
    THE SWAMP LOAN AND TRUST COMPANY v. FLORA E. YOKLEY et al.
    (Filed 21 November, 1917.)
    1. Usury — Statutes.
    An express or implied loan, upon tbe understanding tbat tbe money shall be returned, at a greater interest rate than the statute allows, whatever the form of the transaction, and with corrupt intent on the part of the lender, is usury, under our statute, the corrupt intent consisting in “taking, receiving, reserving, or charging” a greater rate than that allowed by law. Revisal, sec. 1951.
    2. Same — Commissions—Banks and Banking — Certificate of Deposit — Trials —Evidence.
    Under an agreement made with a bank, an insurance company deposited money upon a 6 per cent certificate of deposit; which the bank loaned to its customer upon his note, bearing the legal rate upon its face, which was lfiedgecl to the insurance company as additional collateral to its certificate. The bank charged its customer a greater rate of interest than allowed by statute (Revisal, sec. 1951), in which the insurance company did not participate, looking only to the bank for the rate of interest stated on the certificate. In an action on the note the maker pleaded the usury statute, the plaintiff bank claiming the difference as its commission in negotiating the loan: Held, the transaction between the bank and its customer was usurious, as a matter of law.
    
      3. Usury — Statutes—Commission—Evidence—Trials—Questions for Jury.
    Where, in an action upon a note, the defendant pleads the usury statute (Revisal, sec. 1951), and the evidence is sufficient to sustain a verdict that the excess of interest was a proper charge made for negotiating the loan, the question should be submitted to the jury.
    4. Appeal and Error — Instructions—Reference—Findings—Trial by Jury— Waiver.
    Where instructions of the court to the jury are excepted to, and the case referred, a new trial will not be granted on appeal, for error, when it appears that the facts found by the referee, upon sufficient evidence, covered this phase of the controversy, the report confirmed by the judge, and the right to a trial by the jury waived by the party in failing to demand It in proper time.
    5. Reference — Exceptions—Trial by Jury — Waiver.
    A party who has excepted to the report of a referee may not have the judge pass upon his exceptions, without objection, and then demand that proper issues covering his exceptions be submitted to the jury for determination if the decision is unfavorable, for such is a waiver of his constitutional right thereto.
    6. Judgments — Estoppel—Bills and Notes — Separate Transactions.
    Where notes are given in different and unconnected transactions between the same parties, a judgment in an action on one of them is not an estoppel to an action on the other; and the same is true when the benefit from the only matter involved in both is disclaimed by the party sought to be estopped, and the former judgment amply protects the party setting up the estoppel.
    Appeal by plaintiff from Webb, J., at May Term, 1917, of UNION.
    This is an action on a note executed by tbe defendants to tbe plaintiff, Savings, Loan and Trust Company.
    Tbe defendant relied on tbe plea of usury.
    Tbe plaintiff filed a reply to tbe answer of tbe defendants, in wbicb it, in substance, alleged that tbe loan to tbe defendants was made by tbe Security Life and Annuity Company, and that tbe plaintiff negotiated tbe loan and charged 1 per cent as commissions therefor.
    Tbe action came on for trial at August Term, 1916, when tbe following verdict was returned by tbe jury:
    1. Was tbe loan represented by tbe note sued on in this action made to tbe defendants by tbe Security Life and Annuity Company? Answer: No.
    
      2. Are defendants estopped to maintain tbe defense asserted in tbis action by reason of tbe defense pleaded in another action between tbe .same parties? Answer: No.
    Tbe verdict was returned under an instruction from bis Honor directing tbem to answer botb issues in tbe negative if tbey believed tbe facts testified to by tbe witnesses, to wbicb tbe plaintiff excepted.
    His Honor, tben, over tbe objection of tbe plaintiff, made an order of compulsory reference to state tbe account between tbe plaintiff and tbe •defendants.
    Tbe referee appointed in tbe order, after bearing evidence for tbe plaintiff and tbe defendants, made his report to a subsequent term of the court, in wbicb be found tbe facts as contended for by tbe plaintiff.
    Tbe defendant filed exceptions to said report. Tbe exceptions were beard and were sustained, tbe judge finding tbe facts as contended for by tbe defendants.
    Tbe plaintiff moved for a confirmation of tbe report of the referee, but stated that if tbe report was not confirmed it desired to note exceptions and formulate an issue or issues to be submitted to a jury.
    There was no objection made to tbe court bearing and passing upon the •exceptions of tbe defendant to the report, nor did tbe plaintiff tender any issues upon tbe exceptions, nor ask for any issues to be submitted to a jury until after tbe judge had beard and passed upon tbe exceptions.
    At a subsequent term of tbe court tbe defendants moved for judgment upon tbe record, and the plaintiff requested that certain issues be submitted to the jury. His Honor granted tbe motion of tbe defendants and ■entered judgment in their favor, to wbicb tbe plaintiff excepted and •appealed.
    
