Hyde Ins. Agency, Inc. v. Noland

227 S.E.2d 169 (1976)

30 N.C. App. 503

HYDE INSURANCE AGENCY, INC. v. Homer Randolph NOLAND.

No. 7630DC50.

Court of Appeals of North Carolina.

August 18, 1976.

*170 Millar, Alley & Killian by Leon M. Killian, III, Waynesville, for plaintiff-appellant.

Francis & Hipps by Charles W. Hipps, Waynesville, for defendant-appellee.

*171 HEDRICK, Judge.

Plaintiff excepted to the following conclusion by the Court, "Plaintiff is not entitled to recover for any late charges or finance charges imposed on Defendant's account balance." This exception presents for review the question of whether the facts found by the trial judge support such a conclusion. Defendant argues that the conclusion is supported by the finding, "Defendant has made no actual oral or written agreement to pay finance charges or late charges in any amount or at any rate."

The record before us clearly demonstrates that the defendant purchased insurance through plaintiff's agency from time to time on "open-end credit" or an open account beginning in August, 1968, through April, 1973. On 25 May 1970, when defendant's account balance was $415.00, plaintiff began to impose a "late charge or finance charge" on defendant's credit balance more than 30 days old. The record further discloses and the Court found as a fact, that the monthly bills sent to the defendant by the plaintiff, disclosed that the plaintiff was charging the defendant a "finance charge" of 1½% monthly or 18% annually. The finance charge was reduced to 1% monthly or 12% annually in September, 1973.

General Statute 24-11(a) provides, in part:

"On the extension of credit under an open-end credit or similar plan . . . under which no service charge shall be imposed upon the consumer or creditor if the account is paid within twenty-five days from the billing date, there may be charged and collected interest, finance charges or other fees at a rate in the aggregate not to exceed one and one-half percent (1½%) per month on the unpaid balance of the previous month. . . ."

General Statute 58-56.1(c) provides, in part:

". . . an insurance broker duly licensed in this State who extends credit to and only to his own policyholders may charge and collect finance charges or other fees at a periodic (monthly) rate as provided in G.S. 24-11(a), after said amount has been outstanding for 30 days. . .."

We interpret these statutes to authorize an insurance agent who extends customer credit on an open account to impose a finance charge on his own customers in an amount not to exceed an aggregate annual rate of 18%. We think that it was the intention of the Legislature to authorize the imposition of finance charges on an open account, even though there had not been any prior express agreement between the parties regarding such charges. However, such charges could not be imposed unless the debtor was given proper notice that the creditor intended to impose such finance charges. We think the creditor could collect a finance charge on an open account under the provisions of G.S. 24-11(a) provided the person to whom the credit is extended had been notified by the creditor when the credit was extended of all the details and circumstances pertaining to the imposition of finance charges. Thus we hold the Court's conclusion that the plaintiff could not impose "late charges or finance charges" in any amount on any portion of the overdue credit balance to be erroneous and not supported by the findings of fact.

In the absence of evidence tending to show that the plaintiff notified the defendant of the details and circumstances under which it proposed to institute finance charges prior to 25 May 1970, we hold the plaintiff would not be entitled to impose finance charges on the credit balance existing at that time. However, it is our opinion, that since the statements received by defendant after that date contained detailed information regarding the imposition of finance charges, the plaintiff would be entitled to impose finance charges under G.S. 24-11(a) on all credit extended on purchases made after that date.

Since the Court concluded that the plaintiff was not entitled to recover finance charges, it did not make definitive findings of fact sufficient to determine the precise *172 amount, if any, the plaintiff might be entitled to recover as finance charges. Indeed we cannot say that the parties sufficiently developed the evidence to enable the Court to make definitive findings.

That portion of the judgment awarding the plaintiff $352.94 representing delinquent insurance premiums is affirmed. For the reasons stated above, that portion of the judgment declaring plaintiff is not entitled to recover any amount for "late charges or finance charges" is vacated and the cause is remanded to the District Court for a new trial as to plaintiff's claim to recover $441.19 in finance charges.

Affirmed in part, vacated and remanded in part.

BROCK, C. J., and CLARK, J., concur.