the husband who joins with the wife 'and obtains the full benefit of the loan.
    June 9th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Appeal from the Court of Common Pleas of Clinton county: Of May Term 1880, No. 45.
    Appeal of Samuel D. Tanner from the order of the court discharging a rule to show cause why a judgment should not be opened and defendants therein, Samuel D. Tanner and Adaline Tanner, his wife, be let into a defence.
    . Samuel D. Tanner petitioned the court as follows: That the defendants in the judgment are husband and wife. That the judgment was entered on a single bill, with warrant of attorney to confess judgment, providing for the payment of interest and dues, in the form commonly used by building and loan associations. That said Adaline Tanner, at and before the execution of said single bill, was a stockholder in said association. That she borrowed from the association at the date of said single bill, the sum of $232, and gave to the plaintiff the said single bill, secured by a mortgage recorded in the county of Clinton, upon real estate situated in the borough of Renovo, the title of which was in the said Adaline in her own right. That deponent was not a member of said building and loan association. That since the execution and delivery of said single bill and mortgage, said Adaline has paid to said association more than the amount of money borrowed, with its legal interest. Deponent further avers that plaintiff has issued a writ of fieri facias against him alone, and placed the same in the hands of the sheriff, who, by virtue thereof, has levied thereon and advertised for sale the personal property of deponent.
    He therefore prays the court to grant him a rule on the plaintiff to show cause why said judgment should not be opened and defendants let into a defence, further proceedings on said fieri facias to be stayed in the meantime; or to stay proceedings on said writ of fieri facias that your petitioner may have an opportunity to apply in open court for a rule to show cause why said judgment should not be opened and defendant let into a defence.
    The court suspended the execution and granted the rule to show cause. Depositions were taken under the rule.
    Samuel D. Tanner deposed: “ My wife’s name is Adaline Tanner ; she owns a lot and a half of ground in Renovo, upon which is erected a two-story frame dwelling house; she is a stockholder in the Renovo Building and Loan Association — owner of five shares; my wife has owned this real estate since 1865; it was given to her by her father, William Baird; these five shares of building association stock originally belonged to Daniel W. Pierce, who was a tenant in my wife’s house ; she took the shares from him in payment of rent which he owed her; by mistake Pierce transferred the stock to me, and I then retransferred it to my wife, Adaline. My wife got a loan from this building association on these shares ; there were two loans made to her : the first was about the month of June or July of 1870, about $330 ; the second' loan she got about 1874 — this last loan was about $232. The first loan was secured by a bond and mortgage on her Renovo property; I think the last loan was secured by a note and mortgage on same property.
    “I am not a stockholder in the association; I joined in the mortgages and bonds because my wife had borrowed the money; I was not owing the association anything on my own account; I received no consideration for the signing of the papers ; there was no other consideration for the bond and mortgage than the money borrowed by my wife as a stockholder; the payments made to the association were made on account of the money borrowed ; an execution was issued on this judgment, and was in the hands of the sheriff; a levy was made on the ice in the ice-house; the ice-house is on the property covered by the mortgage.”
    Mrs. Tanner deposed: “ I did not have the use of any of the money from the building association ; my husband got the money for me, but I did not use any.of it; I executed the bond and mortgage to the association ; my husband also joined in it; we got two loans, one of $330, and one of $232; I took the shares and I paid for them; I paid for them by taking them as payment for house rent due to me from Daniel Pierce; they were transferred first to my husband and he transferred them to me; they were transferred to my husband by mistake, as I owned them; I did not tell him to have the shares transferred to himself — we had never any conversation about it; the rent belonged to me and the shares were consequently mine; I signed the bond and mortgage; I expected it would be a lien on my property; when the mortgage was given we expected to pay it; I was instructed, when I signed the mortgage, that we would have to pay the money we got, and lawful interest; our lawyer instructed us to this effect, and that more could not be collected ; most of the money paid to the association was paid by my husband ; I made several of the payments myself; what I paid was paid to James Shuster, an officer of the association ; they gave us no receipts, but entered the payments in our books.”
    The court, without filing an opinion, discharged the rule “ as to Samuel D. Tanner.” He alone then took this appeal, and alleged that the court erred in this action.

