WalKer, J.,
after stating the case: The test of usury is that there should be a contract for the forbearance of an existing indebtedness or a loan of money.
Struthers v. Drexel,
122 U. S., 487; 29 Am. and Eng. Enc., p. 464, sec. 4, and note 5;
Smithwick v. Whitley,
152 N. C., 366; or, as otherwise expressed, a profit greater than the lawful rate of interest, intentionally exacted as a bonus for the loan of money, imposed upon the necessities of the borrower in a transaction where the treaty is for a loan and the money is to be returned at all events, which is a violation of the usury laws, it matters not what form or disguise it may
assume.
Doster v. English,
152 N. C., 339. The following rule was adopted in that case for our guidance: “In order to constitute a usurious transaction, four requisites must appear: (1) There must be a loan, express or implied; (2) an understanding between the parties that the 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 the case may be; and (4) there must exist a corrupt intent to take more than the legal rate for the use of the money loaned. The text-writers declare that these rules are applicable everywhere and under the usury laws of every State, and that unless these four things concur in every transaction it is safe to say that no case of usury can be declared. Tyler on Usury, p. 110; Webb on Usury, sec. 18, and cases cited;
Bennett v. Best,
142 N. C., 168; U.
S. v. Wagoner,
34 U. S., 378.” The same rule, somewhat differently expressed, was stated in
MacRackan v. Bank,
164 N. C., 24, 34, it being there added that the fourth element may be implied if all the others are expressed upon the face of the contract, or are established by sufficient evidence. What was said in
Yarborough v. Hughes,
139 N. C., 200, is, perhaps, more to the point in this case: “The profit realized by Hughes, even if excessive, would not amount to usury, unless it was a mere device to -cover and conceal an usurious transaction. It is less difficult to decide what is usury, when there is a loan of money, than in a case like this one. Interest is the premium allowed by law for the use of money, while usury is the taking of more for its use than the law allows. It is an illegal profit. 4 Blk. Com., 156. How can we say, on the face of this transaction, that as a matter of law it is usurious? If it was a reasonable advance, it surely cannot be illegal, for it was not excessive, and even if exorbitant it must have been resorted to as a mere cloak for usury. It would therefore depend upon the intent with which the increase was exacted. Referring to a .state of facts much like those in this record, Tyler on Usury, p. 92, says: ‘The inquiry often arises whether the transaction was a real sale in the regular course of business or a colorable sale, with intent to disguise a loan and evade the statute against usury; but if the case is found to be a sale and not a loan, the courts uniformly hold that usury cannot attach, and indeed a sale can in no case be
prima facie
evidence of usury; for it is valid unless it be a loan in disguise, and the burden of proof lies on the party claiming it to be usury, and it-is necessary for him to show the circumstances which bring it within the statute.’ In cases like this the intent is the essential element of usury, and this is of course a question of fact to be decided by the jury under proper instructions from the court. In this case the unlawful intent is not found.”
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WalKer, J.,
after stating the case: The test of usury is that there should be a contract for the forbearance of an existing indebtedness or a loan of money.
Struthers v. Drexel,
122 U. S., 487; 29 Am. and Eng. Enc., p. 464, sec. 4, and note 5;
Smithwick v. Whitley,
152 N. C., 366; or, as otherwise expressed, a profit greater than the lawful rate of interest, intentionally exacted as a bonus for the loan of money, imposed upon the necessities of the borrower in a transaction where the treaty is for a loan and the money is to be returned at all events, which is a violation of the usury laws, it matters not what form or disguise it may
assume.
Doster v. English,
152 N. C., 339. The following rule was adopted in that case for our guidance: “In order to constitute a usurious transaction, four requisites must appear: (1) There must be a loan, express or implied; (2) an understanding between the parties that the 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 the case may be; and (4) there must exist a corrupt intent to take more than the legal rate for the use of the money loaned. The text-writers declare that these rules are applicable everywhere and under the usury laws of every State, and that unless these four things concur in every transaction it is safe to say that no case of usury can be declared. Tyler on Usury, p. 110; Webb on Usury, sec. 18, and cases cited;
