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section 5th hereof; and provided further, that if the holder hereof at the date of this certificate was more than fifty years of age, that the said legal representatives of such deceased shall not have the right to surrender this certificate for payment upon conditions above set forth, and the maker hereof can not be required to pay the same 651 under this section hereof, but will issue in lieu hereof a paid-up certificate for the amount of installments that have been paid hereon, with four per cent. per annum interest, according to the provision regulating paid-up certificates in section fifth hereof, or this certificate may be continued as though death had not occurred; and thirty per cent. to a reserve fund which shall be used and held for the protection of all live outstanding certificates; and the remaining twenty per cent. and all transfer fees shall be used for the expenses of the company.
5th. That a failure to pay said installments when due subjects the holder hereof to a fine of fifty cents each month for each and every installment in arrears, and if any installment or fine shall remain unpaid for six months, then this certificate shall become null and void, and of no value, and the holder hereof shall and does forfeit all payments and fines made hereon. Provided, that, at any time after eighty-four monthly installments have been paid hereon, the holder may surrender this certificate, if it is in good standing, and receive for it a new, nonassessable, and non-forfeitable certificate for the amount of installments that have been paid hereon, with interest at the rate of four per cent. per annum, which new certificate shall bear the next unsold number, and shall bear interest at the rate of four per cent. per annum, and be payable on or before the expiration of the tontine period from the time it is then issued.
"6th. That the entire assets of this company shall at all times be liable for the full payment of all obligations incurred in its certificates.
"yth. That the funds of this company may be loaned to the holders of certificates, upon terms and security to be approved and accepted by the board of directors.
“8th. That no part of the reserve or redemption funds can ever be loaned to any officer or director of this company.
"9th. That no transfer hereof shall be valid or binding on the maker until it has been approved by the directors and recorded on the books of the company at its home office, and a fee of one dollar paid for making such record. Each ar
ce tre latimate earrings of the money of the
may under its charter, which may be called
the rate of eight per cent per annum. The present to loan moner at eight per cent, and may
te company will realize funds from this ba a montes, with interest payable at short inter
en meild be perfectly legitimate, and are not
nosz enoda is undeual, and that it is improbable that
Sulanks and other moneyed institutions. In
said, at the end of fourteen years, a sum
be certificate five hundred dol. o de continent is considered as simply a con13 and sixir-tight dollars in monthly
bar and to per the holder of the certifservent thereon, the contract is incapaile per cent upon $5 one hundred and
el in zonthly installments would not, of
penge in the certificate, taken in the light of
, which the company considers
every transferee hereof accepts this certificate subject to all the stipulations herein.
“10th. That no officer or director of this company, or any member of his or their families can purchase or own this certificate.
“11th. That no statement made by anyone except as herein set forth shall be binding on this company.
632 “In witness whereof this company has caused this certificate to be executed in its name and behalf under its corporate seal by its president and secretary.” (Dated and signed.)
The multiple table referred to in this certificate is the same as that which appears upon the back of certificates of Class “A.” The scheme of the company as indicated in these certificates was approved by the assistant attorney general of the United States for the postoffice department, and from the time it began to issue these certificates the company had the same unrestricted right to the use of the mails as any person engaged in a lawful business. Whether the certificates of Class “A” were legal or illegal it is to be said to the credit of the company and its officers that they abandoned the use of the same as soon as the authorities of the postoffice department had declared them to be illegal and did not issue any other form of certificate until the same had been approved by the law officer of that department. These facts indicate that it was the intention of the officers of the company at all times to obey the law of the land and to heed the voice of its authorized officials.
Is the scheme of the company as indicated in certificates of Class “B” of such a character that it must be declared unlawful, violative of sound public policy, and calculated to defraud ? Let us first look at the scheme as indicated by the certificate, independently of other evidence throwing light upon the character of the contract. The certificate is an obligation on the part of the company to pay to the holder the sum of five hundred dollars, subject to the terms and conditions named in the certificate. Is it reasonably probable that the scheme indicated by these certificates can be carried into execution? While it does not appear in terms in the certificate, the fact is, as admitted, that the four dollars paid by the certificate holder is allowed the agent obtaining the certificate as a fee, and that this siun does not go into the treasury of the company. Twentyfive cents of each monthly installment is set apart for expenses. It is therefore to be determined whether it is reasonably probable that the company can legitimately realize with the monthly
2 hotel over and over and over again during
Sala de panuse of improving the funds belonging
som boligens, are far more numerous than loans
to be revelle annually, semi-annualls, serckly, monthly or in eren shorter periods.
a barnet of being usurious.
vilā traussct business upon this plan. The re,
isal and is one of the legitimate resources of eived it cannot be said that it is impossible, or even
3. et not unusual in the business world. They are
installments of one dollar, at the end of fourteen years, a sum sufficient to pay the holder of the certificate five hundred dollars. Of course, if the contract is considered as simply a contract to receive one hundred and sixty-eight dollars in monthly installments of one dollar and to pay the holder of the certificate eight per cent interest thereon, the contract is incapable of performance; for eight per cent upon 653 one hundred and sixty-eight dollars paid in monthly installments would not, of course, realize the sum of five hundred dollars. But that is not the contract embraced in the certificate, taken in the light of the purposes for which the company was organized. The contract is to take the money paid to it in monthly installments and improve it according to well-known legitimate business methods, and guarantee to the certificate holder that at the end of fourteen years the company will pay to him the sum of money named in the certificate, which the company considers by its guaranty as the legitimate earnings of the money of the certificate holder, turned over and over and over again during the period that it is in the hands of the company. If the company in the handling of this money were limited to investments of the money at eight per cent simple interest annually, then no person of ordinary intelligence would for a moment purchase one of these certificates; for it would be manifest, not only to a man of average intelligence, but to the man far below the average, that such a contract was an impossibility. The legitimate resources of the company under its charter, which may be called into exercise for the purpose of improving the funds belonging to its certificate holders, are far more numerous than loans upon simple interest at the rate of eight per cent per annum. The company is authorized to loan money at eight per cent, and may contract for the interest to be payable annually, semi-annually, quarterly, bi-monthly, monthly or in even shorter periods. Such transactions would be perfectly legitimate, and are not subject to the charge of being usurious.
