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ticipates in all the privileges and benefits of a stockholder, has a voice in the management of the association, and participates in 186 its earnings. The latter go toward discharging his obligations arising on the loan, and to shorten the time in which he will be fully discharged therefrom. For, taking all losses into account, whenever the shares of the borrower have reached their par value by the payment of dues and the apportionment of earnings, the loan is liquidated, and he ceases to be a member, as he would if he had not borrowed at all. In other words, with his shares paid up, he discharges his obligations as a borrower. And the exact test of his right to call for a cancellation of the mortgage given to secure his obligations as a borrower is the inquiry whether he would have been entitled to receive from the association the par value of the shares on which the loan was made had he not become a borrower.

In this case, Mrs. Schmitt subscribed for twelve shares, and received from the association their par value, three thousand dollars, as an advanced loan, at a premium of two hundred and forty dollars. She paid the premium, and agreed to pay the dues thereon, six dollars per week, and interest at the rate of six per cent, subject to an annual abatement, "until such time as the weekly dues paid and dividends declared and unpaid shall amount to the sum of three thousand dollars," and all "assessments" that might be levied upon her as a member of the association. She paid the premium, the dues, three thousand dollars, and the interest on the loan to the appointment of the receiver. These facts, standing alone, would satisfy the mortgage. But it is further found that the association is insolvent; that its capital is impaired to the extent of about thirty-one per cent, for which the receiver has made an assessment on the members, including the defendant; that the losses occurred during 187 her membership, were caused by the payment of dividends that had not been earned, and the misapplication of moneys by the treasurer; and that she had withdrawn nine hundred and ninety-five dollars and ninety-two cents of these unearned dividends, although the right to draw earned dividends was limited by the constitution to those members who had not "drawn money." Can, then, a borrower under these circumstances claim the cancellation of his mortgage? We think not. To do so would, as we have shown, undermine the principles upon which these associations are organized. By the terms of the constitution of the association, on the cancellation of the mortgage, the borrower ceases to be a member, and all liability to it is at an end. We see no reason why the remaining mem

bers should be left to bear all the burden, resulting from losses, for which they are no more to blame than she is. It is wholly unlike a savings society where the borrower is not a member or otherwise interested in its business. Having no voice in the management, nor interest in the earnings, of the society, the borrower and it sustains the simple relation of debtor and creditor. Here, as shown, the borrower is also interested as a creditor. The loan is for no definite period of time. It depends upon the management of the association, in which he continues as a member and has a voice. It is in view of the relation of the borrower to the association and the possibility of losses that the mortgage stipulates that, in addition to the specific conditions mentioned, the borrower shall pay all "assessments" that may be levied on him. The fourth section of the twelfth article of the constitution, on which much stress is laid, simply expresses what would be true in a safely conducted association. It does not include nor 188 apply to the case where there are no earnings, and losses have to be met and borne. This was wisely provided for in the mortgage. It was a matter about which the parties could and have contracted. There is no suggestion of fraud or mistake in its execution, and their rights must be determined by its stipulations, conforming as they do to the equity and justice of the case. She has received from the association, in the way of unearned dividends, a sum greater than the assessment that has been made on her.

But it is insisted that Mrs. Schmitt and the other members were not parties to the suit in which the receiver was appointed, and that he had no power to make the assessment, and it is not binding upon them. This objection is without weight. It is not necessary that the members should, as individuals, have been made parties to that suit. They are parties in their corporate name and capacity, and, for the appointment of a receiver, that was sufficient. We will presume that the receiver was duly appointed, as there is nothing to the contrary. As receiver, it was his duty to collect the assets and wind up the affairs of the association. This could only be done by ascertaining the loss and making an assessment on the members to meet it. It was simply a matter of calculation; involved no matters of personal confidence, and could, therefore, be made by the receiver as well as by the members themselves or their chosen agents. Moreover, these had been displaced by the appointment of the receiver, and could not act in the premises.

It is, however, found that a large number of members, borrowing and nonborrowing, who were such during the time the

losses occurred, had withdrawn 189 prior to the time the association went into the hands of a receiver. This does not affect the question here. In the absence of bad faith, such persons as had, according to the constitution and by-laws of the associa tion, withdrawn and ceased to be members, cannot again be brought into the association for the settlement of losses: Wangerien v. Aspell, 47 Ohio St. 250, 261. The withdrawal being an executed transaction, can only be recalled by the association, and a remedy had, in conformity to the rules of equity jurisdiction.

It follows, as we think, that the judgment of the circuit court, dismissing the petition of the receiver, should be reversed, and judgment entered upon the findings as prayed for in the petition.

Judgment accordingly.

BUILDING AND LOAN ASSOCIATIONS-LOSSES.-Each member of the association is under an obligation to contribute his share of its necessary losses and expenses: Extended note to Robertson v. American Homestead Assn., 69 Am. Dec. 154.

BUILDING AND LOAN ASSOCIATIONS-RIGHT OF STOCKHOLDERS.-When stock in a building association has matured, although its maturity has not been declared by the association, the debt of the borrowing stockholder has been paid, and he is entitled to his securities, and the association has no right to recover a judgment against him for the amount of the loan: Charles Tyrrell Loan etc. Assn. v. Haley, 139 Pa. St. 476; 23 Am. St. Rep. 199.

