"the amount which a stockholder, desiring to borrow, is willing to pay for the privilege of anticipating the ultimate value of his stock, by obtaining at once the use of the amount of money his stock will be worth when the association is wound up." Thorn. & Blackl. Bldg. & Loan Ass'ns, § 222. "It is the difference," says Wood, J., in Sullivan v. Association, 70 Miss. 94, 12 South. 590, "estimated by the association and its borrowing member, between the par value of the member's shares of stock and their present real value. It is the bonus which appellant might lawfully agree to pay for a present advancement in cash of a sum certain for the virtual transfer to the association of his shares of stock, which, in the final winding up of its affairs, may realize the sum actually received by the member, together with the premium bid, or which may not." Mr. Justice Cooper, in Patterson v. Association, 14 Lea, 677, 687, after giving briefly the history of those associations and the manner of their operation, says: "For the advance upon the dividends by way of anticipation, and the amount which the member was willing to give out of the final dividend for the preference of an advance, the words 'loan' and 'premium' or 'bonus' were used." Speaking interchangeably of the nature of the transaction and the consideration for the preference, Green, J., in Pfeister v. Association, 19 W. Va. 676, 686, says: "Having no English word to express accurately this abatement, they might have called it, as they did, 'the premium bid for the right of precedence in taking the loan.' And, there being no appropriate word to represent this transaction, it would naturally come to be called by various names, which, with more or less accuracy, would in a word or brief phrase give an idea of it. Some might call it a 'redemption of his interest in the association,' as the ultimate effect of it would be that he would, at the close of the association, get no money from it, because what would be otherwise coming to him would be absorbed by the payment of his note and this abatement he had agreed to, or his 'premium,' as it is generally called. Sometimes it would be called for the like reason, but with still more inaccuracy, 'a purchase of all his interest in the association, by the association.' And, as the loan is really to be ultimately paid by offsetting his interest in the association against this note to the association, it would sometimes, with much more accuracy, be called 'a loan on his interest in the association.'" And, again, in Association v. Wilcox, 24 Conn. 147, in speaking of the term "bonus," as used in the statute, the court say: "By that expression we think that they meant something definite; something distinct, and independent of the interest, in the ordinary acceptation of the term; a definite sum for a loan for a specified time, and not anything which the parties in their contract might choose to denominate a bonus."

* *

It is fairly deducible from these authorities that the significance of the term "premium," within the meaning of the law of building and loan associations, is a bonus in reality, or a definite fixed sum or amount agreed upon between the contracting parties, the association and the borrower. Representing, as it does, the conventional difference between the par value of the share advanced and the amount actually received by the borrower, it is susceptible, in theory, at least, of definite and exact ascertainment, and it is a part and purpose of the scheme that it should be so determined and settled at the outset, and stand for the consideration upon which the loan or advancement is made, The usual method, and the most satisfactory and equitable way, of arriving at the premium to be paid for the privilege of obtaining the advancement, is by a bidding between the members wanting the accumulated funds; the highest bid, or the one offering the largest premium or bonus, taking the funds to the amount desired. By this method, the amount of the premium is ascertained, and becomes a lump sum, to be paid, or, rather, to be retained, by the association from the borrower for his privilege of being preferred over other members desiring the use of the funds of the association. It would seem that the practice of charging "fixed premiums"-that is, premiums prescribed by the by-laws of the association or the board of directors, and not determined by competitive bidding-has become prevalent to some extent among "national" associations. Thomp. Bldg. Ass'ns (2d Ed.) § 191. But the author of this work cites no case where the practice has been upheld, while many are referred to which condemn it as violative of one of the distinctive and most salutary principles characterizing these peculiar associations, which is that the money should be put up for sale, usually denominated "auction," and the highest bid fixes the amount of the premium, and determines, as between members, who shall obtain the loan. Trust Co. v. Whithed, 2 N. D. 82, 49 N. W. 318; Butler v. Investment Co., 94 Ga. 562, 20 S. E. 101; State v. Association, 35 Ohio St. 258; Bates v. Association, 42 Ohio St. 655; Brown v. Archer, 62 Mo. App. 277; Meroney v. Association, 116 N. C. 882, 21 S. E. 924; Boone v. Association (Sup.) 23 N. Y. Supp. 203; McCauley v. Association (Tenn. Sup.) 35 L. R. A. 244 (s. c., 37 S. W. 212). In a footnote to the last case cited, Mr. Burdett A. Rich, one of the annotators of that valuable series of reports, makes this observation: "In America the reported cases which have discussed the matter all seem to condemn fixed premiums or any rule to limit the usual scheme of free bidding."

