SLEDGE LUMBER CORPORATION
v.
SOUTHERN BUILDERS EQUIPMENT COMPANY, Incorporated.
No. 598.
Supreme Court of North Carolina.
June 15, 1962.*99 Robert B. Morgan, Lillington, and Lake, Boyce & Lake, Raleigh, for defendant appellant.
Tally, Tally, Taylor & Strickland and Jesse M. Henley, Jr., Fayetteville, for plaintiff appellee.
SHARP, Justice.
By disallowing defendant's claim that plaintiff had forfeited all right to collect interest on the note which is the subject of this action and by entering judgment for the balance of the principal due with interest at five per cent after crediting defendant with all payments, the trial judge held that the defendant had offered no evidence tending to show that plaintiff had reserved or charged a greater rate of interest than six per cent for the use of the $42,000.00 lent defendant. The correctness of this ruling is the question presented by this appeal. The answer to it depends upon whether or not the evidence will justify an inference that the president of the plaintiff corporation, W. F. Sledge, made the saleoption transaction involving the 15-B Erie Crawler Crane a condition precedent for the loan.
If Sledge were the payee in the note and the plaintiff in this action, the ruling on the motion to dismiss the claim for forfeiture of interest would clearly have been error. The circumstances surrounding the execution and delivery of the bill of sale and the option to repurchase the crane and the retention of the crane thereafter by the defendant for more than a year without any agreement for rent would raise a question of fact to be determined by the jury as to whether that transaction were in fact a bona fide sale or a disguised loan made with the corrupt intent to evade the statute against usury. A contract of this kind is frequently a cloak to cover up a scheme to collect usurious interest. However, whether it is such a device depends upon the real intent of the parties which is a question of fact to be determined by the jury from all the circumstances of the particular case. 55 Am.Jur., Usury, *100 Sections 24, 30; Anno., 154 A.L.R. 1063. A profit, even if excessive, is not usury unless it is a mere device to cover and conceal a usurious transaction. Yarborough v. Hughes, 139 N.C. 199, 51 S.E. 904.
There is no suggestion, either in the pleadings or the evidence, that the $42,000.00 note considered alone, is tainted with usury. The interest charged was only five per cent and the $36,000.00 check which closed the loan was apparently the unpaid balance due the defendant at that time. Therefore, if the crane sale-option deal was, in fact, unrelated to the loan and a separate transaction between Sledge and the defendant, the nonsuit would clearly be proper.
The defendant in its answer alleges that plaintiff is "a corporation wholly owned by W. F. Sledge * * *" that W. F. Sledge "is the sole owner of the stock in the corporation * * *" that W. F. Sledge "acting as agent, servant, and employee for and on behalf of the said Sledge Lumber Corporation, negotiated the $42,000.00 loan but that "acting as agent, servant and employee of the said plaintiff, Sledge Lumber Corporation, simultaneously therewith required the defendant corporation as a part of the inducement to make said loan, to execute a bill of sale * * * wherein * * * a 15-B Erie Crawler Crane was conveyed to the said W. F. Sledge, the said W. F. Sledge being the principal and majority stockholder in the plaintiff corporation, and at the said time acting as agent, servant, and employee of said corporation, and did receive the said bill of sale while acting in said capacity, * * *."
No evidence supports the defendant's allegation that Sledge was the sole owner of the plaintiff corporation; others owned 238 shares. The theory of the counterclaim is not that Sledge is the alter ego of plaintiff or that plaintiff is a one-man dominated corporation, and the ends of justice require that the corporate entity be disregarded so that Sledge is revealed as the real party in interest. Terrace, Inc. v. Indemnity Co., 243 N.C. 595, 91 S.E.2d 584. The repeated allegations are that Sledge, acting as the agent of the plaintiff, required the defendant, as a condition for the loan, to execute to him personally a bill of sale for the crane for the grossly inadequate price of $3500.00, taking back an option to repurchase for $8,500.00.
Sledge was the president and acting manager of the plaintiff corporation. He handled the loan with defendant. His position as chief executive officer of the corporation was such that his acts and knowledge would be the acts and knowledge of the corporation which can act only through its agents. If, as a condition for the corporation's loan and as a cloak for usury, Sledge required defendant to sell the crane to him individually for a grossly inadequate price giving back to the defendant an option to repurchase at more than twice the sales price, then the corporation would be held responsible for his acts. Williams v. Rich, 117 N.C. 235, 23 S.E. 257; Annotations, 7 A.L.R. 139; 52 A.L.R. 2d 747, 748; 105 A.L.R. 807. However, unless Sledge made the sale of the crane to himself one of the conditions for the loan from the corporation, the corporation's loan could not be tainted with usury because of the personal dealings between its president and the defendant on an unrelated transaction however usurious the latter transaction might have been. It is the general doctrine "that a corporation is not bound by the action or chargeable with the knowledge of its officers or agents in respect to a transaction in which such officer or agent is acting in his own behalf, and does not act in any official or representative capacity for the corporation." Brite v. Penny et al., 157 N.C. 110, 72 S.E. 964; Brinson v. Supply Co., 219 N. C. 505, 14 S.E.2d 509.
As we have said, the evidence on this record would sustain a finding that *101 Sledge himself intended to collect usury by means of the crane transaction, but there is no evidence to support defendant's allegation that he made the sale of the crane, for which he gave his personal check, a condition for the loan. The negotiations for the loan were conducted by Sledge and Joe Stout who was then defendant's general manager. Stout is no longer general manager, but he is a second vice-president of the defendant corporation. Nevertheless, he did not testify at the trial of this action. The evidence does not disclose any acceptance of benefits from the crane deal by the plaintiff. The evidence is that all payments on the crane were made to Sledge himself. There is no evidence as to when the negotiations between Sledge and defendant began with reference to the crane deal. The record is silent as to any connection between the loan and the crane transaction except that they were both closed at the same time by the same attorney and that the proceeds of both were used to pay off prior debts of the defendant. We do not think that this was sufficient to sustain a finding that the sale was a condition for the loan.
In any event, it appears that no injury can come to the defendant by treating the note and the crane deal as separate transactions. In the instant case judgment has been entered on the note for the balance which defendant agreed was due. According to the allegation in plaintiff's reply, introduced in evidence by the defendant prior to the institution of this action by the plaintiff corporation, Sledge individually had commenced an action for the possession of the crane, and in that action defendant has properly raised the question of usury which it sought to raise here. Defendant, therefore, still has the right and opportunity to have a jury find the true nature of the crane transaction.
For the reasons stated the ruling of the trial judge is
Affirmed.