      C. S. McCormick, for plaintiff in error.
    According to Wolbach and Wife v. The Lehigh Building Association, 3 Norris 211, Mrs. Tanner’s property, described in the mortgage, is* liable on the mortgage securing this bond for the face of the loan with interest, and Samuel D. Tanner’s relation to the bond is not that of principal, but rather in the nature of a surety for her. When the Act of 1859 declares that the premiums and fines contracted for by the association shall not be usurious, it applies only to contracts between the association and its members. The bond is void as to Mrs. Tanner. Admitting that Mr. Tanner’s liability remains as though the bond had been good against her ; still, unless the Act of April 12th 1859 applies to the contract, he can be liable only for the original debt with interest. There is nothing in the Act of 1859 which makes the surety of a member a member of the association, or that causes him to stand in the relation of a member. Mrs. Tanner was incapable of acquiring membership. S. D. Tanner, although the stock had by mistake been assigned to him, really never became a member, or if he did by the assignment of the stock, before the money was borrowed, he ceased to be a member.
    The evidence shows that the money was borrowed for and used by Mr. Tanner, so that his relations to'the association may seem to stand in equity about as they would if a person not a member of the association had borrowed money from the association and given his own bond to secure its repayment. If this Avere so we do not see that it changes his liability to the association. In either case, just as any other person in this Commonwealth, dealing with this defendant, could recover the debt and legal interest of the loan, so may this association, and it can legally recover no more.
    June 21st 1880.
    No counsel nor paper book contra.

   Mr. Justice Mercur

delivered the opinion of the court,

This is an appeal from the refusal of the court to open a judgment entered by confession on warrant of attorney. The wife of the appellant was the' OAvner of stock in the Building and Loan Association. Assuming to act as a full member of the association, the loan Avas made to her. To secure the payment thereof, the obligation on which this judgment was entered Avas executed by the appellant and his wife jointly. The money passed directly from the appellee into the hands of the appellant, and appears to have been used by him. It must be conceded, under the authority of Wolbach et ux. v. The Lehigh Building Association, 3 Norris 211, that the wife is not legally liable for more than the sum borrowed, with six per cent, interest thereon. She, however, has not appealed from the decision of the court, and is not here complaining. He alone has appealed. He bound himself jointly with his Avife for the payment of the sum borrowed, according to the constitution and by-law’of the association. They permit interest in excess of six per cent to be charged and taken. By reason of the personal disability of the wife, that excess could not be enforced by law against her. Inasmuch as she might receive the benefit of such excess of interest paid by others, there would be nothing inequitable in her paying according to her agreement, nor in the association so receiving it. In many cases of contract by husband and Avife jointly, the former may be bound where the latter is not. This is not an attempt to enforce .the executory contract of the husband, but one executed. Of one into which he voluntarily entered for the supposed benefit of himself and wife. He now appeals to the equitable power of the court to relieve him from the judgment thus given. In view of all the facts shown to the court and in the exercise of its reasonable discretion, it refused to disturb the judgment against the appellant. The case is not so clear as to induce us to reverse its decision.

Decree afiirmed and appeal dismissed at the costs of the appellant.


