Cowan v. Security Life & Trust Co.

Oonnoe, J. The first contention of the plaintiff on his appeal to this Court is that C. S., 6291, which is chapter 8, Public Laws of North Carolina, 1915, as amended by chapter 61, Public Laws of ISTorth Carolina, 1917, is void, for that its enactment was in violation of section 7, Article I, of the Constitution of North Carolina, which is as follows: “NTo man or set of men are entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.” ' If the effect of C. S., 6291, is to exempt insurance companies from the provisions of C. S., 2305, which provides that the legal rate of interest in this State shall be six per centum per annum, for such time, as interest may accrue, and no more, and also from the provisions of C. S., 2306, which prescribes penalties for usury, and thereby to authorize insurance companies to charge, retain, or receive interest on loans made by them in this State at a greater rate of interest than six per centum per annum, this contention must be sustained. See Edgerton v. Hood, Comr., 205 N. C., 816, 172 S. E., 481; Plott v. Ferguson, 202 N. C., 446, 163 S. E., 688; Motley v. Warehouse Co., 122 N. C., 347, 30 S. E., 3; Rowland v. B. & L. Assn., 116 N. C., 877, 22 S. E., 8; Meroney v. B. & L. Assn., 116 N. C., 882, 21 S. E., 924; and Simonton v. Lanier, 71 N. C., 503. In the last cited case it is said that if the provision in the charter of the Bank of Statesville, which was involved in that case, must be construed as authorizing the bank to charge, retain, or receive interest at a greater rate than six per centum per annum, as contended by the plaintiff, then such provision was void, for the reason that it was in violation of section 7, and also of section 31, of Article I of the Constitution of this State. *22 If C. S., 6291, is void, then the judgment in the instant case must he reversed on the authority of Carter v. Insurance Co., 122 N. C., 338, 30 S. E., 341; Miller v. Insurance Co., 118 N. C., 612, 24 S. E., 484; and Roberts v. Insurance Co., 118 N. C., 429, 24 S. E., 780. C. S., 6291, is as follows: “Where an insurance company, as a condition for a loan by such company, of money upon mortgage or other security, requires that the borrower insure either his life or that of another, or his property, or the title to his property, with the company, and assign or cause to be assigned to it a policy of insurance as security for the loan, and agree to pay premiums thereon during the continuance of the loan, whether the premium is paid annually, semiannually, quarterly, or monthly, such premium shall not be considered as interest on such loan, nor will any loan be rendered usurious by reason of any such requirements, when the rate of interest charged for the loan does not exceed the legal rate, and when the premium charged for the insurance does not exceed the premium charged to other persons for similar policies, who do not obtain loans.” Chapter 8, Public Laws of North Carolina, 1915, and chapter 61, Public Laws of North Carolina, 1917 (now C. S., 6291), were both enacted subsequent to the decisions of this Court in Carter v. Insurance Co., supra; Miller v. Insurance Co., supra; and Roberts v. Insurance Co., supra. Their enactment was manifestly in consequence of the decisions in those cases. The statutes do not purport to exempt, nor do they exempt insurance companies from the provisions of C. S., 2305, and C. S., 2306. An insurance company which charges, retains, or receives interest on a loan made by it in this State, to a policyholder or other person, at a rate in excess of six per centum per annum, is subject to the penalties prescribed by C. S., 2306, notwithstanding the provisions of C. S., 6291. The contention of the plaintiff that the provisions of this statute should be construed to the contrary, and are for that reason void, cannot be sustained. The second contention of the plaintiff is that if C. S., 6291, is valid, its provisions are not applicable to the instant case, for the reason that the policy which the defendant required the plaintiff to procure from it, as a condition precedent to its making the loan to the plaintiff, and which the plaintiff did procure, is not a policy of insurance on the life of the plaintiff, but is an investment contract. This contention cannot be sustained. It is true that the policy is described as a ten-year endowment policy, and matures at the expiration of ten years from its date, if the plaintiff shall be living at that time. It is, however, provided in the policy that if the plaintiff shall die during the ten-year period, and the policy shall be in force at the date of his death, the face amount of the policy shall be paid by the defendant to *23 the 'beneficiary named in the policy. the policy insures the life of the plaintiff within the meaning of C. S., 6291. 37 C. J., 362. the statute is applicable to the instant case, and by reason of its provisions the plaintiff cannot recover in this action. See Sledd v. Pilot Life Insurance Co. (Ga.), 183 S. E., 199, and Heaberlin v. Jefferson Standard Life Insurance Co. (W. Va.), 171 S. E., 419. There is no error in tbe judgment in tbe instant ease. It is Affirmed.