These loans, where upheld as not usurious, when the premium, added to the redemption money or interest, exceeds the lawful rate of interest, are supported upon the ground that the transaction is not, in all of its es

sentials, a loan, but an anticipatory advancement, by way of discount, of the share the member would otherwise be entitled to claim payment of on the termination of the society, coupled with the idea that it is a dealing with what is virtually a co-partnership fund, or one in which all the members, including the borrower, are mutually interested. Seagrave v. Pope, 1 De Gex, M. & G. 783; Silver v. Barnes, 8 Scott, 300. This is, in brief, the rationale of the English doctrine, which has been adopted by many of the states of the Union. Association v. Martin, 13 N. J. Eq. 427; Association v. Stephens, 26 N. J. Eq. 351; McLaughlin v. Association, 62 Ind. 264; Homestead Co. v. Linigan, 46 La. Ann. 1118, 15 South. 369; Robertson v. Association, 10 Md. 397; Massey v. Association, 22 Kan. 624; Sullivan v. Association, 70 Miss. 94, 12 South. 590; Merrill v. McIntire, 13 Gray, 157; Tilley v. Association (C. C.) 52 Fed. 618; Holmes v. Smythe, 100 Ill. 413; Association v. Lampson, 60 Minn. 422, 62 N. W. 544; Association v. Gilbert, 23 Grat. 787.

Our statute prescribes (section 4 of said act) that the association shall adopt by-laws, which, among other things, shall "especially provide for the character and methods of conducting the business of the association, with rules governing the admission of members, the sale of its shares, the amount of admission fee, the amount of and the periods when dues shall be paid by the members to the association, the disposition and investment of the funds of the association, including loans, the amount of premiums to be paid for and the rate of interest on loans," etc. Section 6, that the by-laws shall provide for the mode in which the application or bids for loans shall be made and received, and who shall be entitled to preference in allotting the same, but it contains a proviso as follows: "That the provisions of this section, relating to bidding for loans, shall not apply to associations which fix the rate of interest and premium in its by-laws or annually, by resolution of the board of directors, at a rate which will keep the money of such association at all times safely invested and in which the system of bidding is not allowed. The minimum amount and nature of premiums to be bid or asked for loans shall be fixed and described in the by-laws, but the same may from time to time be changed by a two-thirds vote of all the members of the board of directors." Section 7 provides that "any premium which has heretofore or which shall hereafter be taken for loans *

made

by any association governed by this act, shall not be considered or treated as interest, nor render such association amenable to the laws relating to usury." Does this statute permit the taking of a rate of premium such as is stated in the obligation set out in the complaint which the plaintiff seeks to foreclose? Section 4 requires the by-laws to provide for the amount of the premium to be paid for, and the rate of interest on, loans. This obvi

ously treats the premium as something different in character from interest, and is in perfect accord with another provision to be contained in the by-laws, prescribing the mode by which bids for loans shall be made, obtained, and received; for, when the two are observed, the amount of the premium becomes definitely fixed and determined, and in that respect is well distinguished from the interest.

But when we come to the proviso of section 6, above noted, the intendment of the legislature is not so clear. It may be conceded, for the purposes of this case,—but we must by no means be understood as deciding it, that it would be legitimate for the association, through its by-laws or by resolution of its board of directors, to prescribe a minimum lump premium, or name a certain or definite amount per share to be paid as a premium, upon a loan or advancement to be made; but even this could not be held to authorize the fixing of a premium by a rate per cent. or by a percentage upon the amount of the loan, and dependent for the time of its continued payment upon the length of time the loan may remain unpaid, or the stock of the borrower be not fully paid in. There is nothing in such a condition to distinguish it from interest, and the legislature surely did not intend to say that interest shall not be treated as interest, or that interest, to be collected by the designation of premium, shall not be treated as interest. So that, when the statute speaks of the rate of premium, it does not mean the same thing as the rate of interest. The more natural and consistent interpretation would be that, when the legislature speaks of a rate of premium, it means a proportional or pro rata distribution of the payment of a premium, fixed by the by-laws or by resolution of the board of directors of the association. If it does not have this meaning, it has no other that will distinguish it from interest, and the act cannot be held to sanction the taking of any premium at all under the appellation of "rate of premium.” The idea of a rate of premium corresponding to rate of interest is not within the spirit and intendment of the law of building associations, and, if that is what was attempted to be sanctioned by legislative edict, so as to relieve it from amenability to the laws relating to usury, it would be very questionable whether it could secure the warrant of the constitution, which inhibits the adoption of any special or local law relating to interest on money. Under this interpretation of the act, it is plain that the plaintiff was not warranted in exacting from the borrower the 6 per cent. premium upon the amount of the loan, as, when added to the 6 per cent. interest, it exceeds the lawful rate which is permitted to be charged in this state as interest on money. The device has the characteristic of a shift to circumvent and avoid the law relating to usury, and cannot receive our sanction. Meroney V. Association, supra,

