BUILDING SOCIETY. All societies formed under the Building Societies Acts, 1874 to 1894, must obtain a certificate of incorporation from the Registrar of Friendly Societies.
These incorporated societies are to be dis tinguished from an unincorporated society formed under the Act of 1836, and which has not since obtained a certificate of in corporation under the 1874 to 1894 Acts.
A terminating society means a society which by its rules is to terminate at a fixed date, or when a result specified in its rules is attained ; a permanent society means a society which has not by its rules any such fixed date or specified n suit at which it shall terminate.
\\'ith respect to incorporated societies, the Building Societies Act, 1874 '37 & 38 Viet. c. 421 provides as follows :— '• Section I 5. \\'ith respect to the borrowing of money by societies under this Act, the following provisions shall have effect : " (1) Any society under this Act may receive deposits or loans, at interest, within the limits in this Section pro vided, from the members or other persons, or from corporate bodies, joint stock companies, or from any terminating building society, to be applied to the purposes of the society : " (2) In a permanent society the total amount so received on deposit or loan and not repaid by the society shall not at any time exceed two thirds of the amount for the time being secured to the society by mortgages from its members.
(3) In a terminating society the total amount so received and not repaid may either be a sum not exceeding such two-thirds as aforesaid, or a sum not exceeding twelve months' subscriptions on the shares for the time being in force : " (4) Any deposits with or loans to a society under this Act, made before the commencement of this Act in accordance with its certified rules, are hereby declared to be valid and binding on the society, but no further deposits or loans shall be received by such society, except within the limits provided by this section : " (5) Every deposit book or acknowledg ment or security of any kind given for a deposit or loan by a society shall have printed or written therein or thereon the whole of the four teenth and fifteenth Sections of the present Act." An overdraft to a building society is a loan within the meaning of the above Section.
" Section 14. The liability of any member of any society under this Act in respect of any share upon which no advance has been made shall be limited to the amount actually paid or in arrear on such share, and in respect of any share upon which an advance has been made shall be limited to the amount payable thereon under any mortgage or other security or under the rules of the society."
Part of Section 43 is as follows : " If any society under this Act receives loans or deposits in excess of the limits prescribed by this Act, the directors or committee of management of such society receiving such loans or deposits on its behalf shall be personally liable for the amount so received in excess." In Chapleo and Wife v. Brunswick Per manent Building Society and Others (1SS1, 6 Q.B.D. 696), Bagallay, L. J., in the course of his judgment, said :—" Persons who deal with corporations and societies that owe their constitution to or have their powers defined or limited by Acts of Parliament, or arc regulated by deeds of settlement or rules, deriving their effect more or less from Acts of Parliament, are bound to know or to ascertain for themselves the nature of the constitution, and the extent of the powers of the corporation or society with which they deal. The plaintiffs and every one else who have dealings with a building society are bound to know that such a society has no power of borrowing, except such as is conferred upon it by its rules,and if in dealing with such a society they neglect or fail to ascertain whether it has the power of borrowing, or whether any limited power it may have has been exceeded, they must take the consequences of their carelessness." A society registered under the Act of 1836 and not incorporated under the Act of 1S74 has no power of borrowing unless authorised by its rules. Section 1 of the 1894 Act provides that the rules of every society under the Building Societies Acts established or substituting a new set of rules for the existing rules after the passing of this Act shall set forth whether the society intends to borrow money, and, if so, within what limits, not exceeding those prescribed by the Building Societies Acts. The 1894 Act (Section 2S) repealed a somewhat similar provision in the 1S74 Act, Section 16. para graph 2, which enacted that the rules should set forth whether the society intends to avail itself of the borrowing powers con tained in this Act, and, if so, within what limits, not exceeding the limits prescribed by this Act. Therefore, where an advance is required by a building society, its rules should be carefully perused to ascertain (1) if the society has power to borrow, and to what extent ; (2) if it has power to mortgage or pledge. If the society has such powers, it is necessary to see that such powers are not exceeded.