author: Chief Justice Sharswood

text:
    Stiles's Appeal.
    1. Building associations chartered under the Act of April 12th 1859 mus* operate strictly in conformity with the act to entitle them to the privileges it confers. Loans made by them can only be made out of the amount in the treasury derived from interest, dues and fines received from members and given out at each stated monthly meeting to the highest bidder. Such association cannot borrow money from banks or others for the purpose of loans, nor can they fix a minimum rate of premium below which they will accept no bid. They are bound to offer all that is in the treasury to open competition, so that the members may obtain the loan at a low premium if there should be no bid at a higher.
    2. If the association violates the act in any of the above-mentioned ways, and a particular loan is affected thereby, it may be set up as a defence to an action against a borrowing member.
    3. A judgment was entered against a borrowing member on a penal bill given for a loan and he petitioned the court for a rule to show cause why the judgment should not be opened, alleging among other reasons that he took his loan at a premium of §24, that being the minimum premium fixed by the association : Held, that this was sufficient ground to open the judgment and let the defendant into a defence.
    June 9th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Appeal from the Court of Common Pleas of Columbia county: Of May Term 1880, No. 123.
    Appeal of Jeremiah Stiles from an order of the court refusing to open a judgment against him and let him into a defence. The judgment was entered against him by the Benton Mutual Savings Fund and Loan Association on a penal bill conditioned for the payment of $200. In his petition for a rule to show cause why the judgment should not be opened, Stiles averred, inter alia, that an execution had been issued upon said judgment and a levy made upon the property of petitioner; that under said levy said association sought to collect a larger sum than is due them; that at a regular meeting of said association petitioner had bid for and taken the loan for which the judgment was entered at a premium of $24, “that being the minimum rate fixed by the association for that year, and said associatidn refusing to receive a less bid.” The petitioner further averred that he would be able to show that the plaintiff has violated its charter, exceeded the powers contained therein and was therefore only entitled to recover the sum actually loaned with six per cent, interest. That among said violations were the borrowing of money from banks, banking institutions and individuals to loan to its members at rates in excess of six per cent., the charging of interest upon said loans by said banks and their payment out of the funds of the association, the fixing of a minimum rate of premiums, the refusal to loan below said rate and the charging of excessive fines.
    The court, Elwell, P. J., refused to grant the rule in an opinion, saying:

      “ The law is too well settled to require discussion of the defendant’s right to make defence on the ground taken in this collateral proceeding. He cannot withhold payment on that ground. The affidavit does allege that the plaintiff is proceeding to collect more than is due to it. But it does not. allege payments except as before stated up to June or July 1877. By the terms of his bond more is due. If he has made payments or has been otherwise discharged it should be set forth with reasonable certainty. The defendant has the same opportunity to set up his defence as if the balance claimed had been mentioned in the prsecipe and the failure to make payments for six months had been suggested. .Rule refused.”
    From this decree this appeal whs taken.

      Harvey E. Smith and A. C. Smith, for appellant.
    If the association is to be presumed as being incorporated under the Act of 12th April 1859, and therefore entitled to the immunities contained in the sixth section of said act, viz.: “ That no premiums, fines or interest on such premiums that may accrue to the said corporation according to the provisions of the act shall be deemed usurious, and the same may be collected as debts of like amount are now by law collected in this Commonwealth,” then the question arises not as to the validity of the- charter of the association, but whether the association drawing its vital' breath from and being the mere creature of the statute can act in any other manner than that prescribed by the act from which it derives its existence. That it cannot is abundantly sustained by authority: Hibernian Turnpike Co. v. Henderson, 8 S. & R. 222 ; Commonwealth v. E. & N. E. Railroad Co., 3 Casey 351. The question of usury was for the jury: Chamberlain v. McClurg, 8 W. & S. 36. And the action of the corporation through its hoard of directors in fixing the premium upon loans at not less than $24 per share, and refusing to grant loans unless the premium bid was equal to or in excess of this sum, was and is arbitrary and unauthorized: State v. Greenville Building and Savings Association, S. C. of Ohio, reported in 3 Law & Eq. Reporter, p. 515.
    A contract will not be enforced when made in violation of an Act of Assembly, although not expressly made void: Fowler v. Scully, 22 Id. 456; Mitchell v. Smith, 1 Binn. 110; Mayburn v. Carlin, 4 Dallas 298; Biddis v. James, 6 Binn. 321; Seidenbender v. Charles’s Administrators, 4 S. & R. 160 ; Badgley v. Beal, 3 Watts 263; Columbia Bank & Bridge Co. v. Haldeman, 7 W. & S. 233. The association can take nothing by implication. They must find their warrant for their' excessive rate of interest appearing on the bond either in an act with whose provisions they have complied or in the general laws of the state. Can they do either ? Failing to do so, must they not fail in the enforcement of their judgment? If this association borrowed money from banks or individuals and loaned it out to members, it violated its charter.
    June 21st 1880.

