22 S.Ct. 566
46 L.Ed. 830
Argued March 3, 1902.
Decided April 7, 1902.
The plaintiff in error is a building and loan association incorporated under the laws of the state of New York, and has its principal place of business in the city of Syracuse in that state. The defendant in error is a shareholder in said corporation, and brought this action in the court of common pleas of the county of Greenville, state of South Carolina, for the par value of his stock,—to wit, the sum of $1,000,—or, failing in that, for the sum of $580, the money paid in by him.
By agreement of counsel all issues of law and fact were referred to a referee. The referee took testimony, and reported to the court 'that the plaintiff is entitled to recover judgment against the defendant for the sum of $1,000, with interest from October 15, 1898, at the rate of 7 per cent per annum, and for the costs of this action.'
The report of the referee was confirmed, and judgment was entered for the plaintiff (defendant in error) in accordance with the report. The judgment was affirmed by the supreme court of the state, and the case was then brought here.
The facts as recited in the opinion of the court of common pleas are as follows:
'The defendant is a corporation organized under the laws of New York, with its principal place of business in the city of Syracuse. In the early part of the year 1892 it began business in the state of South Carolina, and organized in the city of Greenville a local branch of said association. The plaintiff is a resident of the city of Greenville, in said state. The defendant's agent approached the plaintiff for the purpose of inducing him to become a stockholder in the defendant company. The agent exhibited to the plaintiff a form of the certificate of stock, which contained, among other things, this promise:
"Eastern Building and Loan Association of Syracuse, New York, agrees to pay said shareholder, or his heirs, executors, administrators, or assigns, the sum of $100 for each of said shares, at the end of seventy-eight months.'
'At the same time the agent exhibited to him certain printed circulars, or literature, of the defendant company. One of these circulars was entitled 'The definite contract plan.' This circular stated:
"Q. What amount is deposited monthly? A. Seventy-five cents per share. . . .
"Q. When will the shares reach their par value? A. Shares mature in exactly six and one half years.
"Q. How much will a member have to pay in altogether? A. On a basis of ten shares ($1,000 maturity value) he will have paid in five hundred and ninety-five dollars ($595) and receives $1,000.' . . .
"All shares on which payments are made are regularly matured at the expiration of seventy-eight months (six and one half years) from date of certificate. . . .
"Showing cost and profits to the investor of ten shares of $1,000 six and a half years, at time of maturity.
He pays a membership fee of $1.00
per share.......................... $10 00
He pays monthly instalments of
$7.50 per month for 78 months
$7.50x78........................... 585 00[End Page ]
Total amount invested............. $595 00
He receives in cash at maturity... 1,000 00
'. . . 'The only association making a contract definite in every particular. . . . Stock matures in seventy-eight months.'
'On reading the circulars and after listening to the persuasive talk of the agent, the plaintiff was induced to become a subscriber for ten shares of stock. Thereupon the certificate sued upon was issued to him. This certificate is dated on April 1, 1892. It certifies that 'D. W. Ebaugh, of Greenville, county of Greenville, and state of South Carolina, is hereby constituted a stockholder of the Eastern Building & Loan Association of Syracuse, New York, incorporated under the laws of New York, and holds ten shares therein of $100 each, and in consideration of the membership fee, together with agreements and statements contained in the application for membership in the association, and full compliance with the terms, conditions, and by-laws printed on the front and back of this certificate, which are hereby referred to and made a part of this contract; and the said Eastern Building & Loan Association of Syracuse, New York, agree to pay to said shareholder, or his heirs, executors, administrators, or assigns, the sum of $100 for each of said shares at the end of seventy-eight months from the date hereof.'
'Ebaugh paid the entrance fees, and continued to pay the monthly instalments until seventy-eight months had elapsed. The last payment was made on October 1, 1898. In subscribing to this stock and in making these payments, Ebaugh trusted to the statements contained in the circular and to the promise made in the certificate. About one month before the last payment was made, the association wrote to Ebaugh stating that they could not carry out the contract, and stating that they could not pay him $100 upon the end of seventy-eight months, but that he would have to continue making payments. In reply to this, Ebaugh wrote that he had made a definite contract with the association, and expected them to comply with its terms. A short time after making the last remittance he signed a blank receipt upon the back of the certificate, and sent the same to the association, with the request that they forward him a check for the money due him. The association refused to make payment, and on January 17, 1899, this action was commenced to recover from the association the sum of $1,000, with interest thereon from October 1, 1898. Certain property of the defendant company in this state was attached in said action.
'The defendant made answer, alleging that there was no contract to mature the stock at a definite period, but that it was only estimated that the stock would be matured in seventy-eight months. It also claims that any promise to mature the stock within a definite time would be contrary to their by-laws and charter, and contrary to the laws of New York.
'By agreement of counsel, all issues of law and fact were referred to Oscar Hodges, a member of the bar at Greenville, as special heard argument, and filed his report, wherein heard argument, and filed his report, where-in he concludes 'that the plaintiff is entitled to recover judgment against the defendant for the sum of $1,000, with interest from October 15, 1898, at the rate of 7 per cent per annum, and for the costs of this action.'
'To this report the defendant filed certain exceptions. After hearing agrument, I am satisfied that the report of the referee is correct in every particular, and the exceptions are hereby overruled. The defendant certainly made definite assurances in those circulars, and a definite promise as to the maturity of stock; that if the plaintiff would pay the entrance fees, and his monthly dues for seventy-eight months, that at the end of that time it would pay to him $100 for each share of stock taken by him. These assurances and this promise were made for the purpose of procuring the plaintiff as a stockholder. This promise was definite. The plaintiff relied upon it, and made the payment of his entrance fees, and his monthly dues. The association knew that the plaintiff was relying upon its promise, and allowed him to make all these payments and to incur the liability of a stockholder. It received the full benefit of this transaction, and it cannot now be heard to say that the contract was contrary to its by-laws or its charter. Even if this contract were in excess of its charter powers, the association would, nevertheless, be bound by it, inasmuch as it received the full benefit thereof.' [58 S. C. 83, 36 S. E. 535.]
Messrs. William Hepburn Russell and William Beverly Winslow for plaintiff in error.
Messrs. H. J. Haynsworth, L. W. Parker, W. H. Lyles, and L. O. Patterson for defendant in error.
Mr. Justice McKenna delivered the opinion of the court: