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John Deere Industrial Equipment Co. v. Delphia

June 21, 1973


Appeal from Circuit Court, Yamhill County. Kurt C. Rossman, Judge.

Julian Herndon, Jr., and Atma Singh Mann, Portland, for appellant.

John R. Faust, Jr., and Cake, Jaureguy, Hardy, Buttler & McEwen, Portland, for respondent.

In Banc.*fn* Bryson, J.


Plaintiff, a farm equipment manufacturer, brought this action to recover possession of a tractor from defendant, a farmer. In the alternative, plaintiff demanded judgment in the sum of $8,053.13. After a trial without a jury, the court allowed judgment for plaintiff to recover from defendant the possession of the John Deere Model 350 Industrial Crawler tractor with dozer and, in the alternative, if the described tractor was not delivered to plaintiff, then plaintiff to have judgment against the defendant in the sum of $8,053.50.

A review of the facts and voluminous pleadings reveals the following. Defendant originally purchased the tractor from T-C Equipment, Inc., for $10,000 pursuant to a written "purchase order" which provided that defendant would pay the balance of the amount due in cash or execute a time sales agreement, plus additional charges shown thereon, on or before delivery of the equipment.

The defendant elected not to pay cash, and on July 25, 1969, T-C Equipment and the defendant executed a retail installment contract which provided for a finance or time price differential charge, leaving a

contract balance of $9,312.08, payable in 36 monthly payments of $258.51.

The contract also provided credit life insurance in favor of the defendant in the amount of the indebtedness and physical damage insurance on the tractor at no additional charge.

T-C Equipment, Inc., filed a financing statement and perfected its security interest. Thereafter, on August 8, 1969, T-C Equipment, Inc., assigned to plaintiff all of its title and interest in and to the contract, the tractor, and the security interest. Upon execution of the contract defendant took possession of the tractor but made no monthly payments to plaintiff as required by the contract. Defendant claimed that an employee of T-C Equipment, Inc., misrepresented the rate of interest to be charged defendant on the contract balance; "[t]hat the rate of interest should [sic] be charged on the agreement involved was to be at 7.5% per year," and that the interest rate charged was "in fact, 14.4% per annum."

Plaintiff filed this action on March 11, 1970, because of defendant's refusal to make the required monthly payments and demanded possession of the tractor or the sum of $8,053.15 in the alternative (not $9,312.08, the time balance of the retail installment contract). On July 21, 1970, plaintiff filed a replevin bond, but on the same date defendant filed an undertaking for redelivery of the tractor and still retained possession of it at the time of trial, some eighteen months after plaintiff filed the complaint and twenty-two months after execution of the contract.

The defendant's second amended answer and counterclaim generally denied the allegations of plaintiff's complaint and alleged five affirmative defenses; namely, rescission for material misrepresentation; the

purchase agreement constituted a loan with a usurious rate of interest; class action on behalf of all persons who had purchased farm implements from John Deere Industrial Equipment under similar allegedly usurious contracts; the purchase agreement violates the Federal Truth in Lending Act,*fn1 and this violation justifies rescission by defendant; class action on behalf of all persons who have been the victims of violations of the Federal Truth in Lending Act or regulations thereunder by John Deere Industrial Equipment in similar consumer credit transactions.

The court sustained plaintiff's demurrer to each of the five affirmative defenses. Defendant filed a third amended answer and counterclaim which substantially realleged the previous answer. Plaintiff moved against the third amended answer and the court allowed plaintiff's motion to strike all of the affirmative defenses, except the defense that the contract was usurious.

The case ultimately went to trial on plaintiff's complaint and defendant's sixth amended answer, affirmative defense and counterclaim which alleged that the purchase agreement represented an extension of credit at a usurious rate of interest.

Defendant assigns as error the court's order "in allowing the motion to strike the defence that the agreement in question violated Federal Truth in Lending Act."

As hereinafter set forth, defendant concedes that "* * * the Truth in Lending Act Section 16 Title 15 USC does not allow rescission in this case * * *." Under the pleadings of this case we agree and, therefore, the trial court did not err in this respect.

Defendant also assigns as error the order of the court sustaining the demurrer to each of defendant's class actions. In Amer. Timber/Bernard v. First Nat'l, 263 Or 1, 11, 500 P2d 1204, 1208 (1972), we held "there is no such thing as a class action in Oregon, * * *" as distinguished from a class suit. Even if we assume that the defendant was attempting to institute two class suits within the terms of ORS 13.170,*fn2 we are of the opinion that the trial court properly allowed the demurrer. In both cases, defendant alleged that he had purchased the farm equipment from T-C Equipment, Inc., but that the class for whom defendant was counterclaiming was composed of "many persons who have purchased farm implements from John Deere Industrial Equipment Company, Inc." We conclude that defendant has not demonstrated the requisite community of interest with the represented class if defendant and the class purchased their farm machinery from different legal entities and no agency between the two entities was pleaded. See Lonsford et al. v. Burton et al., 200 Or 497, 267 P2d 208 (1954), wherein it was held that the interests of the plaintiffs and those they sought to represent were not so identical as to warrant maintenance of a class or representative suit.

Defendant next contends that the court erred "in not finding the transaction usurious, in finding the transaction a sale of chattel but not a loan, and in finding that the time price differential is applicable to

said transaction." The trial court entered written findings of fact to this effect.

The issue here is whether there is any evidence to support the court's finding that the transaction here involved was a sale and not a "loan or use of money" within the terms of the usury statute, ORS 82.110. Proof of a loan is vital to a defense of usury, and the proof of usury must be "plain, positive and palpable." Blue River ...

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