was a case where $3.25 per month, as interest and premium, was contracted to be paid upon a loan of $300, and it was held that the whole transaction could not be characterized otherwise than as "a lending of $300 to the plaintiff at 12 per cent. per annum." So it was said, in Butler v. Investment Co., supra: "It [the association] claims to loan money at 6 per cent. per annum, payable and collectible monthly; but under the name of premium, which is but another name for usury, collects another 6 per cent. monthly, by such device collecting really 12 per cent. interest per annum, payable monthly, on loans; thus, under fancy names, carefully eschewing the name of interest, which said charges really are, and, with the object and intent to do so, contracting to take and collect a higher rate of interest than that allowed by law." These cases illustrate the principle adopted, and it would seem that plaintiff's contract is usurious upon its face.

The plaintiff contends, however, that the agreement must be treated as a Washington contract, and therefore should be construed with reference to the usury laws of that state, and, incidentally, that the transaction of making the loan, and taking a note payable at Seattle, Wash., and a mortgage upon lands in Oregon, to secure its payment, was not doing business within this state. It is strange reasoning to insist, on the one hand, that, in order to enable the plaintiff to sue in our courts, it has complied with the law with that particularity which will enable it to do business in the state, and yet, when it is suggested that it has violated the laws of usury here by a transaction consummated under the same authority that authorizes the suit, to insist that it has not done business within the state. The very purpose of the act is to enable those associations having their domiciles in other states to do and transact business and sue and be sued here, and it ought to be alike effective under all conditions. When they come here under the statute, and have the license of the secretary of state to do business here, they become pro hac vice domestic corporations, and must operate as if actually domiciled in the state. They submit and render themselves amenable to the laws of the state, which must be taken to govern all their transactions entered into and consummated therein. Our own citizens would not be permitted to make contracts here payable in another state, and then insist upon having them construed here according to the laws of such state; and it does not seem consistent with principle and reason that a foreign corporation, securing citizenship in this state for the purpose of promoting its business, can insist upon making its contracts payable elsewhere, and then invoke the authority and process of our courts to enforce them according to laws other than our own. If such were to be recognized as good law, it would in many instances give foreign

corporations, although domiciled in this state, advantages over those organized under its laws and having their principal place of business here. But the transaction, under the conditions attending it, must be regard ed as doing business within this state. Bank v. Page, 6 Or. 431; Hacheny v. Leary, 12 Or. 40, 7 Pac. 329; Manufacturing Co. v. Ferguson, 113 U. S. 727, 5 Sup. Ct. 739, 28 L. Ed. 1137. The contract was made in Oregon, and must be construed and enforced according to our laws. The application for stock and the loan was made in Oregon, to and by an association domiciled and doing business therein, through a resident solicitor. The mortgage was given upon an Oregon farm, and was executed and acknowledged here. The money was used here, and this suit was instituted in the county in which the mortgaged premises are situated, as contemplated by the association when it acquired the license to do business in the state. All this, notwithstanding the mortgage stipulation to the effect that it is a Washington contract, clearly shows its Oregon nativity, and it is therefore solvable by the laws thereof. Meroney V. Association, supra; Martin v. Johnson, 84 Ga. 481, 10 S. E. 1092, 8 L. R. A. 170; Dickinson v. Edwards, 77 N. Y. 573; Jackson v. Mortgage Co. (Ga.) 15 S. E. 812.

But, notwithstanding the contract appears to be usurious on its face, and the natural inference to be drawn therefrom is that the parties intended the result of their own acts, yet there is another element which must attend the practice of usury. It must be with a corrupt intent, which means that the parties must have knowingly agreed upon a rate of interest greater than that allowed by law. 27 Am. & Eng. Enc. Law, 925; Balfour v. Davis, 14 Or. 47, 12 Pac. 89; Burwell v. Burgwyn, 100 N. C. 389, 6 S. E. 409. But, where they have acted under an honest belief that the stipulated rate was recoverable under the law, in which they were mistaken, it has been held that the penalties of usury would not be enforced. Thompson v. Jones, 1 Stew. (Ala.) 556. There is no evidence in this case, aside from that which appears upon the face of the contract, by which we are or can be advised as to the true intent of these parties. Hence we may fairly suppose that they in good faith designed to act within the legislative intendment of the act governing the management and conduct of building and loan associations, and as the provisions governing in the premises are, as we have seen, of doubtful import, in view of the rule that forfeitures are never enforced except when the case is reasonably free from doubt, we have conIcluded to decree a foreclosure in favor of the plaintiff for the principal sum, with interest at the rate of 6 per cent. per annum, against which defendants will be allowed credit for the $39 paid upon the stock. Plaintiff should also have $CO as an attorney's fee, being the

pear unpaid of such debt, and then in that case he shall assess such debt and security at whatever sum he thinks to be their real cash value." Id. § 2737. "It shall be the duty of the assessor to deduct the amount of indebtedness within the state, of any person assessed, from the amount of his or her taxable property," Id. § 2752. “A debt secured by land or real property * * * shall, for the purpose of taxation, be deemed and considered an indebtedness within this state, and the person or persons owing such debt shall be entitled to deduct the same from his or their assessments in the same manner that other indebtedness within the state is deducted." Id. § 2753. "No promissory note or other instrument of writing which is the evidence of a debt that is wholly or partially secured by land or real property * ** shall be taxed for any purpose in this state." Id. § 2754.

