5 Or. 432 | Or. | 1875
By the Court,
This appeal presented two questions: first, as to the validity of the usury law of 1862; and second, as to its construction.
It is contended by counsel for Chapman that the law is unconstitutional, because it is penal in its nature, and in effect punishes one man for another’s crime; that is to say, in this case, Shuker is the usurer, and Chapman is the innocent holder of the note in question, Chapman, in this case, is in just the same condition of any man who buys a note or contract, made in violation of an express provision of the statute. He has nothing to forfeit; the note being illegal and void in its inception, it never had any legal existence, and Chapman never had any property in it. He may have been unfortunate in buying it; so would he be in buying one made on Sunday, or one that was forged. In each case, he would have a note that was worthless. That the Legislature has the right to pass a law prohibiting persons lending money from contracting for or receiving any greater rate of interest than a fixed amount, will hardly be
The last paragraph in \ 1 of the usury law reads as follows: “But on contracts interest at the rate of one per cent, per month may be charged, by express agreement of the parties, and no more.” Section 2 provides, in effect, that no person shall, directly or indirectly, receive, in money or goods, etc., any greater sum for the loan or use of money than one per cent, per month.
The Constitution of the State of Maryland contains the following provisions: ‘ ‘ That the rate of interest' shall not exceed six per cent, per annum, and no higher rate shall be taken or demanded.” It will be seen that the provision in the Maryland statute is very similar to our own statute, except as to the rate of interest allowed. Chief Justice Taney, before whom a case was brought, involving the construction of this provision of the Maryland statute, says: “These words are free from all ambiguity; they prohibit, in plain, positive, and direct terms, the taking or demanding of more than six per cent, interest. * * * * * Can a contract, by which a higher interest is taken or demanded, be enforced in a court of justice ? It is true, the Constitution does not say, in express terms, that such a contract shall be void, nor was such a provision necessary to invalidate it; for it is well settled, by a multitude of decisions in this country and in England, that a contract to do an act forbidden bylaw is void, and cannot be enforced in a court of justice.” He further says: “ We do not stop, at present, to refer to judicial decisions to support this proposition. Many cases to that effect are cited in the opinions delivered by the Supreme Court of the United States in The Bank of the United States v. Owens (2 Pet. 527); and we are not aware of any decisions in any court in which a contrary doctrine has been held. Indeed, in a State where the legislative, executive, and judicial departments are separated, it would render all law uncertain and ineffectual if the judicial power enforced, in whole or in part, the performance of a contract to do an act which is altogether forbidden by the Constitution-or laws of the State.”
It is no doubt true that at common law, a mortgage of chattels vested the title in the mortgagee, and after default by the mortgagor, the title of the mortgagee was absolute; but under the statute he is not entitled to the possession of the chattels as a matter of right until condition broken (Mis. Laws C. 40, § 1); and it appears from the different sections of the statute in regard to chattel mortgages, that they simply create a lien upon the property mortgaged in favor of the mortgagee, and do not vest any title without foreclosure.
The second question raised, and the one that affects the appellants, Johnson and Spaulding, involves a construction of § 3 of the Usury Law. That section provides as follows:
“If it shall be ascertained in any suit brought on any contract, that a rate of interest has been contracted for greater than has been authorized by this chapter, etc., * * the design of which is to obtain for money so loaned, or for debts due or to become due, a rate of interest greater than that specified by the provisions of this chapter, the same shall be deemed usurious, and shall work a forfeiture of the entire debt so contracted, to the school fund of the county where such suit is brought.”
The same section further provides that the court in which such suit is prosecuted, shall render judgment for the amount of the original sum loaned or the debt contracted, without interest, against the defendant, and in favor of the State of' Oregon, for the use of the common school fund of the county where the suit is brought, and against the plaintiff for costs of suit, whether such suit be contested or not.
This statute is somewhat peculiar in its provisions; and while there is no other one like it, it is the duty of the court to construe it in such manner as to give full effect to the legislative will, within the limits prescribed by the
It was further claimed that the court should have dismissed the suit on the plaintiff’s motion, after the answer of the defendant Watkins had been filed, for the reason that a court of equity should not decree a forfeiture. The statute has clothed the court with power and made it their duty to declare a forfeiture in cases of this kind, and when the plaintiff admitted that the contract was usurious, the court below was bound, in obedience to the statute, to make the decree made in this case.
Decree affirmed.