Bagri v. Desai

349 S.E.2d 309 (1986)

H.S. BAGRI v. E.M. DESAI.

No. 8626SC370.

Court of Appeals of North Carolina.

October 21, 1986.

*310 Bryan, Jones, Johnson & Snow by James M. Johnson, Dunn, for plaintiff-appellant.

Parker, Poe, Thompson, Bernstein, Gage & Preston by Gaston H. Gage and Debra L. Foster, Charlotte, for defendant-appellee.

HEDRICK, Chief Judge.

Plaintiff contends that the trial court erred to his prejudice in granting defendant's motion for summary judgment. Plaintiff argues that the interest charged defendant was not usurious, but legal under G.S. 24-1.1.

To establish that an agreement is usurious, it must be shown that (1) there was a loan, (2) there was an understanding that the money lent would be returned, (3) for the loan a greater rate of interest than allowed by law was charged, and (4) there was corrupt intent to take more than the legal rate for the use of the money. Kessing v. Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823 (1971).

Here, the first two requirements are clearly established: There was a loan, and an understanding that the money lent would be returned.

The facts show that the third requirement, that a greater rate of interest than allowed by law was charged, is also satisfied. Whether or not plaintiff's charging of the 15% interest is legal under G.S. 24-1.1, his requiring that defendant also pay one-sixth of the motel's profits and one-sixth of any gain on the sale of the motel is clearly prohibited by G.S. 24-8, which provides in pertinent part that "[n]o lender shall ... require in connection with a loan any borrower, directly or indirectly, to pay ... 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 ... together with fees and interest provided for in chapter 24 or chapter 53 of the North Carolina General Statutes, where the principal amount of a loan is not in excess of three hundred thousand dollars ($300,000.00)...." The one-sixth interest in the profits and gain on resale of the motel is a "sum of money, thing of value or other consideration" and it is not security, fees or interest. Under Kessing v. Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823 *311 (1971), a violation of G.S. 24-8 satisfies the third requirement for establishing usury.

The fourth requirement, corrupt intent to take more than the legal rate for the use of the money, is simply the intentional charging of more for money lent than the law allows. Id.

The penalty for usury, under G.S. 24-2, includes forfeiture of the entire interest which has been agreed to be paid for the loan. It therefore becomes clear that even if the facts as claimed by plaintiff are taken as true, he cannot recover what he claims is due him. In such a case, summary judgment is proper. Lowder v. Lowder, 68 N.C.App. 505, 315 S.E.2d 520, disc. rev. denied, 311 N.C. 759, 321 S.E.2d 138 (1984). It was therefore not error for the trial court to grant defendant's motion for summary judgment.

Since upon plaintiff's version of the facts, he is not entitled to recover, any other error by the trial court is harmless. Rankin v. Oates, 183 N.C. 517, 112 S.E. 32 (1922). Therefore, we need not reach plaintiff's two other assignments of error.

Affirmed.

ARNOLD and ORR, JJ., concur.