Case Name: BARGER v. TAYLOR
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1895-12-02
Citations: 30 Or. 228
Docket Number: 
Parties: BARGER v. TAYLOR.
Judges: 
Reporter: Oregon Reports
Volume: 30
Pages: 228–238

Head Matter:
BARGER v. TAYLOR.
(42 Pac. 615; 47 Pac. 618.)
x. Usury — Adverse Party to Appeal — Service of Notice — Code, § 537. — The word “party,” as used in section 537 of Hill’s Code, providing that a notice of appeal must be served on every “adverse party,” means only one who becomes identified with the case in some mode recognized by law, so as to be bound by the proceeding. Within the scope of this rule, the fact that a contract has been adjudged usurious, and the principal declared forfeited to the state for the use of the school fund, does not make the state a “party” to the proceeding so as to require notice of appeal to be served on it.
2. Adverse Party to an Appeal — Usury—Code, § 3589. — The state is not an “adverse party” in the sense that it must be served with a notice of appeal from a judgment or decree in its favor upon consideration of a contract found to be usurious. It is not obliged to intervene in order to obtain the benefit of the forfeiture provided by section 3589, in cases of usury, and unless it has been made a party to the proceeding in some appropriate manner, it is not a “party” to the litigation at all.
3. Testimony to Establish Usury. — Forfeitures, though not favored, are firmly upheld as a penalty to the state for a. violation of law, but. proof of the transaction incurring such punishment must not be left to probability or conjecture: Poppleton v. Nelson, 12 Or. 349, cited and approved.
4. Presumption as to Scope of Agency. — The presumption is that an agency comprehends the doing of only lawful things, and the law will always assume that an illegal act, as, for example, accepting usury, was done without the principal’s authority or consent.
5. Proof of Usury — Code, § 3589. — In order to establish usury it must be shown that the borrower paid for the loan, either directly or indirectly, a sum more than the amount of interest at the law ful rate, and that the lender either received some part of this excess, or authorized or ratified its exaction.
From Wasco: W. L. Bradshaw, Judge.
Suit in equity by John Barger against O. D. Taylor and wife to foreclose two mortgages, securing certain notes. There was a decree allowing a small recovery on one note, and declaring the principal of the second note forfeited for usury, under the terms of section 3589 of Hill’s Code, from which plaintiff appealed.
Reversed.
For appellant there was a brief over the name, of Dufur & Menefee, with an oral argument by Mr. E. B. Dufur.
For respondent there was a brief and an oral argument by Mr. Alfred S. Bennett.
Argued November 4;
decided December 2, 1895.

Opinion:
On Motion to Dismiss Appeal.
Per Curiam,
This is a suit to foreclose a mortgage. The defense is usury. The court below found the contract to be usurious, and rendered a decree for the amount of the original sum loaned against the defendant in favor of the state for the use of the common school fund, as provided in section 3589 of Hill's Code. From this decree the plaintiff appealed, but did not serve the state with notice thereof. The defendant now moves to dismiss the appeal upon the ground that the state is an "adverse party," and should have been served with notice. Under the decisions of this court, if it could be made to appear that the state is a "party" to the decree appealed from in the sense contemplated by the statute regulating-appeals (Hill's Code, § 537), its interest being adverse to that of appellant, the failure to serve it with notice would be fatal to this appeal. But in our opinion the state cannot, under the circumstances of this case, be deemed a "party" within the meaning of that statute. As used therein, the term "party" must be understood in the ordinary legal sense, and to embrace such persons only as become parties to the case in some mode prescribed or recognized by law, so as to be bound by the proceeding. Now, the state never was made a party to this suit, nor did it become or seek to become such. It never appeared in any way, had no right to adduce testimony, cross examine witnesses, or appeal from the decree had it been to the effect that the contract sued upon was not usurious. The statute in relation to usury requires the court to declare the forfeiture and enter the judgment whenever the contract in suit appears to be usurious: Code, § 3589. The forfeiture is to be declared by the court on its own motion, as the result of the litigation between the parties and by force of the statute. Whenever, in any action or suit on a contract, it is ascertained that the contract is usurious, the law steps in, and, propria vigore, forfeits the original sum to the common school fund of the county. The entry of the judgment or decree in favor of the state is but the means of carrying out the forfeiture, and does not make it a "party" to the proceeding in the sense that it must be served with notice, or that it is entitled to notice. The question of usury is to be determined upon the issues made and evidence offered by the parties to the litigation. By the terms of the statute the principal sum is to be deemed forfeited, and a judgment in favor of the state is to be rendered, whenever "it shall be ascertained in any suit brought on" a contract that it is usurious, but it cannot be judicially so ascertained until the final determination of the suit. So long as the parties have a right to continue the litigation, either in the court of original jurisdiction or on appeal, the usurious nature of the contract remains undetermined, and the state is not entitled to judgment. When the sui-t is fully tried out, if it then appears that the contract is tainted with usury, it is the duty of the court to render a judgment in favor of the state; but, until that time arrives, the state has no interest in the proceeding, and is not entitled to be heard or to be served with notice, unless it has in some way become a part}" in the manner recognized by law. The state, therefore, bearing no such relation to the case, is not, in our opinion, an "adverse party" within the meaning of the statute providing for the manner of taking and perfecting appeals. It follows that the motion to dismiss must be overruled.
Motion Overruled.