Opinion ID: 1898067
Heading Depth: 2
Heading Rank: 2

Heading: procedural disposition of the case

Text: Even if I agreed with the majority as to the adoption of the New York rule concerning the use of a dummy corporation to conclude a high-interest loan, I would doubt that the case could be properly disposed of by a simple affirmance. As I understand it, the majority adopts the New York rule as to loans made for a business purpose, for the opinion explicitly says that defense of usury remains available when the proceeds of the loan are used to meet the individual's personal, non-business needs and obligations. At this point, it becomes important to remember that this case came before us as an appeal of a summary judgment. The granting of a summary judgment is, of course, not proper unless there are no material issues of fact in dispute. Rule 56(c), M.R.C.P. There was some evidence that all of the funds of the loan to Lake George Plantation, Inc. were not used for business purposes. The deposition of Galloway contains the following: Q. So that when the $15 million loan was closed Lake George, Inc., the corporate entity, borrowed the money. Right? A. That's right. Q. It used the money to pay off all of the debts for which you and George Whitsitt and your wives were personally liable? A. Individually owed, yes, sir.       Q. All right. In the second paragraph he talks about the fact that Lake George will use the proceeds of the Travelers loan to pay off the mortgages assumed and then will pay the balance of the net proceeds to you as boot. We'll look at the closing statement in a few minutes. But I gather from this and from the closing statement that there was a certain amount of money left over after the payment of all the mortgages and after the payment of the commission and other things that did come to Lake George. Right? A. To Lake George? Q. Or to you and Mr. Whitsitt, which? A. We paid our outstanding debts with it, yes, sir. This raises questions as to the nature of the personal debts thus paid  especially those of the wives. From the record before us, we cannot tell whether, and to what extent, the loan funds were used for purposes unrelated to the farm business. That question could be resolved only by a full trial. Thus, even if the New York rule be the better one, it seems to me that the case ought to be remanded for resolution of these factual issues rather than affirmed.