Bundy v. Commercial Credit Co.
| Decision Date | 13 April 1932 |
| Docket Number | 475. |
| Parties | BUNDY v. COMMERCIAL CREDIT CO. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Mecklenburg County; Schenck, Judge.
Action by C. W. Bundy, receiver of the Triplett Lumber Company against the Commercial Credit Company. From the judgment both parties appeal.
No error as to plaintiff's appeal. Error as to defendant's appeal.
On issue whether contract was made outside state in bad faith to evade state's usury laws, instruction defining "bad faith" held proper.
See also, 198 N.C. 339, 151 S.E. 626.
This cause was considered by the court in a former appeal reported in 200 N.C. 511, 157 S.E. 860. The facts are substantially the same, and no extended restatement of them will be attempted upon this appeal.
The issues submitted were as follows:
1. "Was the contract between the Commercial Credit Company and the Triplett Lumber Company (Exhibit No. 1) lastly executed in the State of Maryland, as alleged in the answer?"
2. "If so, was said contract (Exhibit No. 1) executed by the defendant, Commercial Credit Company, in the State of Maryland in bad faith with the intent and purpose of evading the usury laws of North Carolina?"
3. "Did the defendant, Commercial Credit Company, knowingly take, receive, reserve, or charge the Triplett Lumber Company a greater rate of interest than 6 per cent per annum, as alleged in the amendment to the complaint?"
4. "What amount of penalty, if any, is the plaintiff, C. W. Bundy, Receiver for the Triplett Lumber Company, entitled to recover of the defendant, Commercial Credit Company, for usurious interest paid?"
5. "What amount is the Triplett Lumber Company, indebted to the defendant, Commercial Credit Company?"
The jury answered the first issue "Yes," the second issue "No," and the fifth issue "$11,942.70."
Thereupon, judgment was entered decreeing (a) that the plaintiff, receiver, is the owner of the accounts in controversy "free and clear of any lien or claim of the defendant"; (b) that the defendant, credit company, is entitled to file an unsecured claim against the receiver for the sum of $11,942.70; (c) that the plaintiff is not entitled to recover anything of the defendant upon the allegations of usury; (d) that the costs be paid by the plaintiff.
From the judgment so rendered both parties appealed, assigning errors.
John M. Robinson and Hunter M. Jones, both of Charlotte, for plaintiff.
Duane R. Dills and Jack J. Levinson, both of New York City, and J. Laurence Jones and J. L. De Laney, both of Charlotte, for defendant.
The determinative questions presented by the record may be stated as follows:
1. Did the trial judge correctly instruct the jury upon the second issue?
2. Was the defendant, credit company, entitled to a lien upon the proceeds realized from the collection of accounts and evidences of indebtedness described in the exhibit?
3. Did the trial judge properly tax the costs?
The second issue is as follows: "Was said contract executed by the defendant, Commercial Credit Company, in the State of Maryland in bad faith with the intent and purpose of evading the usury laws of North Carolina?" Upon said issue the judge instructed the jury as follows: (1) "Now, gentlemen of the jury, you will note that the conjunction 'and' is used, and not the alternative 'or,' and the issue raises the query whether the action was in bad faith and with the intent to evade the usury laws of North Carolina." (2) "If upon consideration of all the evidence it has satisfied you, by its greater weight, that in so doing the Credit Company did act in bad faith and did act with the intent and purpose of evading the usury laws of North Carolina, then, gentlemen of the jury, it will be your duty to answer the second issue 'Yes' as contended for by the plaintiff." (3) (4) '
The attack made by the plaintiff upon the foregoing instructions is grounded upon the contention that bad faith was improperly defined. The general definition given in Black's Law Dictionary, 2d Ed., is as follows:
"The opposite of 'good faith,' generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties but by some interested or sinister motive." The Georgia court, in Copeland v. Dunehoo, 36 Ga.App. 817, 138 S.E. 267, 270, said: "Counsel for the defendants say that 'bad faith involves fraud, deceit, duress, or some such act, and is a state of mind,' and with this we agree." There are several decisions in this state discussing good faith as affecting the jurisdiction of courts. See Wiseman v. Witherow, 90 N.C. 140; Sloan v. R. R., 126 N.C. 487, 36 S.E. 21, 22; Thompson v. Express Co., 144 N.C. 389, 57 S.E. 18; Wooten v. Drug Co., 169 N.C. 64, 85 S.E. 140. In the Sloan Case the court held that jurisdiction is not ousted "except when the sum demanded is so palpably in bad faith as to amount to a fraud on the jurisdiction." In the Wooten Case, supra, the court intimated that good faith not only meant an honest purpose, but that such purpose must appear from the allegations and surrounding facts.
Bad faith cannot be defined with mathematical precision. The ultimate definition of the term would depend upon the facts and circumstances of a given controversy. Certainly, it implies a false motive or a false purpose, and hence it is a species of fraudulent conduct. Technically, there is, of course, a legal distinction between bad faith and fraud, but for all practical purposes bad faith usually hunts in the fraud pack. The practical question developed by the evidence in this case is whether the credit company, impelled by a false and dishonest motive and not by a legitimate business purpose, undertook to have the contract executed in Maryland in order to evade the usury laws of North Carolina and thus oust the jurisdiction...
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