Bennett v. Best,
142 N. C., 168; U.
S. v. Wagoner,
34 U. S., 378.” The same rule, somewhat differently expressed, was stated in
MacRackan v. Bank,
164 N. C., 24, 34, it being there added that the fourth element may be implied if all the others are expressed upon the face of the contract, or are established by sufficient evidence. What was said in
Yarborough v. Hughes,
139 N. C., 200, is, perhaps, more to the point in this case: “The profit realized by Hughes, even if excessive, would not amount to usury, unless it was a mere device to -cover and conceal an usurious transaction. It is less difficult to decide what is usury, when there is a loan of money, than in a case like this one. Interest is the premium allowed by law for the use of money, while usury is the taking of more for its use than the law allows. It is an illegal profit. 4 Blk. Com., 156. How can we say, on the face of this transaction, that as a matter of law it is usurious? If it was a reasonable advance, it surely cannot be illegal, for it was not excessive, and even if exorbitant it must have been resorted to as a mere cloak for usury. It would therefore depend upon the intent with which the increase was exacted. Referring to a .state of facts much like those in this record, Tyler on Usury, p. 92, says: ‘The inquiry often arises whether the transaction was a real sale in the regular course of business or a colorable sale, with intent to disguise a loan and evade the statute against usury; but if the case is found to be a sale and not a loan, the courts uniformly hold that usury cannot attach, and indeed a sale can in no case be
prima facie
evidence of usury; for it is valid unless it be a loan in disguise, and the burden of proof lies on the party claiming it to be usury, and it-is necessary for him to show the circumstances which bring it within the statute.’ In cases like this the intent is the essential element of usury, and this is of course a question of fact to be decided by the jury under proper instructions from the court. In this case the unlawful intent is not found.”
The jury, of course, must be satisfied by a clear preponderance of proof that the debtor has paid more than the legal rate of interest, and
tbat the creditor received it as usury, or with the knowledge that it was usury, or, in other words, with the wrongful intent to violate the law by taking an excessive amount for the use of his money.
Bennett v. Best,
142 N. C., 168. The object of the Legislature was to forbid the reserving, charging, or taking interest for the use of money at a rate in excess of 6 per cent per annum, under any contract where the relation of debtor and creditor is created or survives, and the absolute sale of property bona fide is not condemned by the law. It was held in
Jackson v. State,
5 Ga. App., p. 181: “There is certainly no intimation in the language of this caption of a legislative intent to make penal the purchase of personal property or choses in action under any circumstances or at any price, no matter how low. The misdemeanor indicated by the title of the act is the reserving, charging, or taking of usury or excessive interest for money loaned or advanced at a greater sum than 5 per cent per month. In a bona fide sale and transfer of property for a cash consideration there is no interest or usury, and the relation of debtor and creditor is not created and does not survive the transaction. Only when the relation of debtor and creditor exists’ can the question of interest, excessive or otherwise, arise.” The law, though, considers the substance and not the mere form or outward appearance of the transaction in order to ascertain what in reality it is. If this were not so, the usury laws might easily be evaded by false and deceitful methods. The inquiry, therefore, is what is the transaction in its substance and effect? These principles of the law upon the subject were carefully and fully explained to the jury, and they have found the essential fact in the case against the defendant, viz., that he loaned the money to the plaintiff with which to buy the ear and exacted of him interest in excess of the lawful rate. The defendant excepted to but one instruction, which was taken from the body of the charge, but there was no error in it, especially when considered with its context, and we are required so to view it. The correctness of an instruction should be tested by examining the charge as a whole, and if, as an entirety, it is free from error, an assignment predicated upon an isolated paragraph, which standing alone might be misleading, must fail.
Kornegay v. R. R.,
154 N. C., 389;
Revis v. City of Raleigh,
150 N. C., 348;
Aman v. Lumber Co.,
160 N. C., 369;
Bird v. Lumber Co.,
163 N. C., 162. This is the settled rule in other jurisdictions. 4 S. E. Dig., p. 2067, sec. 295. The criticism of the selected paragraph is directed more against its verbal accuracy than its substantial correctness. We do not think it is erroneous even if construed alone, and contrary to the rule we have stated, because, when brought to its final analysis, it is equivalent to an instruction that if the transaction was, in good faith and in reality, a sale instead of a loan, then there was no usury, and this was correct. We think that there is no just ground of complaint that the instruction was not clear enough.
An intelligent jury could, not bave failed to understand it, even standing by itself; but when considered in view of tbe other parts of the charge, its meaning is perfectly apparent. It was really a repetition of what had before been said by the court in stating the contentions of the parties, and the court was merely affirming,-as sound law, the particular contention of defendant, and directing a verdict accordingly, provided the jury found the facts to be as he had stated in his testimony they were.
The charge was scrupulously fair and impartial, and, judged by every test of the law, it complied fully with the requirement of the statute as to instructing juries.
No error.