BUILDING ASSOCIATIONS. Co-opera tive associations, usually incorporated, estab lished for the purpose of accumulating and loaning money to their members upon real estate security. It is usual for the members to make monthly payments upon each share of stock, and for those who borrow money from the association to make such payments in addition to interest on the sum borrowed. When the stock, by successive payments and the accumulation of interest, has reached par, the mortgages given by borrowing mem bers are cancelled, and the ndn-borrowing members. receive in cash the par of their stock. See Endlich, Build. Assoc.; Wrig1 Build. Assoc. The general design of such an association is the accumulation from fixed periodical contributions of its shareholders and from the profits derived from the, invest ment the same, of a fund to be applied from time to time in accommodating such shareholders with loans, to enable them to acquire and improve real estate by building thereon; the conditions of the loan being such that the liability incurred therefor may be gradually extinguished by the borrower's periodical contributions upon his stock, so that when the latter shall be fully paid up the amount paid shall be sufficient to cancel the indebtedness; State v. Loan Ass'n, 45 Minn. 154, 47 N. W. 540, 10 L. R. A. 752. It differs from an ordinary corporation among other ways in the fact that in an ordinary business corporation stock is subscribed and either paid for at the time, or if partly paid for it becomes the property of the subscriber subject to future calls, while in a building association the stock subscriber is not the out and out owner of the stock from the be ginning. He pays thereon a monthly pay ment, and, when these monthly payments, with his increment of gains accrued, equal the par value of the share of stock he is en titled to receive that amount. If, in the meantime, he has borrowed on his stock, it by pledge or operation of the loan remains the property or quasi property of the corpo ration, and the loan is returned by the pay ment of interest and stock dues, penalties, etc., the repayment of the loan culminating
at the same time the stock itself matures, at which time, in theory, the corporation, or a given series or issue of its stock, is liqui dated—the non-borrowing steckholders bare their stock redeemed and the borrowers have their loans cancelled; Cobe v. *Lovan, 193 Mo. 235, 92 S. W. 93, 4 L. R. A. (N. S.) 439, 112 Am. St. Rep. 480.
That it has power to borrow money to pay its stockholders their stock reaches its par value is held in North Hudson Mut. Bldg. & Loan Ass'n v. Bank, 79 Wis. 31, 47 N. W. 300, 11 L. R. A. 845 ; that such power is im plied when no statute denies it is held in Bohn v. Bldg. & Loan Ass'n, 135 Ia. 140. 112 N. W. 199, 124 Am. St. Rep. 263 ; Marion Trust Co. v. Inv. Co., 27 Ind. App. 451, 61 N. E. 688, 87 Am. St. Rep. 257. Other cases hold that a loan for the purpose of, paying withdrawing members is ultra vires and void in the absence of an express borrowing pow er in the association ; 22 Ch. D. 61; Stand ard. Savings & Loan Ass'n v. Aldrich, 163 Fed. 216, 89 C. C. A. 646, 20 L. R. A. (N. S.) 393.
It has no power to transfer to another as sociatim the contract of a borrowing stock holder ; Thomp. Bldg. & Loan Ass'n (2d ed.) 286 ; Barton v. Loan & Bldg. Ass'n, 114 Ind. 226, 16 N. E. 486, 5 Am. St. Rep. 608; Love lace v. Pratt, 163 Mo. 70, 63 S. W. 383. That it has such power in the absence of statutory prohibitions, is held in Bowlby v. Kline, 28 Ind. App. 659, 63 N. E. 723 ; Quein v. Smith, 108 Pa. 325.
In case of an advance by one loan associa tion to take up a loan in another upon stock which has partly, matured, the net amount of the loan is the sum still due, and not the face value of the loan, although the latter amount is charged on the books of the asso ciation and a credit as of an advance pay ment thereon given for the withdrawal value of the stock in the other association ; But son v. Say. & Trust Co., 120 Ia. 370, 105 N. W. 645, 4 L. R. A. (N. S.) 98, 113 Am. St. Rep. 463.