Court Opinion

ID: 9572467
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:41:54.359122+00
Date Added: 2024-06-11T12:33:07.494849
License: Public Domain

Justice CARLTON
dissenting.
I join in the dissenting opinion filed by Justice Meyer and dissent for other reasons as well.
I must also register my disagreement with section III of the majority opinion dealing with the element of usurious intent. My first objection to that section is that it is wholly unnecessary and thus dictum. The only issues presented for our review are whether the usury laws apply to this arrangement for sale of chattel paper or, more specifically, whether the arrangement employed by Western Auto and Vick in transferring chattel paper was a sale or a loan or forbearance, and, if the transaction constitutes a loan or forbearance, whether the time-price doctrine applies.
The issue of usurious intent is not only not before us, its consideration is premature. I find it a rather novel approach to determine that usurious intent exists before there has been any determination that the interest charged Vick was greater than the legal maximum. I would prefer that we not consider that issue unless and until it is established that the interest charged exceeds the applicable legal rate.
Furthermore, I cannot- agree with the definition given usurious intent by the majority. While Kessing is certainly capable of the interpretation given it by the majority, I think Kessing, in light of the established precedent in this area, re*53quires more than just the intentional charging of interest regardless of whether the entity making the loan is aware that the rate of interest actually charged exceeds the legal maximum. I would hold that the corrupt intent required to establish usury is the intent to charge more than the law allows, ie., knowledge that the interest actually charged exceeds the legal maximum.
That Kessing is capable of this interpretation is, I think, obvious from the following passage:
In an action for usury plaintiff must show (1) that there was a loan, (2) that there was an understanding that the money lent would be returned, (3) that for the loan a greater rate of interest than allowed by law was paid, and (4) that there was corrupt intent to take more than the legal rate for the use of the money. The corrupt intent required to constitute usury is simply the intentional charging of more for money lent than the law allows. Where the lender intentionally charges the borrower a greater rate of interest than the law allows and his purpose is clearly revealed on the face of the instrument, a corrupt intent to violate the usury law on the part of the lender is shown.
Kessing v. National Mortgage Corporation, 278 N.C. 523, 530, 180 S.E. 2d 823, 827 (1971) (citations omitted). Kessing states that corrupt intent can be inferred only when the first three elements —a loan, an intent to repay, and an interest rate which exceeds the legal maximum —are shown on the face of the debt instrument. The majority found that the first two elements were shown on the face of the debt instruments, but nowhere does the majority find or the debt instruments show a greater rate of interest than allowed by law. Therefore, I submit that under Kessing the majority’s conclusion that usurious intent exists is erroneous.
Furthermore, an examination of our earlier cases shows that corrupt intent requires that the loaner know that the interest charged exceeds the maximum. In Ector v. Osborne, 179 N.C. 667, 669, 103 S.E. 388, 399 (1920), we stated, “ ‘The corrupt intent mentioned in the books consists in the charging or receiving the excessive interest with the knowledge that it is prohibited by law, and the purpose to violate it. Our statute makes it usury if the interest is knowingly charged or received at the unlawful rate.’ ” (Quoting MacRackan v. Bank of Columbus, 164 N.C. 24, 26, 80 S.E. *54184, 185 (1913) (emphasis in original). We said in Swamp Loan and Trust Company v. Yokley, 174 N.C. 573, 576, 94 S.E. 102, 103 (1917) that: “The corrupt intent consists in knowingly ‘taking, receiving, reserving or charging a greater rate of interest than 6 per centum per annum . . .”’ (citations omitted).
A profit, greater than the lawful rate of interest, intentionally exacted as a bonus for the loan of money, imposed upon the necessities of the borrower in a transaction where the treaty is for a loan and the money is to be returned in all events, is a violation of the usury laws, it matters not what form or disguise it may assume.
Doster v. English, 152 N.C. 339, 341, 67 S.E. 754, 755 (1910). These cases establish that the corrupt intent required to establish usury is the intentional charging of a greater interest than the law allows.
In my opinion, Kessing in no way departs from or alters this standard. Kessing states that when, on the face of a loan instrument, the rate of interest charged is greater than the legal maximum, corrupt intent is inferred. If the rate of interest charged appears on the face of the instrument and that rate exceeds the legal maximum, that knowledge is imputed to the person making the loan; we are all presumed to know what the law says. Under the above-quoted cases and under Kessing, I submit that the element of usurious or corrupt intent has not been shown to exist.
My next point of disagreement with the majority is its analysis of the time-price doctrine as applied to the facts of this case. The majority concludes that the time-price doctrine is inapplicable because the transfers of the chattel paper were not absolute. I find this factor irrelevant. As I understand the opinion, the majority has decided that the transactions amounted to credit sales of merchandise to Vick with his obligation to pay secured by the assignment of the chattel paper. If, as the majority has concluded, the transactions here constitute a loan or forbearance, the relevant transaction is the sale of the merchandise to Vick. No one has claimed that the chattel paper was to be paid for over a period of time. I find the majority’s treatment of the chattel paper transfer transaction to be both confusing and misleading, for it attempts to apply the time-price doctrine to the chattel paper transfer, a transaction which it has declared to be a mere *55security agreement for a loan. The majority seems to recognize in its next paragraph that the relevant transaction for purposes of the application of this doctrine is the sale of merchandise to Vick, and with that statement I agree. I simply wish to say that this opinion adds to the confusion in this area of the law.
In conclusion, I would note that the areas of law involved in this case — usury, the transfer of chattel paper and the time-price doctrine —are all murky areas, difficult to understand and to apply. I not only disagree with the result reached by the majority for the reasons stated by Justice Meyer and here, I am concerned that the majority opinion compounds the confusion.
Justice Meyer joins in this dissenting opinion.