DeHart v. R/S Financial Corp.

BRASWELL, Judge. This is an action for usury. Plaintiff appeals from the granting of a directed verdict in favor of defendant at the close of plaintiffs evidence. Plaintiff alleged in her complaint that she and her husband, since deceased, applied for a loan from the Modern Homes Construction Company (Modern Homes) on 9 February 1965. Modern Homes agreed to make the loan and required plaintiff and her [649] husband to execute a promissory note in the amount of $9,645.12, due and payable in 144 equal installments of $66.98, and secured by a deed of trust. Modern Homes thereafter assigned the note and deed of trust to G.A.C. Trans-World Acceptance Corporation, which in turn assigned the note and deed of trust to defendant. Plaintiff alleged that the interest rate on the note was usurious in that it exceeded the maximum legal rate of interest of six per cent (6%). Defendant filed an answer in which it denied the allegations of usury and asserted a counterclaim for money owed it by plaintiff for payment of insurance premiums on behalf of plaintiff in accordance with the terms of the deed of trust. Defendant took a voluntary dismissal of its counterclaim upon the granting of its motion for a directed verdict. A motion for a directed verdict tests the legal sufficiency of the evidence to take the case to the jury. Kelly v. Harvester Co., 278 N.C. 153, 179 S.E. 2d 396 (1971). In considering a defendant’s motion for a directed verdict, the court must examine the evidence in the light most favorable to the plaintiff, resolving all conflicts in his favor and giving the plaintiff the benefit of every inference that reasonably can be drawn in his favor. Husketh v. Convenient Systems, 295 N.C. 459, 245 S.E. 2d 507 (1978). The motion should be allowed only when the evidence presented by the plaintiff, taken in the light most favorable to the plaintiff, is insufficient as a matter of law to support a verdict for the plaintiff. Investment Properties v. Allen, 281 N.C. 174, 188 S.E. 2d 441 (1972), vacated on other grounds, 283 N.C. 277, 196 S.E. 2d 262 (1973). When the question of granting a motion for directed verdict is close, the better practice is for the trial judge to reserve his decision on the motion and allow the case to be submitted to the jury. Koonce v. May, 59 N.C. App. 633, 298 S.E. 2d 69 (1982). To maintain an action for usury, the claimant must show that there was (1) a loan or forbearance of money, (2) an understanding between the parties that the money loaned shall be repaid, (3) a payment or an agreement to pay a rate of interest greater than that allowed by law, and (4) a corrupt intent to take a greater return than that allowed by law for the use of the money loaned. Auto Supply v. Vick, 303 N.C. 30, 277 S.E. 2d 360 (1981); Bank v. Merrimon, 260 N.C. 335, 132 S.E. 2d 692 (1963). [650] Based upon our examination of the plaintiffs evidence in the light most favorable to the plaintiff and giving the plaintiff the benefit of every inference which can be drawn in her favor, we hold that plaintiff presented sufficient evidence to support a prima facie case of usury. The plaintiffs evidence shows the following: In 1965, plaintiff and her late husband, having learned that Modern Homes would lend 100% of the money required to build a house, applied to Modern Homes for a loan for that purpose. Modern Homes agreed not only to lend them $5,600.00, which was 100% of the cost of building the house, but also to build the house for them. Plaintiff and her late husband executed a promissory note in the amount of $9,645.12, payable in 144 equal installments of $66.98. The first payment was due on 1 December 1965, and “payable monthly thereafter on the same day of each month in monthly installments, as specified hereon, until said whole amount has been paid with interest on each installment from maturity thereof until paid at six percentum (6%) per an-num.” She and her husband also executed a deed of trust as security for the loan. She has made all payments. In the deed of trust attached as an exhibit to the complaint the amount of insurance coverage is stated to be $5,600.00. In all of the plaintiffs evidence the only sum of money testified about as being the amount of the loan is $5,600.00. Although plaintiff does not deny signing the promissory note in the amount of $9,645.12, nothing supports that sum as being the base amount of the loan. It would appear that interest was computed in some manner on $5,600.00 and added to it so as to equal the face amount of the note. The interest was charged in advance, and added to the amount of the note in advance. The note itself only provides for interest in case of default and from maturity of each installment payment. Although the figure $5,600.00 does not appear in the complaint, the notice pleading does fully apprise the defendant of the very transaction out of which the claim for usury arises. The evidence of $5,600.00 as being the amount of the loan was not objected to at the trial. Since the usury theory is the only theory for relief raised in the pleadings, no formal amendment of the pleadings was necessary here. As said in Securities & Exchange Commission v. Rapp, 304 F. 2d 786, 790 (2d Cir. 1962), cited with approval in Roberts v. Memorial Park, 281 N.C. 48, 187 S.E. 2d [651] 721 (1972), and in Taylor v. Gillespie, 66 N.C. App. 302, 305, 311 S.E. 2d 362, 364 (filed 7 February 1984), [No. 8317SC209], “A formal amendment to the pleadings ‘is needed only when evidence is objected to at trial as not within the scope of the pleadings.’ ” And, as further stated in Taylor, “Because no objection was made to the introduction of the evidence, the pleadings were amended by implication.” Id. A certified public accountant testified that, based upon amortization tables, six per cent (6%) interest on $5,600.00, the principal amount, would yield a monthly payment of $54.65 over twelve years. Payments of interest and principal would therefore total the sum of $7,871.04 over twelve years. Deducting $5,600.00 principal from that total would yield a total of interest of $2,271.04 over twelve years. In contrast, plaintiff was charged $4,045.12 in interest. Further, based upon the same tables, a ten per cent (10%) interest rate would yield a monthly payment of $66.93, which closely approximates the $66.98 monthly payment charged plaintiff, tending to indicate that plaintiff was charged a ten per cent (10%) rate. Since plaintiff did produce sufficient evidence of all of the constituent elements of usury, the trial court improperly granted the defendant’s motion for a directed verdict. Accordingly, the case must be remanded for a new trial. Reversed and remanded. Judge WELLS concurs. Judge Phillips concurs in result.