Building and loan association — Assumption of payment of first mortgage — Increase of indebtedness — Corporations — Article 16, section 7 of the Constitution — Powers — Ultra vires — Necessity of creditor to exhaust security.
1. A contract between a mortgagee and a building and loan association which owns the premises upon which the mortgage is secured, whereby the mortgagee extends the time for payment of the principal and the association, in consideration of such forbearance, obligates itself to pay the principal debt, interest, taxes and insurance, does not constitute an increase of indebtedness of the association within the meaning of article 16, section 7, of the Constitution. [392-3]
2. Such an agreement is an original undertaking on the part of the building and loan association, not a contract of suretyship, and not ultra vires. [393]
3. Under such contract the mortgagee is not bound to exhaust the security before suing on the contract. [394]
Corporations — Officers — Authority — Execution of contract by president and secretary — Act of May 12, 1925, P. L. 615.
4. Where an agreement between a mortgagee and a building and loan association which owns the mortgaged premises, for the assumption by the association of payment of the mortgage debt, in consideration of forbearance by the mortgagee of its rights under the first mortgage, is signed by the president and secretary of the association, the corporation is bound by the act of these officers under the Act of May 12, 1925, P. L. 615. [393-4]
Argued December 7, 1933.
PER CURIAM, January 2, 1934:
The opinion of the learned judge of the court below fully and correctly disposes of all questions raised in this appeal. The judgment is accordingly affirmed on his opinion.