      E. H. Little, for appellee.
    A violation of the charter of incorporation cannot be made the subject of judicial investigation in this collateral proceeding. The only evidence competent to prove' the forfeiture of a charter is the judgment of a court directly on the point. A plea involving the forfeiture or invalidity of the charter would be demurrable, or might be treated as a nullity by the court. Proof of the violation of the Act of Assembly by which the corporation is created would involve the forfeiture or invalidity of the charter itself: Becket v. Uniontown Building Association, 7 Norris 213-14. Opinion by Stowe, P. J., affirmed by this court; Irvine v. Lumbermen’s Bank, 2 W. & S. 190; Dyer v. Walker, 4 Wright 157 ; Coil v. Pittsburgh Female College, 4 Id. 439; Cleveland & Pittsburgh Railroad Co. v. Speer, 6 P. F. Smith 326; Cochran v. Arnold, 8 Id. 399; Workingmen’s Building and Loan Association, v. Coleman, 8 Norris 428. A motion to open a judgment entered upon warrant of attorney is an appeal to th equitable powers of the court; and in an appeal under the Act of April 4th 1877, Pamph. L. 53, the question is as to the rightful exercise of discretion by the court below: Kneedler’s Appeal, 11 Norris 428.
   Chief Justice Sharswood

delivered the opinion of the Court,

The act entitled An act to confer on certain associations of the citizens of this Commonwealth the powers and immunities of corporations and bodies politic in law, and to confirm charters heretofore granted,” passed April 12th 1859, Pamph. L. 544, is a general law for the regulation of associations known as Building and Loan Associations. This appears not only from the general scope of its provisions, but.from the recitals in its preamble which declares that such associations are meritorious and deserving the care of the state.” The learned judge below fell into an error in considering it as merely the charter of any association included in its benefits — the violation 'of which could not be inquired of collaterally. The charters of such corporations are derived from the Courts of Common Pleas, and it may be true that the violation of their provisions by the corporation cannot be the subject of collateral inquiry nor set up by any debtor as a defence to an action. They can be declared forfeited only by a direct proceeding in the name and by the anthority of the Commonwealth. Corporations, however, as well as individuals, may be subject rightfully to general laws regulating their contracts and proceedings. More especially is this true where such corporations accept their charters after such laws have been passed and therefore subject to their provisions.

Assuming the Benton Mutual Saving Fund and Loan Association to be an association within the provisions of the Act of 1859, which is the only ground upon which they can claim exemption from the law prohibiting the taking of a greater rate of interest upon the loan of money than six per cent., it is evident that their contracts must be made in conformity'to the provisions of that act in order to entitle them to the privilege granted by it. It makes an exception in their case from the general law of the state, and they must bring themselves within the exception. They can loan money only to members of the association — in amounts not exceeding two hundred dollars on each share of stock held by them — and the loans can only be of the amount in the treasury derived from the interest, dues and fines received from the members and given out at each stated monthly meeting to the highest bidder. It would be a gross perversion of the whole spirit and design of such an association to borrow money from banks or others for the purpose. It is equally so to fix a minimum rate of premium below which they will accept no bid. • They are bound to offer all that is in the treasury to open competition so that the members may obtain the loan at a low premium if there should be no bid a-t a higher. The practical operation of such institutions is that wherever the member procures a loan at a premium below the average of the premiums for the whole time the association has to run, he is to that extent a gainer; where his loan is at a premium higher than the average, he is to that extent a loser. This is a most valuable feature in such associations, and hence the great importance of maintaining the principle -of free competition in the bids.

Where the member is told that there is a minimum premium below which loans will not be made, he must offer that amount for the loan whether any other one offers or not. If no offer to that amount is made, the money remains in the treasury without investment. It is evident in this way that the members who are not borrowers will obtain a very undue advantage over the members who are borrowers. These institutions are liable like every thing else human to abuse, and we are bound to guard them carefully from being perverted into mere contrivances by which capitalists can evade the laws against usury. So the legislature evidently intended they should be by the act. As to the allegation in the petition, that the association was in the habit of borrowing money to loan out, it was too vague to avail the defendant. He must show that the money loaned to him had been borrowed. But by the allegation that he took his loan at the premium of twenty-four dollars, that being the minimum rate fixed by the association, and said association refusing to receive a less bid, he laid, we think, a sufficiently clear and tangible ground upon which the court below ought to have granted the rule to show cause why the judgment should not be opened. Of course, upon the hearing of the rule, he will have to produce evidence to satisfy the court of the truth of the averments of his petition or affidavit, and that the rule ought to bo made absolute, which the plaintiff will have the opportunity to controvert by opposite evidence.

Order reversed, and record remitted for further proceedings.