      Redwine <& Sikes for plaintiff.
    
    
      Stack & Parker for defendants.
    
   Allen, J.

“In order to constitute a usurious transaction, four requisites must appear: (1) There must be a loan, express or implied; (2) an understanding between tbe parties that tbe money lent shall be returned; (3) that for such loan a greater rate of interest than is allowed by law shall be paid or agreed to be paid, as tbe case may be; and- (4) there must exist a corrupt intent to take more than tbe legal rate for tbe use of the money loaned. ... A profit greater than tbe lawful rate of interest, intentionally exacted as a bonus for tbe loan of money, imposed upon tbe necessities of tbe borrower in a transaction where tbe treaty is for a loan and tbe money is to be returned at all events, is a violation of tbe usury laws, it matters not what form or disguise it may assume.” Doster v. English, 152 N. C., 341, approved in Monk v. Goldstein, 172 N. C., 519.

The corrupt intent consists in knowingly “taking, receiving, reserving,, or charging a greater rate of interest than 6 per centum per annum”' (Revisal, sec. 1951; McRackan v. Bank, 164 N. C., 26); and “Where' there is negotiation for a loan of money, and the borrower agrees to-return the amount advanced at all events, it is a contract of lending; and. however the transaction may be shaped or disguised, if a profit or- return beyond the legal rate of interest is intended to be made out of the necessities or improvidence of the borrower, or otherwise, the contract is-usurious.” McRackan v. Bank, supra.

.Applying these principles to the evidence, we are of opinion his Honor held correctly, that in any view- of the evidence the plaintiff, the Savings,. Loan and Trust Company, made the loan to the defendants, and not the Security Life and Annuity Company, and that the transaction is usurious.

The evidence shows that the defendants applied to the annuity company and were refused the loan; that the annuity company then agreed to advance the money to the trust company to be lent to the defendants-upon condition that the trust company would issue to the annuity company a certificate of deposit for the amount and attach the note of the defendants as collateral; that, pursuant to this agreement, the money was sent to the trust company, and the certificate of deposit and the note executed and delivered; that the note was payable to the trust company; that an agreement for extension of time was made with the trust company-; that renewal notes were excepted to the trust company; that all payments made by the defendants were made to the trust company; that the trust company entered the transaction on its books, and while it at first charged the excess over 6 per cent as commissions, it afterwards charged it as interest; and that the defendants at first paid to the trust company 7 per cent on the loan, and afterwards 8 per cent.

Mr. Grimsley, an officer of the annuity company, who acted for the company in the transaction, testified, among other things: “I told them (defendants) we could not handle the paper they offered us; that we wanted to accommodate them, but I suggested that we could do it if they could get the Savings, Loan and Trust Company to handle it for them; we could take a certificate of deposit from the Savings, Loan and Trust Company at 6 per cent. We afterwards did that, made the deposit, and got the certificate, and we got the note of Payne and Kochtitzky as further security

On cross-examination, he said: “When Kochtitzky came to see me, he wanted to borrow from us, but could not give proper security. He wanted to give personal security, and we wanted real-estate mortgage. We then proceeded to lend the money or deposit the money with the Savings, Loan and Trust Company and take a certificate of deposit from tbe Savings, Loan and Trust Company. Then they made the. loan to Payne and Koehtitzky, taking Payne and Koehtitzky’s note as collateral security. In other words, we made the loan to the Savings, Loan and Trust Company and took those certificates of deposit introduced in evidence. When we'collected interest from time to time we collected that from the bank and made demand on the bank. Nothing was said to me by the Savings, Loan and Trust Company as to what rate of interest they were making the loan.”

And, again, he said: “We never had any arrangements with Payne and Koehtitzky as to what rate of interest they were to pay the Savings, Loan and Trust Company. We never had any arrangements with Payne and Koehtitzky as to the rate of interest we were to receive. We didn’t look for interest from anybody but the Savings, Loan and Trust Company. When this certificate of deposit became due we did not make the demand on the Savings, Loan and Trust Company. We carried it on for some years. They got after Payne and wanted to collect from Payne, and he came to us and wanted us to deposit more money with them, and we did that, and they gave us the certificate of deposit.”