But suppose it should be said that interest payable monthly or for shorter periods is unusual, and that it is improbable that the company would transact business upon this plan. The reply is that it is legal and is one of the legitimate resources of the company, and it cannot be said that it is impossible, or even improbable, that the company will realize funds from this source. Loans of money, with interest payable at short interFals of time, are not unusual in the business world. They are constantly made by banks and other moneyed institutions. In
za poda largely upon the honesty, wisdom and busisaid ita oicers, and those who place their ang paling sith the question, we have assumed that the * uite command all the sources of income above re
in Li, of course, be conceded that those resources
te wen sall that the "power of courts to
te from doubt”: Richmond v. Railroad
addition to this, the company has a right to purchase negotiable paper, and in the purchase is not restricted, under the faw of this state, to discount at the rate of eight per cent; and the proceeds that in all probability can be derived from this source of income would aid very much in the improvement of the fund placed, under the contract, in the hands of the officers of 654 the company for improvement for the benefit of the certificate holder. The company is authorized to engage in the purchase of property, either real or personal, and experience has demonstrated that wise and prudent business men make handsome profits in a business of this character. Indeed, there is scarcely any limit to the possible profits to be derived from such investments wisely made. The company is also authorized to deal in stocks, bonds, etc., and to guarantee the payment of obligations of other persons, both natural and artificial. All of these methods of business are lawful, and, if wisely adhered to, are profitable, and this company has authority to engage in them. In addition to these, there are other resources of the company for the benefit of the persistent certificate holder who continues to the end. Under the terms of the certificate, if any member desires to discontinue payments of installments at the expiration of seven years, he may do so, taking a paid-up certificate bearing only four per cent interest; and the legal representatives of deceased members who were more than fifty years of age at the date their certificates were issued may take paid-up certificates of similar character. Another resource is redemption of certificates. Still another is fines; and lastly lapses or forfeitures for nonpayment of assessments during the first seven years. The company holds out to the world that it will take the money of others and improve it in these various ways and pay back at the end of fourteen years a guaranteed sum.
Let it be conceded for the moment that all of the sources of profit above referred to are legitimate and proper, can it be said as matter of law that the scheme of the company is so far beyond possibility or probability of performance that those who engage in it are engaged in a fraudulent scheme which should be branded as being contrary to a sound public policy? Have not legitimate financial institutions in the past taken the money of investors and improved it in such a way that the profits were far in excess of the profits intended to be realized under this contract? Are not sound financial institutions at this time engaged in lines of lawful and legitimate business where profits of this character are realized for investors who intrust their
eta in supervising private contracts,
a the prostility of one being able to
te surt should hold that a given contract
la norber the duty nor within the power of tente pran from a contract merely because a niz or even foolish. Taking the contract
beste uier consideration, with all of the
ei tarving the funds intrusted to its care, we
(n the other hand, it may not. Contracts,
las risk of loss than is apparent in this one
money tmpany take the chances that are always incisong to another the handling and improvement of
money to them? It has been said that the “power of courts to declare a contract void for being in contravention of sound public policy is a very delicate and undefined power, and, like the power to declare a statute unconstitutional, 655 should be exercised only in cases free from doubt”: Richmond y, Railroad Co., 26 Iowa, 202. It will not do for courts to declare contracts void simply because they are apparently unwise or even foolish. The authority of the law-making power to interfere with the private right of contract has its limits, and certainly the courts should be extremely cautious in supervising private contracts, when the law-making power has not declared them to be unlawful. The possibility or the probability of one being able to perform many of the contracts known to the commercial world is dependent upon so many considerations that it is only in an extreme case that the court should hold that a given contract is of such a character that its performance is impossible or improbable and that those who entered into it must have done so with a fraudulent intent. Of course, it is the duty of the courts to put their stamp of disapproval upon all contracts which are fraudulent, and for this reason calculated to deceive the confiding and the credulous. But not all foolish contracts are fraudulent, and it is neither the duty nor within the power of the courts to relieve a person from a contract merely because it is in its terms unwise or even foolish. Taking the contract evidenced by the certificate under consideration, with all of the resources of the company which can be called into operation for the purpose of improving the funds intrusted to its care, we cannot say as matter of law that the contract is so unreasonable and incapable of performance as to be void because opposed to a sound public policy. The company may be able to comply with the contract. On the other hand, it may not. Contracts, although not exactly of a similar nature, but involving as much risk of loss have been complied with. On the other hand, contracts involving less risk of loss than is apparent in this one have not been complied with. The success of the scheme of this company depends largely upon the honesty, wisdom and business sagacity of its officers, and those who place their money in the hands of the company take the chances that are always incident to intrusting to another the handling and improvement of
a sum of money.
In thus dealing with the question, we have assumed that the
had at its command all the sources of income above referred to. It will, of course, be conceded that those resources