well, 3 Baxt. 98; Railroad Co. v. Johnson, 8 Baxt. 332; Heck v. McEwen, 12 Lea, 97. The act of 1871 does not mention building and loan corporations, nor corporations for buying and selling land or lending money upon lands, nor define the powers of any such corporations. It is probable that the court acted under the tenth section of the act, which provides for the incorporation of corporations to carry on any "local business." Neither that section, nor any other of the act, defines what shall be the powers of such corporations. Under the Tennessee decisions cited above, this section of the act is plainly unconstitutional, and no valid corporation could be organized under any decree depending upon that section for its authority. By chapter 142, Acts Tenn. 1875, a very elaborate and complete law was provided for the organization of many kinds and classes of private corporations, which repealed the act of 1871 and all prior laws upon the subject. This act has been in force ever since its passage, and is the law under which all organizations have since been made. That act, among other things, provided for the organization of building associations, and defined their powers. Among other things, it empowered such companies to lend their funds to their shareholders,to such one of them as at a stated meeting, and upon a competitive bidding, should agree to pay for the preference in obtaining a loan the highest premium in addition to legal interest. By the nineteenth section of the act of 1875 it was provided as follows:

"That any corporation heretofore chartered by an act of the general assembly, which may desire to change its name, increase its capital stock, or obtain any powers granted by this act, shall have the right to do so, by the board of directors of said corporation copying said amendment, and making an application in these words: 'We, the undersigned, comprising the board of directors of (here insert the name of the corporation), apply to the state of Tennessee, by virtue of the general laws of the land, for an amendment to said charter of incorporation, for the purpose of investing said corporation with the power (here state the clause in the general law aforesaid, which is desired as an amendment, or if it be simply to change the name, so state the fact). Witness our hands the day of The same

to be probated or acknowledged as provided by section 15 of this act, and the certificate of registration given by the secretary of state, under the great seal of the state, shall complete the amendment to said act of incorporation, and the validity thereof shall not, in any legal proceeding, be collaterally questioned, as in cases of application for original charter."

This section, it will be noticed, did not extend to corporations organized under orders of the chancery courts the privileges of amendment extended to those "chartered by an act of the general assembly." This was remedied by Act March 23, 1883, which is in these words:

"Section 1. That any persons organized as a corporation under a charter granted by a chancery court of this state, or under the Acts of 1875, who may desire to change the name of such corporation, increase its capital stock, or obtain any power granted by the act entitled An act to provide for the organization of corporations, approved March 23, 1875, shall have the right to do so under and in the manner provided by section 19 of said act, which provides for the amendment of charters granted by the legislature, and with the like effect as therein provided: provided, that this act shall in no way apply to or affect corporations where suits have already been brought to declare their charters void, and shall have no effect on any kind of litigation or suits now pending against such corporation, for any purpose.

"Sec. 2. Be it further enacted, that this act take effect from and after its passage, the public welfare requiring it." Laws 1883, c. 163.

Long prior to the transactions involved, the Knoxville Building & Loan Association attempted to acquire the powers conferred by this act of 1875 upon building associations by amending the court charter, under which it had been operating, by an "application" for an amendment as provided by the nineteenth section of that act. That application was in these words:

"We, the undersigned, comprising the board of directors of the Knoxville Building & Loan Association, a corporation chartered under the laws of Tennessee, and organized under a decree of the chancery court of Knox county, Tennessee. pronounced on February 24, 1872, in the matter of R. R. Bearden et al., ex parte, for the purpose of carrying on the business of a building and loan association in said Knox county, Tennessee, apply to the state of Tennessee, by virtue of the general laws of the land, for an amendment to said charter (which is spread of record in Record Book A of said court, pp. 345 to 347), for the purpose of investing said corporation with all the powers and privileges provided for building associations by the Acts of the general assembly of the state of Tennessee (chapter 142, section 14), especially the following powers and privileges provided by said act, viz.: The members of said corporation shall have the power to adopt a constitution, and the constitution adopted, the by-laws and regulations, shall have the force and effect of a legal enactment on the members of said corporation: provided, the same are not in conflict with the general laws of the land. The corporation shall have the power to take and hold all such real estate as may be mortgaged to it, or conveyed in trust, to secure any debt of the corporation for loan of its funds; and the said corporation shall have power to purchase any such real estate at any sale thereof, and the same to hold, sell, or otherwise dispose of as the said corporation may deem expedient. Said corporation may purchase at judicial or execution or trustee's sale any real estate mortgaged or conveyed to it to secure a debt, and said real estate, or any other real estate the corporation may be entitled to hold, the said corporation shall have the power to sell, convey, lease, or mortgage at pleasure. Married women may hold stock in such corporation, free from the claims or debts of their husbands. The corporation may, by by-laws, make regulations concerning the subscription for, or transfer of stock, fix upon the amount of capital to be invested in the enterprise, the division of the same into shares, the time required for payment thereof by the subscribers for stock, and the amount to be called for at one time. Witness our hands," etc.

