CHIEF JUSTICE HAZELRIGG
delivered the opinion of the couet.
In May, 1895, appellant became the owner of fifteen shares of paid-up stock, at .$100 per share, in the Globe Building & Loan Company — a building and loan association incorporated in February, 1891, under chapter 56 of the General Statutes. In July, 1897, the association convoyed its property to a trustee for the benefit of its creditors; and, in the action brought to settle the assigned estate, appellant presented her claim as a preferred one, having theretofore given a withdrawal notice as provided in the by-laws of the association. The chancellor overruled her contention, saying: “All stockholders will be paid equally in proportion to their respective payments for *293stock, common and preferred alike. Both «the preferred and common stockholders entered into a scheme which promised unusual profits from the lending of their money by the association at a much higher rate of interest than the law7 permitted them individually to charge. They believed that the association might legally do this, but it has been authoritatively decided to the contrary, and the company forced into insolvency by its liability for excessive interested collected by it.
“All the stockholders invested their money in an enterprise that is impossible of performance, because of the statute against usury. The formation of the company wms induced by a mistake of law, which wras shared in by all the stockholders, and which has brought on a misfortune common to all of them, because the enterprise contemplated by the articles of incorporation and by the stockholders could not mature. Under s.uch a state of fact, each stockholder must bear his proportionate share of the burden, and he can not equitably claim a right to be paid in full at the expense of the other stockholders, who did nothing more nor less than make the same mistake of law.”
We think the chancellor reached a correct conclusion. This court has recently announced, in Reddick-Stofer’s Appeal, 20 Ky. Law Rep., 1720 [50 S. W., -], in Sumrall v. Commercial Bldg Trust’s Assignee, 20 Ky. Law Rep., 1801, [50 S. W., 69], and in Safety Building & Loan Co. v. Ecklar, 20 Ky. Law Rep., 1770, [50 S. W., 50], that the underlying principles of such associations demand exact equality and mutuality among all their members; and certainly this is true when the members are all alike participants in a plan supposed by them to be legal, but which authorizes the exaction of usurious rates of interest. Apart from this, howrever, while we do not in*294timate that a different result would follow, there is in fact nothing whatever in the company’s articles of incorporation authorizing the issuance of preferred stock; and there certainly is not in chapter 56, General Statutes, because the building and loan plan is not mentioned.
There is a by-law of the company to the following effect: “Paid-up stock may be withdrawn at any time after one year from date of certificate, and the holder thereof will receive the cost price of such stock, together with interest as follows: Forty-dollar stock, six per cent, per annum; fifty-five dollar stock, six per cent, per annum; seventy-five dollar stock, seven per cent, per annum, and one-hundred-dollar stock, eight per cent, per annum — for the full time. This stock will also participate in the net profits over and above the interest mentioned, and shall bear their proportion of expenses and losses.” Another by-law, providing for the expense fund, fixes a limitation of eight cents per share per month upon installment stock, and six per cent, per' annum on paid-up and prepaid stock. The body of appellant’s certificate of stock recites that, “as such stockholder,” she “is a member of said company.” On the back of this certificate is the following recital: “Terms and conditions: The Globe Building and Loan Company guarantees the prompt payment of the interest, as per the coupons, on the within certificate, and guarantees to redeem this certificate at face value at any time after twelve months from date of issue, provided 60 days’ notice shall have been given. This stock shall not participate in the profits or losses of the company, but prompt payment of the principal and interest of this certificate shall be guaranteed by the entire assets of the company.”
*295It is the contention of appellant's counsel that stock issued upon the foregoing, conditions is stock only in name; that it is in fact a misnomer to call the certificate an evidence of stock; that the transaction is simply a borrowing and lending of money, and that the appellant is a creditor, not a stockholder or member, of the association; and that the borrowing of money is not an ultra vires act. “Every commercial body,” say counsel, “whether an individual, partnership or corporation, must have the power to borrow money. Commerce means credit and credit means the power to borrow.” We deem it necessary only to repeat, without elaboration, our conclusion heretofore stated — that the exercise of such powers is wiiolly foreign, to the design and purposes of such associations. Stofer’s Appeal 20 Ky. Law Rep., 1720 [50 S. W., -]; Safety B. & L. Assn. v. Ecklar, 20 Ky. Law Rep., 1770; [50 S. W., 50]. In Towle v. Building and Loan Co., 78 Fed., 688 it was said of such an association: “It can not borrow' money, nor loan money, except such as'is paid in by its members in the manner pointed out by the law, nor engage in any general business transactions. Its sole function is to consolidate the small savings of the many, and by a system of unified loans, secure advantages to each contributor that he could not, perhaps, individually obtain. To this process of consolidation, and of loaning out the gatherings thereof, and their collection again, with the interest thereon, for redistribution, with such incidental powers as are necessary to make the process effective, the authority of the corporation is strictly confined. The usefulness of such corporations, and their safety, depend upon strict limitation. To grant them, by judicial implication or intendment, a wdder amplitude of pow'er, would destroy the only safe assurance on which they are granted.” Nor does *296it follow that if the contract is dfeclared ultra vires of the corporation, the bolder of the preferred stock is to be declared a creditor of the association when insolvency intervenes. Gibson v. Safety B. & L. Association, 170 Ill., 44, [39 L. R. A., 202; 48 N. E., 580]. The effect of denying the preference does not invalidate the stock. Cook on Corp. (4th ed.), sec. 271. The only ground of appellant’s claim presenting any sort of plausibility is that she has given notice of withdrawal; but this, we have seen in the recent appeal of Stofer, cited above, gives her no priority over other stockholders. It would be a singular co-operative mutual association that could give unequal privileges to its stockholders, or base their priorities on the question of diligence in giving notice. In respect to being purely co-operative and mutual, such associations are ' different from corporations generally. As said by Mr. Thompson in his work on Building Associations (2d ed., sec. 129): “The poor and illiterate classes were encouraged to support it, and it is poor policy that would subordinate their claims to a higher membership.” In Bertche v. B. & L. Co., [48 S. W., 954], the supreme court of Missouri said: “All members must participate equally in the profits, and bear the losses, if any, in the same proportion. * * The plainest principles of justice and honesty clearly forbid that one class of stockholders, equally meritorious, should be compelled to suffer, that others may profit thereby.” In many of the courts of other States, while the fundamental principle of co-operation and equality is announced in forceful language, there seems to have been sanctioned a system of classification of stock into preferential groups wholly destructive of the principle announced. In our opinion, there can be no preference in stock among the members of a building and loan association. The judgment below is affirmed.