The ease with which promissory notes secured by mortgages could be removed from the state, prior to the enactment of the mortgage tax law, and the evident desire of foreign owners of such property to escape taxation thereon, to the detriment of resident money loaners, rebuts any inference that the taxes imposed upon the debt and security could ever have been intended as a lien upon the mortgage and notes secured thereby, as mere evidences of indebtedness, in the nature of a common-law lien, to secure a general balance due an attorney upon a bond and mortgage left with him by his client for foreclosure, because such lien was predicated upon, and existed only while the attorney retained, possession of the choses in action. 1 Jones, Liens (2d Ed.) § 113; Bank v. Todd, 52 N. Y. 489. The exemption from taxation of a promissory note secured by a mortgage of land tends to show that it was the intention of the legislative assembly not to treat the evidence of the debt, and the mortgage, which is an incident thereof, as a chose in action, but to regard the mortgage as transferring an interest in the land itself, commensurate with the debt due from the mortgagor, as shown by the mortgage record. And the exemption allowed the mortgagor from his assessment of real property of a sum equal to the debt secured thereon, and providing for the assessment of such debt and mortgage as land, furnished a method of avoiding a double taxation of real property, and evinced a legislative intention to segregate the mortgagor's estate in the premises into a fee, represented by the equity of redemption, and the mortgagee's interest in, or incumbrance upon, the land, in the nature of an artificial estate, and, as the fee estate and mortgagee's interest are assessed to the owners thereof, respectively, such fee or interest upon which the tax is levied may be sold for the nonpayment thereof. The legislative assembly, by treating the debt and security as land, to be taxed in the county in which the real property affected by the mort63 P.-32

gage is situated, gave to the debt and security a situs; thereby changing, for the purposes of assessment and taxation, the theory adopted by this court that a mortgage on real property was a mere incident, which necessarily followed a promissory note secured thereby, when the holder of the note placed it beyond the taxing power of the state by removing therefrom. The mortgage tax law, when considered in its entirety, induces the belief that the legislative assembly intended that though the evidence of the debt, and the mortgage which is its incident, may pass beyond the boundaries of the state, the debt and the lien created by the execution of the mortgage still remain (Mumford v. Sewall, 11 Or. 67, 4 Pac. 585) and are taxable as land in the county in which the real property affected by the mortgage is situated, and the tax levied thereon is, by the express provisions of the statute, impressed as a lien on the mortgagee's interest in or incumbrance upon the premises which may be sold for the payment of any taxes due thereon, in the same manner and with like effect that real property or land is sold for the payment of taxes. Nor do we think the description of the debt and mortgage contained in the abstract of unsatisfied instruments, furnished by the recorder of conveyances or county clerk to the assessor, and which forms the basis of the assessment, and is presumably copied into the assessment roll, insufficient to create a lien on the mortgagee's interest in the real property affected by the mortgage, because only "a brief description of the property contained therein, to wit, the range, township, and section in which it is situated," is required (Hill's Ann. Laws Or. § 2755, subd. 4); for an observance of the other subdivisions of that section would enable a competent person, by inspecting the book and page where the mortgage is recorded and to which reference is made, to identify and locate the real property subject to the lien of the mortgage, upon which incumbrance the tax lien is impressed, and, in the absence of a statute requiring a more specific description of the property assessed, the means indicated is sufficient for identification if the record to which attention is called affords adequate information upon the subject (1 Blackw. Tax Titles [5th Ed.] § 241; Law v. People, 80 Ill. 268; Fowler v. Same, 93 III. 116; Sloan v. Sewell, 81 Ind. 180; Adams v. Larrabee, 46 Me. 516; Inhabitants of Orono v. Veazie, 61 Me. 431). In Savings & Loan Soc. v. Multnomah Co., 169 U. S. 421, 18 Sup. Ct. 392, 42 L. Ed. 803, in construing the mortgage tax law of this state, it was held that a mortgage of land given to secure the payment of a debt conveyed an interest in the premises thereby incumbered. Mr. Justice Gray, speaking for the court upon this subject, says: "Taking all the provisions of the statute into consideration, its clear intent and effect are as follows: The personal obligation of the mortgagor to the