Northwestern Bank v. Barber

339 S.E.2d 452 (1986)

The NORTHWESTERN BANK v. Mrs. R.H. BARBER, a/k/a Norma G. Barber, and Tom Kinley.

No. 8526SC678.

Court of Appeals of North Carolina.

February 18, 1986.

*454 No brief for plaintiff-appellee.

Erwin, Beddow & Reese by Fenton T. Erwin, Jr., Charlotte, for defendant-appellant.

ARNOLD, Judge.

Defendant first contends that the trial court erred when it failed to apply the provisions of G.S. 24-8 to the evidence. G.S. 24-8 provides in pertinent part:

No lender shall charge or receive from any borrower or require in connection with a loan any borrower, directly or indirectly, to pay, deliver, transfer or convey or otherwise confer upon or for the benefit of the lender ... any sum of money, thing of value or other consideration other than that which is pledged as security or collateral to secure the repayment of the full principal of the loan, together with fees and interest provided for in ... the ... Statutes, where the principal amount of a loan is not in excess of three hundred thousand dollars ($300,000.00).

The loan between plaintiff and Carolina Jeep, Inc. was for less than $300,000.00. Defendant argues that both the guaranty agreements and his endorsement of the promissory note as "Vice Pres." are "a thing of value" within the meaning of the statute and thus G.S. 24-8 precluded plaintiff from taking these incident to the loan. We do not agree.

The limitation imposed by G.S. 24-8 concerns a thing of value "other than that which is pledged as security or collateral to secure the repayment of the full principal of the loan, together with fees and interest...." In this instance, defendant's endorsement and the guaranty agreements served as security for the loan to Carolina Jeep, Inc. No additional sum or thing of value is involved other than securing for the plaintiff that the loan will be repaid in full. Thus the statute has not been violated.

Defendant next contends that the trial court erred in granting a judgment for an amount which included interest. We disagree.

Plaintiff loaned the $200,000.00 to Carolina Jeep, Inc. on 30 November 1973. On that date, G.S. 24-1.1 (Cum.Supp.1971) provided in pertinent part as follows:

*455 [T]he parties to a loan ... may contract in writing for the payment of interest not in excess of: ... (4) Twelve percent (12%) per annum where the principal amount is more than one hundred thousand dollars ($100,000.00) but not more than three hundred thousand dollars ($300,000.00)....

G.S. 24-2 mandates the forfeiture of the entire interest which the note carries with it when there has been a "taking, receiving, reserving or charging a greater rate of interest" than that allowed by law. The "charging" which constitutes a forfeiture under G.S. 24-2 is the contract, promise or agreement to a usurious rate of interest as opposed to the actual collection or payment of that interest. Kessing v. Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823 (1971); Haanebrink v. Meyer, 47 N.C.App. 646, 267 S.E.2d 598 (1980). However, we see no need to discuss the question of usury since there is nothing in this record to show that plaintiff ever charged or collected anything more than the legal rate of interest.

Plaintiff in its complaint sought interest in excess of the 12% allowed under G.S. 24-1.1. Defendant excepts to the trial court allowing plaintiff to amend the complaint so as to reduce the interest sought to that calculated at 12% per annum. Rule 15(b) of the North Carolina Rules of Civil Procedure provides that a party may amend the pleadings to conform to the evidence. Plaintiff presented evidence as to the amount of the interest when calculated at 12% per annum. The allowance of conforming amendments is in the trial court's sound discretion. Markham v. Johnson, 15 N.C.App. 139, 189 S.E.2d 588, cert. denied, 281 N.C. 758, 191 S.E.2d 356 (1972). We find the trial court did not abuse its discretion in granting the amendment to the pleadings.

Defendant also contends the trial court erred when it failed to receive into evidence a land appraisal prepared at plaintiff's request. The evidence was hearsay and does not fall within any of the hearsay exceptions. We find no error in the exclusion of this appraisal.

Finally, defendant contends the trial court erred when it awarded the plaintiff attorneys' fees. As to this contention, we agree.

The promissory note evidencing the loan did not provide for payment of counsel fees in an action to collect the debt, but the guaranty agreements signed by defendant did so provide. Provisions relative to the payment of attorneys' fees are not enforceable unless expressly authorized by statute. Enterprises, Inc. v. Equipment Co., 300 N.C. 286, 266 S.E.2d 812 (1980). G.S. 6-21.2(5) allows recovery of attorneys' fees incurred in the collection of a note provided written notice is sent to the debtor advising him of the right under the statute to pay the outstanding balance on the note without incurring the attorneys' fees. See Blanton v. Sisk, 70 N.C.App. 70, 318 S.E.2d 560 (1984). The record fails to contain any evidence of such notice to the debtor. Absent such evidence, the attorneys' fees were improperly granted. That portion of the judgment awarding attorneys' fees is therefore reversed.

Affirmed in part, reversed in part and remanded.

WELLS and PARKER, JJ., concur.