SWOFFORD v. FIRST NATIONAL BUILDING AND LOAN ASSOCIATION

Supreme Court of Georgia1937-04-15No. No. 11652

184 Ga. 312

Summary · law.co

Holding. The trial court properly sustained the demurrer and dismissed the petition because Swofford, having voluntarily signed clear written instruments without any allegation of fraud or prevention from reading them, cannot deny membership in the association, and his allegations of usury were insufficient where the association presumptively was legitimate. The judgment is affirmed.

Swofford borrowed money from First National Building & Loan Association and signed a security deed and promissory note. He later sought to block the association from foreclosing, claiming he never agreed to become a member and that the membership requirement was a scheme to circumvent state usury laws by charging interest rates otherwise prohibited. Swofford alleged he signed the documents without reading them and only recently discovered they made him a member. He also contended that if his payments were properly credited to principal, no default existed, and that he had tendered full payment which was wrongfully refused.

The trial court dismissed the case by sustaining a demurrer. The court found that the association's name indicated it was a legitimate building and loan association, which was entitled to presumption on demurrer. Because Swofford signed clear, unambiguous written instruments without any allegation of fraud, trick, or inability to read the documents, he could not later deny that he became a member as the papers stated. The court determined that even if Swofford was induced by misrepresentations about the association's business practices, such claims cannot override the plain language of a written contract he voluntarily executed and had the opportunity to examine.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a borrower who signs a written contract can later deny its terms based on unread provisions
Whether membership in a building and loan association can be imposed through written contract despite claimed non-agreement
Whether interest rates charged by building and loan associations are subject to state usury laws
Whether fraud in inducement regarding business practices can override the plain language of a signed written contract

Procedural posture

The trial court sustained a general demurrer to Swofford's petition for injunction and cancellation of the loan documents, and Swofford appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Bell, Justice.

S. H. Swofford instituted a suit to enjoin the First National Building & Loan Association from exercising a power of sale contained in a security deed made to it by the plaintiff, and for cancellation of the deed and note and of a membership stock certificate and transfer which constituted a part of the loan transaction. The plaintiff alleged, among other things, that he did not agree to become a member of the association; that he executed tlie security deed and notes without reading them, trusting the defendant and its officers to make effective its agreement to lend him a stated sum of money at an interest rate of five per cent, per annum; that he did not know until recently that the papers signed by him purported to show that he had become a member of the association; that the papers to which the defendant thus obtained his signature constituted a device of the defendant to evade the usury laws of this State “by charging a greater amount for the use of the defendant’s money” than is permissible under the law except when the borrower is actually and in truth a member of a building and loan association engaged in lending money; that if all payments made by the plaintiff are duly applied to principal, and interest is forfeited as it should be, the debt is not in default, and there should be no exercise of the power of sale; and that the plaintiff had tendered a sum sufficient to pay the entire balance of principal, and such tender had been refused. The plaintiff attached to his petition as exhibits a copy of the security deed and the note or bond for the indebtedness, by the express terms of which, if valid, the plaintiff became a member and stockholder of the defendant association. This is not a statement of every detail of the petition, but it is a sufficient resumé of the material allegations. The court sustained a general demurrer to the petition, and the plaintiff excepted.

If the defendant association “was a building and loan association pure and simple, and the particular transaction under investigation was one thoroughly in accord with the scope and object of such an association, there would be no usury in the transaction.” White v. Interstate Building & Loan Asso., 106 Ga. 146 (32 S. E. 26); Code, § 16-101. The defendant’s name prima facie imports that it is a building and loan association; and there being no allegation to the contrary, it is to be treated, on demurrer, as an organization of that kind. Smith v. Southern Building & Loan Asso., 111 Ga. 811 (35 S. E. 707); Rooney v. Southern Building & Loan Asso., 119 Ga. 941 (4) (47 S. E. 345). As to “like associations,” see Atlanta Loan & Saving Co. v. Norton, 149 Ga. 805 (102 S. E. 536); Gore v. Industrial Loan & Savings Co., 52 Ga. App. 401 (183 S. E. 499).

•“One having the capacity and opportunity to read a written contract, and who signs it, not under any emergency, and whose signature is not obtained by any trick or artifice of the other party, can not afterwards set up fraud in the procurement of his signature to the instrument.” Truitt-Silvey Hat Co. v. Callaway, 130 Ga. 637 (2) (61 S. E. 481). “That the maker of a plain and unambiguous written contract with a corporation was induced to execute the same by false and fraudulent representations as to its methods of doing business, and as to the probable results of the transactions evidenced by such contract, is not a valid defense to an action thereon, when there is nothing to show that the maker was misled or deceived as to its contents or in any manner prevented from ascertaining the same.” Angier v. Equitable Building & Loan Asso., 109 Ga. 625 (3) (35 S. E. 64); that being, like the present, a building and loan association case. See, to the same effect, Smith v. Southern Building & Loan Asso., 111 Ga. 811 (4) (35 S. E. 707). Cf. Boynton v. McDaniel, 97 Ga. 400 (23 S. E. 824); Williamson v. Read Phosphate Co., 40 Ga. App. 219 (2) (149 S. E. 175); Lee v. Loveland, 43 Ga. App. 5 (157 S. E. 707). Accordingly, under the allegations in the instant case, the plaintiff will not be heard to say that he did not become a member of the association as indicated by the clear and unambiguous language of the written instruments executed by him.

The allegations that the particular contract constituted a device of the defendant to evade the. usury laws, and that the defendant actually charged a specified rate of interest greater than is per: missible under the law except when the borrower is a member of a building and loan association, were insufficient to show usury, where, under a proper construction of the other averments, it appears that the defendant is a legitimate building and loan association, and that, in view of the writings voluntarily executed by him, the plaintiff is estopped to deny membership in such association. The present case is distinguished by its facts from National Building Asso. v. Quin, 120 Ga. 358 (47 S. E. 962), where it was denied that .the creditor was a legitimate building and loan association. See generally, on the subjects of building and loan associations and usury, Parker v. Fulton Loan & Building Asso., 46 Ga. 166; Van Pelt v. Home Building & Loan Asso., 79 Ga. 439 (4 S. E. 501); Butler v. Mutual Aid Loan &c. Co., 94 Ga. 562 (2), 568 (20 S. E. 101); Hawkins v. Americus National Building & Loan Asso., 96 Ga. 206, 208 (22 S. E. 711); Goodrich v. Atlanta National Building & Loan Asso., 96 Ga. 803 (2) (22 S. E. 585); Reynolds v. Georgia State Building & Loan Asso., 102 Ga. 126 (2) (29 S. E. 187); Hollis v. Covenant Building & Loan Asso., 104 Ga. 318 (3) (31 S. E. 215); Cook v. Equitable Building & Loan Asso., 104 Ga. 814 (8) (30 S. E. 911); Burns v. Equitable Building & Loan Asso., 108 Ga. 181 (33 S. E. 856); Morgan v. Interstate Building & Loan Asso., 108 Ga. 185 (33 S. E. 964); Gibson v. Interstate Building & Loan Asso., 109 Ga. 460 (34 S. E. 563); National Building Asso. v. Quin, 120 Ga. 358 (47 S. E. 962); National Building Asso. v. Quin, 121 Ga. 307 (49 S. E. 312). Under the foregoing principles, tire petition did. not state a cause of action, and the general demurrer thereto was properly sustained.

Judgment affirmed.

All the Justices concur.