North Carolina § 24-2 - Penalty for usury; corporate bonds may be sold below par.

§ 24-2. Penalty for usury; corporate bonds may be sold below par.

The taking, receiving, reserving or charging a greater rate of interest than permitted by this chapter or other applicable law, either before or after the interest may accrue, when knowingly done, shall be a forfeiture of the entire interest which the note or other evidence of debt carries with it, or which has been agreed to be paid thereon. And in case a greater rate of interest has been paid, the person or his legal representatives or corporation by whom it has been paid, may recover back twice the amount of interest paid in an action in the nature of action for debt. In any action brought in any court of competent jurisdiction to recover upon any such note or other evidence of debt, it is lawful for the party against whom the action is brought to plead as a counterclaim the penalty above provided for, to wit, twice the amount of interest paid as aforesaid, and also the forfeiture of the entire interest. If security has been given for an usurious loan and the debtor or other person having an interest in the security seeks relief against the enforcement of the security or seeks any other affirmative relief, the debtor or other person having an interest in the security shall not be required to pay or to offer to pay the principal plus legal interest as a condition to obtaining the relief sought but shall be entitled to the advantages provided in this section. Nothing contained in this section or in G.S. 24-1, however, shall be held or construed to prohibit private corporations from paying a commission on or for the sale of their coupon bonds, nor from selling such bonds for less than the par value thereof. History (1876-7, c. 91; Code, s. 3836; 1895, c. 69; 1903, c. 154; Rev., s. 1951; C.S., s. 2306; 1955, c. 1196; 1959, c. 110; 1969, c. 1303, s. 3.) Cross References. - As to limitation of actions to recover penalty and forfeiture of interest for usury, see G.S. 1-53. As to party seeking to recover on any usurious contract not being allowed costs, see G.S. 6-25 . As to usurious loans on household and kitchen furniture or assignments of wages being made a misdemeanor, see G.S. 14-391. For the Consumer Finance Act, see G.S. 53-164 to 53-191. As to applicability of usury provisions to pawnbrokers, see G.S. 91A-8. Legal Periodicals. - For note in reference to this section, see 12 N.C.L. Rev. 279 (1934). For brief comment on the 1955 amendment, see 33 N.C.L. Rev. 537 (1955). For comment on Michigan Nat'l Bank v. Hanner, 268 N.C. 668 , 151 S.E.2d 579 (1966), see 45 N.C.L. Rev. 899, 1151 (1967). For comment on usury law in North Carolina, see 47 N.C.L. Rev. 761 (1969). For comment on equity participation (a device to circumvent usury laws) in real estate finance, see 7 N.C. Cent. L.J. 387 (1976). For note, "Judicially Imposed Usury Penalties in the Absence of Statutory Penalties: Can Freedom of Contract Co-Exist with Public Policy After Merritt v. Knox?," see 68 N.C.L. Rev. 1021 (1990). For survey on usury law, see 70 N.C.L. Rev. 1983 (1992).