BUILDING AND LOAN ASSOCIATIONS.-Right of members to withdraw, and the effect thereof, is discussed in the extended note to Robertson v. American Homestead Assn., 69 Am. Dec. 155, 163.

JACKSON V. BRICK ASSOCIATION.

[53 OHIO STATE, 303.]

A PARTNERSHIP CANNOT BE FORMED FOR AN ILLEGAL PURPOSE or one contrary to public policy.

A PARTNERSHIP OR ASSOCIATION, FORMED FOR THE ILLEGAL PURPOSE of controlling and enhancing the price of brick, and in restraint of trade therein, cannot maintain an action in the partnership or association name for brick sold and delivered. The remedy, when one exists, is by an action in the names of the several persons constituting the unlawful association.

PUBLIC POLICY, ASSOCIATIONS IN RESTRAINT OF TRADE.-An association, formed for the purpose of controlling the price of brick in the interest of its members, is against public policy. It therefore cannot maintain any action in its association or partnership name.

PRACTICE.-THE DEFENSE that a partnership or association was formed for illegal purposes, when it does not appear on the face of the complaint, may be interposed by answer.

Kohler & Musser, for the plaintiffs in error.

Oviatt, Allen & Cobb, for the defendant in error.

303 MINSHALL, C. J. The action below was brought by the Akron Brick Association, claiming to be a partnership doing business under that name in the city of Akron, against Jackson and Lyman as defendants. The object of the suit was to recover on a contract, by which, as averred, Jackson and Lyman agreed to pay the association for brick it was then furnishing to Barnett & O'Near, subcontractors of the defendants. The defendants denied any liability upon the contract; and also denied that the plaintiff was a partnership doing business under the name of the Akron Brick Association. They also, as a separate and specific defense, averred "that said Akron Brick Association, so called, is not, in fact, a lawful partnership, but that said alleged partnership is a combination of all, or nearly all, of the several brick manufacturers and dealers in and about the city of Akron, in which place, and in order to accomplish its purposes, said association has established and now maintains a central office or agency through which 304 all purchases of brick must be made, and through which all sales of brick are made; that the object and purpose of forming and maintaining said association, and of said agency, was and is to control and enhance the price of brick, and in order to prevent and do away with a fair open competition among the several companies, firms, and individuals entering into and comprising said association; that the said union or association is in restraint of trade and contrary to sound public policy."

By a reply the averments of the answer were denied, and, in compliance with interrogations annexed to the answer, the plaintiff added a copy of the articles under which the association was formed and does business. From the view we take of the case, it is unnecessary to consider any of the errors assigned, other than the one that relates to the right of the plaintiff to sue by the assumed name of the Akron Brick Association. The articles of association in connection with the evidence support the averments of the defense. On the trial of the case, the court in its charge to the jury dispensed with any consideration of the question by the jury, saying: "In our jurisprudence, it is no defense to say that the contract was made with a bad man, or with persons engaged in prosecuting acts contrary to law, or the policy of the state, unless the contract grows immediately out of and in connection with an illegal or immoral act. A clear distinction exists in law, as well as ethics, between a contract entered into to do an unlawful or immoral act, or to promote a

course of conduct contrary to the policy of the state, and a contract entered into for a legitimate purpose, though made with persons who commit unlawful and immoral acts or promote schemes contrary to good policy."

305 We see no error in the court deciding the matter, nor in the law as stated by the learned judge; the error consists, as we think, in the application of it. The objection relates to the right of the persons composing the Akron Brick Association to sue by that name, instead of the names of those composing the association. If they have that right, it is derived from the provision of section 5011 of the Revised Statutes, which reads as follows: "A partnership formed for the purpose of carrying on a trade or business in this state, or holding property therein, may sue or be sued by the usual or ordinary name which it has assumed, or by which it is known; and in such case it shall not be necessary to allege or prove the names of the individual members thereof." A partnership is an association with certain incidents recognized by law for the convenient transaction of legitimate trade and business; it cannot, therefore, be formed for an illegal purpose, or one contrary to public policy: Metcalf on Contracts, 116; 1 Lindley on Partnership, 91; Sampson v. Shaw, 101 Mass. 145; 3 Am. Rep. 327. It therefore follows that, if the Akron Brick Association was organized for a purpose contrary to public policy, it has no right under the statute to sue by the name assumed in its business-it is not a partnership within the meaning of the statute. This does not deny to the persons comprising the association the right, in their individual names, to maintain an action for the price of brick sold and delivered to a third person, or the enforcement of any contract that in no way depends upon the illegal arrangement as between themselves. The law stated by the court in its charge properly applies to such a case, but does not to the question made here; which goes simply to the right of the persons comprising the association to sue in the name assumed 306 by them, under the provisions of the section above quoted. It is a right derived from the making of a lawful contract of partnership, and can only be exercised where a lawful contract of partnership has been made and entered into.

The evidence in the case tended to, if it did not conclusively, show that the association was formed for the simple purpose of controlling the price of brick in the interest of the members. Such combinations are against public policy, as has been frequently held in this state: Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666; Emery v. Ohio Candle Co., 47 Ohio St. 320; 21 Am. St. Rep. 819; State v. Standard Oil Co., 49 Ohio St. 137,

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