Mr. Clark, cashier of the trust company, testified: “When the money was sent down here and deposited, it was deposited in our bank by the Security Life and Annuity Company, and we then issued a certificate of deposit to them. Then we got Payne and Koehtitzky, and they gave us a note.

The notes ran for twelve months. At the end of every twelve months we had them give us a new note, and every one of them was made to the Savings, Loan and Trust Company. We allowed the same certificate of deposit to stay on, and did not give a new one. This note sued on is a part of the original transaction.”

Later, referring to the amounts collected by plaintiff from Payne and Koehtitzky, he said: “In May, 1914,1 quit calling one of them commissions and called them both discounts. On 8 June, 1914, ... we charged them $83,43, at that time, as discount on the note sued on. It is down here as discount. I think that figures out at the rate of 73/2 per cent. ... 9 June, 1915, is the next entry — T. J. Payne, $141.66 twice. That was on this $2,500 note. That shows interest at the rate of 7percent. We credited the Security Life and Annuity Company on our books with $5,000, and issued a certificate of deposit for it.”

One of the defendants testified: “We could not borrow the money from the insurance company. We borrowed it from the plaintiff. Mr. Grimsley said he would not lend the money without real-estate security.”

Under this evidence, the money received by the defendants was the property of the trust company, and as there was an agreement to repay, it is a loan, and a greater rate of interest than 6 per cent being reserved, it is usurious.

If the transaction was of doubtful character, we would agree with the plaintiff that it ought to have been submitted to the jury, and if made to appear that the trust company was doing no more than charging a reasonable commission for negotiating a loan made by the annuity company, would uphold it, but this is not a reasonable inference, from the evidence.

If, however, the instruction of his Honor was erroneous and the verdict should be set aside, the plaintiff would be in no better position, because his Honor found the facts against the plaintiff on exceptions to the report of the referee, and these facts are sufficient to support the judgment. He made the following rulings and findings, which appear in his judgment:

“Defendants’ objections and exceptions to finding of fact No. 3 is allowed, and the finding stricken out and the following substituted therefor: 3. On or about 3 March, 1910, the Security Life and Annuity Company deposited $5,000 in the Savings, Loan and Trust Company, for which it received a regular certificate of deposit, bearing interest at 6 per cent per annum. The plaintiff made a loan of $5,000 to O. W. Kochtitzky and T. J. Payne, taking their note for said amount, with ~W. C. Heath as endorser, said note bearing interest at 6 per cent from date on its face, but 7 per cent interest being in reality charged and collected thereon, per annum, by the plaintiff. The latter deposited this note with the said insurance company as collateral to the said certificate of deposit.
“The findings of fact, as they stand, under these rulings, and amendments, are to the effect that plaintiff made the loan, a part of the time at 7 per cent interest per annum, a part at 8 per cent; that such rate of interest was paid, and giving the respective amounts, in dollars.”

These findings of fact are supported by evidence and are conclusive upon us, and the plaintiff waived his right to have a jury trial upon them by failing to demand a jury upon the exceptions.

The plaintiff could not take its chance with the judge for a favorable decision, thereby consenting that he should hear the exceptions, and then ask for a jury trial if the decision was unfavorable.

The question was passed upon and decided in Robinson v. Johnson, at this term, in which, upon a similar state of facts, the Court says: “Plaintiffs have clearly waived their constitutional right to the trial of the issues in the case by a jury, as they failed to except to the referee’s report, and did not tender any issues at all, not even on the defendants’ exceptions. This was really tantamount to an agreement on their part that the judge should pass upon the defendants’ exceptions without a jury.”

We are also of opinion that tbe plea of estoppel cannot avail tbe plaintiff.

Tbe parties in tbe former action were tbe same as in tbis, but tbe note sued on was a different one, and tbe transaction, so far as tbe records sbow, not connected witb tbe loan in tbe present case.

Tbe issues, therefore, were not tbe same, and tbe only reference in tbe former action to any item or fact in tbis'is as to an item of $812.12, and tbe defendants in tbe present action stated at tbe trial of tbe issues tbat tbey did not ask any recovery on account of tbis item, and tbe possibility of any benefit therefrom is provided against in tbe judgment.

We find no error.

Affirmed.  