Bedford v. Eastern Building and Loan Assn.

Citations

• 181 U.S. 227
• 21 S. Ct. 597
• 45 L. Ed. 834
• 1901 U.S. LEXIS 1361

Syllabus

<p>The Building Association, a corporation organized under the laws of New York, was authorized by law to make advances to its members. The statutory provisions regarding such advances and the securing of the same are stated in the opinion of the court. Bedford, a resident in Tennessee, became á shareholder by subscription to the stock, and by payment therefor.' The statutes of Tennessee authorized the corporation to do business in that State. Bedford, after subscribing to the stock, paid his.subscription, and on his application secured a loan from the corporation and mortgaged his property to secure it. All this was authorized by the statutes of Tennessee at the time when it was done. Subsequently a new statute was enacted, the provisions in which are set forth in the opinion of the court, and an act was passed concerning building associations, the parts of which thereof, relating to foreign building associations, are also set .forth in the opinion of the court. The Building Association subsequently filed its 'charter with the secretary of state of Tennessee, and an abstract of the same in the office of the Register of Shelby County, but it did not comply with the building association laws. Bedford de- . faulted in-his payments on the notes, and the association filed a bill in equity in the United States Circuit Court to foreclose the mortgage, and collect the amount due under his contract. Bedford answered that the notes and mortgage violated the laws of Tennessee, and were void. Held :</p> <p>(1) That Bedford’s subscription to the stock of the association, its issuance, and the application of a loan in pursuance of it, constituted a contract, which is inviolable by the state legislature.</p> <p>(2) That by his subscription to the stock of the association, Bedford became a member of it, bound to the performance of what its by-laws and charter required of him, and entitled to exact the performance of what the by-laws and charter required of the association.</p> <p>