English Lumber Co. v. Wachovia Bank & Trust Co.
Decision Date | 18 February 1920 |
Docket Number | 537. |
Parties | ENGLISH LUMBER CO. v. WACHOVIA BANK & TRUST CO. |
Court | North Carolina Supreme Court |
On Petition to Rehear, June 2, 1920.
Appeal from Superior Court, Buncombe County; Ray, Judge.
Action by the English Lumber Company against the Wachovia Bank & Trust Company. Judgment for plaintiff, and defendant appeals. Affirmed.
A commission charged for the purpose of securing more than 6 per cent. interest in addition to a charge of 6 per cent interest constitutes usury.
This is an action to recover the penalty for usurious interest alleged to have been paid by the plaintiff to the defendant.
The defendant denied that usury was charged or paid, and pleaded the statute of limitations.
A reference was ordered, and upon the report being made, which was in favor of the defendant, exceptions were filed by the plaintiff, and upon the hearing the material findings of fact and conclusions of law of the referee were reversed additional findings made by the court, and judgment rendered in favor of the plaintiff, and the defendant excepted and appealed.
It appears from the findings of fact made by the court:
That in 1909 the plaintiff was engaged in the lumber business with its principal office in Asheville, and that in that year it began business with the defendant bank.
(3) That the plaintiff opened an account and began business with the defendant bank in March, 1909, and began to discount its customers' notes or paper, pursuant to an arrangement made at the time with the defendant bank, and continued same thenceforward, until it closed its business dealings with the defendant, in 1913.
(4) That said plaintiff, beginning about September 2, 1909, and continuing thenceforward until the close of its business dealings with the defendant bank, borrowed money from the defendant on its assigned invoices, or accounts receivable, as collateral security, from time to time, as its necessities required, and as shown in Exhibit A, as corrected by agreement of the parties, and agreed to pay, and did pay, and the defendant bank did receive, from the plaintiff, in addition to the 6 per cent. charged for the loan of the money, a charge of 1 per cent. upon 50 per cent. of the face value of said accounts receivable, or invoices, so assigned, handled or collected by said bank, and continued to make and collect this additional charge from the date hereinbefore in this section mentioned, until January, 1910, when the charge was reduced to two-thirds of 1 per cent. upon the face value of said assigned accounts receivable, or invoices, and said loans thenceforward were limited in amount to two-thirds of the face value of said accounts. That on a large portion of the transactions as shown by Exhibit A, to which this paragraph relates, the charge which was originally 1 per cent. on the face of the invoice and later two-thirds of 1 per cent., was often greater than the interest expected or received. That the accounts were, in at least 90 per cent. of the cases, promptly paid, were generally known and easily ascertained to be solvent, were guaranteed by plaintiff and required very little, if any, more attention than collateral loans upon other classes of paper; and said agreement was proposed by the plaintiff in order to get the accommodation of the loan, and the loan was granted because of the profit derived from the charge of the commission, which was an unreasonable charge and was an attempted device by which the bank would receive a greater than 6 per cent. income from its loans as the condition for making such loans. That there were almost daily transactions in the nature of loans or credits allowed by the bank, taken up by substituted notes, substituted demand notes on customers' paper, all collateral, and on discounted customers' paper, all covered by the agreement as to the line of credit, which line of credit agreed upon from time to time was kept exhausted by the plaintiff, transactions being of practically daily frequence, each party keeping the whole of the accounts, the mutual items being so interlocked as to make them practically inseparable. So that it was, and was assumed to be, an open mutual running account from March 1, 1909, to the close of the transactions; the final settlement and payments being on November 4, 1914.
There are other findings, but those set out are sufficient to a proper understanding of the legal questions presented.
The action was commenced more than two years after the date of most of the items in the account and...
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