This was duly acknowledged, registered in Knox county, and filed with the secretary of state, who affixed thereto the great seal of state, and recorded it in his office as required by law.

The objections which have been made to this amendment of the powers of the association are: First, that the charter was invalid, and, as such, nonamendable, and that the act of 1883 does not purport to apply to an invalid corporation; second, that the amendment did not purport to confer power to make premium loans.

The act, in terms, applies to "all persons organized as a corporation under a charter granted by a chancery court of this state," etc. This describes the precise status of this association. The organization was invalid. This must be conceded. Whether, being a goodfaith organization under a law purporting to give authority to the chancery courts to organize corporations to conduct any lawful business with such powers as the court should deem needful and not hurt

ful, it was a corporation de facto as to those who dealt with it as such, we need not decide. But the act is not, in terms, confined to valid organizations, and contains no word or phrase indicating an intent that it should apply only to "persons" validly "organized as a corporation," etc. That invalid organizations were included is made evident from the proviso, which provides that the act shall not "apply to or affect corporations where suits have been already brought to declare their charters void," etc. The proviso thereby excepts out of the act the case of corporations organized by the chancery courts, against whom suits were pending to declare their charters void, and also declares that the act shall have no effect upon any suit pending against such corporations. Why except out of the benefits of the act corporations against whom suits were pending, involving the validity of their charters, if invalid corporations were not within the terms of the act? The primary and usual office of a proviso is to except something out of a statute which would otherwise be within it. Its use is to take special instances out of a general class. Suth. St. Const. §§ 222, 223; Gibbons v. Ogden, 9 Wheat. 191, 6 L. Ed. 23. The power of the state to permit an invalid corporate organization to become valid by compliance with the terms of a curative statute cannot be denied. Shields v. Land Co., 94 Tenn. 146, 153, 28 S. W. 668, 26 L. R. A. 509, 45 Am. St. Rep. 700. Whether the organization was invalid because of failure to comply with the terms of a valid law, or because the organization was under an invalid law purporting to authorize such a corporation, there is no impairment of the obligation of any contract by subsequent legislation permitting the irregular or invalid corporation to become a corporation de jure.

It is next urged very earnestly that the only powers added by this amendment are those copied into the amendment, and that the application for "all the powers and privileges provided for building associations by the act of the general assembly of the state of Tennessee (chapter 142, section 14), especially the following powers and privileges provided by said act," etc., does not sufficiently identify the act referred to, or the powers and privileges applied for, because it omits the date of the act; and, secondly, that, if this objection is without merit, the failure to copy into the amendment all of the powers desired is fatal to the acquisition of any powers except those set out in full. The objection that the date of the act is not set out, and therefore not identified, is without merit. The maxim, "Certum est quod reddi potest," has application. There was no other law defining the powers of a building association, except chapter 142, § 14, Acts 1875. From the character of the powers applied for, the reference to a Tennessee act as chapter 142, § 14, makes it absolutely certain that the application was for the powers and privileges provided for building associations by the act of 1875. The objection that all of the powers desired should have been copied into the application in hæc verba, and not brought in by reference, has more substance. The purpose to obtain all of the powers and privileges conferred by the act upon building associations, in addition to those "especially" asked for and copied, is clear beyond dispute. It was not an application for certain

of those powers only, but for all. This being the case, the mere failure to copy all of the powers desired in full into the application, instead of applying for a part by reference to the act and a part by specific application, should be regarded as a mere irregularity, not affecting the validity of the amendments thus obtained by reference to the act, and general characterization of the powers desired. Aside from general principles of law which would reach the same result, the act of 1875 itself provides in respect to all such amendments that "the validity thereof shall not, in any legal proceeding, be collaterally questioned." When the directors of the Knoxville Building & Loan Association applied for an amendment to the chancery court charter under which they had been acting as a building and loan incorporation, there was a valid law under which a valid building and loan incorporation might have been organized, and a law under which any building corporation organized theretofore under either a general or special law of the legislature, or under a chancery court decree, might obtain the powers conferred upon building incorporations by the act of 1875. This condition brings the case within even those definitions of a "de facto corporation" which seem to hold that there can be no de facto corporation unless there was a valid law under which a de jure corporation might have been organized. The irregularity of applying for all the powers conferred upon building associations by reference to the section and chapter of the act specifying them ought not to avail the appellant to enable him to escape his obligations as a borrowing member, whereby he very solemnly recognized the association as a valid building incorporation under the law of Tennessee. He waived the right to make any such objection by the execution of his note and mortgage, and by the assumption of the note and mortgage of Bloom and Goodfriend. Whatever might be the result of a proceeding by the state to prevent the association from assuming to be a corporation at all, or a corporation having the powers of a building incorporation under the act of 1875, it is not competent for the appellant to raise any such objections in a proceeding to enforce mortgages recognizing the corporate character of the association. Toledo, St. L. & K. C. R. Co. v. Continental Trust Co., 36 C. C. A. 155, 165, 95 Fed. 497; Merriman v. Magiveny, 12 Heisk. 494; Railroad Co. v. Johnson, 8 Baxt. 332; Anderson v. Railroad Co., 91 Tenn. 44, 17 S. W. 803; Ashley v. Board, 8 C. C. A. 455, 60 Fed. 55; Wallace v. Loomis, 97 U. S. 146, 24 L. Ed. 895; Douglas Co. v. Bolles, 94 U. S. 104, 24 L. Ed. 46; Association v. Chamberlain, 4 S. D. 271, 278, 56 N. W. 897; Freeland v. Insurance Co., 94 Pa. 504; Mor. Corp. §§ 750, 759; Smith v. Sheely, 12 Wall. 358, 20 L. Ed. 430; McTighe v. Construction Co., 94 Ga. 306, 21 S. E. 701, 32 L. R. A. 208, 47 Am. St. Rep. 153; Cowell v. Springs Co., 100 U. S. 55, 61, 25 L. Ed. 547.

The loans involved purport to be loans made for a premium in addition to lawful interest. This is authorized by the law under which such building associations do business in Tennessee, and such loans are not illegal or usurious. Patterson v. Association, 14 Lea, 689. But the law authorizing the selling of loans for a premium pro

vides that such premium shall be paid, "not as a part of the loan, not as interest, but as a means of determining which one of the shareholders shall receive the loan, whenever there are a number of shareholders who may simultaneously desire to effect a loan." To effectuate this the law requires that the funds of such associations "shall be offered for loan in open meeting, at a rate not in conflict with the law of the state, and the stockholder who shall bid the highest premium for the preference or priority, shall be entitled to receive a loan of $200.00 for each share of stock held by such stockholders." Where the loans were made not at open meeting upon competitive biddings, but for an arbitrary premium fixed by a by-law or otherwise, the Tennessee courts have uniformly held the loan usurious to the extent of the premium so exacted. Post v. Association, 97 Tenn. 408, 37 S. W. 216, 34 L. R. A. 201; Douglass v. Kavanaugh, 33 C. C. A. 107, 90 Fed. 373.

This cause came on to be heard upon all the evidence in the case, and on November 22, 1899, the trial judge filed an opinion, in which, among other things, he said:

"Although not without some difficulty, I reach the conclusion that the defendant has failed to show (the burden being on him) that the loan was upon a level premium, without bidding. C. Aebli does not sustain the defendant in this contention, and defendant's own testimony is purely negative and hearsay."

2. The second defense made in the answer was that:

"Neither of said loans was the result of competitive biddings among the members as a means of determining which one should receive the loan of money then in the treasury, but the substance of the transaction was a mere loan of money for a bonus, to wit, a premium charged and paid as heretofore shown, which was fixed by agreement of parties to the loan, whereby said association was to receive more than six per cent. per annum as compensation for the use of said money," etc.

There was evidence tending to both support and contradict this defense of usury. A petition to rehear the case upon this and other points was denied. But no application was made to reopen the case for new or additional evidence. Thereupon a decree was entered which adjudged the defense of usury against the defendant. The cause was then referred to a special master to ascertain and report what amount was due upon each of the loans, and to ascertain the present cash value of the shares upon which the loans had been made, and fixing the basis upon which this accounting should be had. Upon the hearing before the master under this decree the deposition of C. Aebli was again taken, and additional evidence tending to show that the loans were not made upon open competitive biddings was elicited. This evidence was objected to as irrelevant to any issue before the master, who, while making no express ruling, yet ignored it altogether, and confined his report to the matters referred to him. The defendant excepted to the report because he did not report that the loans were usurious, as not being made upon competitive biddings. The master overruled the exception, and the court did likewise. It is now insisted that we must consider this new evidence thus introduced. The decree adjudging that the loans were not usurious was