Case ID: tenn_54/html/0128-01.html
Source: Caselaw Access Project
Author: {"author": "Fbeeman, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Sam’l S. House et al. v. Tennessee Female College..
    Interest. When a promissory note bears interest payable semi-annually, interest is to be allowed on unpaid instalments of interest.
    FROM WILLIAMSON.
    From the Chancery Court, April Term, 1871. W. S. Fleming, Ch.
    R. M. Ewing for complainant:
    1. This was a note executed by the obligors, and payable to a guardian against whom the law would compound the interest as between him and his ward, and therefore all doubts which might arise as to the intention or understanding of the parties would be in favor of the guardian’s having discharged his duty to his ward, and framed the contract with a view to his legal duties and his own protection.
    2. The credits on the back of the note, and the prompt payment of the interest for several years, according to the contract, are further evidence of the intention of the parties and their views of the obligations of the contract.
    3. The note on its face stipulates, not only for the payment of the interest due thereon at stated intervals, but also that these payments shall be “prompt.”
    In the case of Hale v. Hale, 1 Col., 233, this Court said, that when the payment of interest at stated intervals forms part of the contract, and the payment of the principal sum is postponed to a distant day upon the faith of the agreement for regular and punctual discharge of the interest agreed on, equity and good conscience at least require that the debtor should fulfill his engagement or render to his . creditor the usual equivalent for the non-payment of the interest at the time agreed on. And that if an agreement to this effect were made, there is nothing illegal, immoral, or contrary to public policy in such a contract.
    This Court, in the ease of Ward v. Brandon, 1 Heis., 490, cites and approves the case of Sale v.- Hale,-1 Col., 233, and we think that that case is decidedly the one at bar.
    T. W. Turley for defendant:
    Compound interest can not be allowed upon the note in question: Ferry v. Ferry, 2 Cush., 92; Hastings v. Wiswall, 8 Mass., 455; Wilcox v. Howland, 23 Pick., 167; Doe v. Warren, 7 Greenl., 48; Bannister v. Roberts, 35 Me., 75; Stokely v. Thompson, 34 Penn., 210; Niles v. The Board, 8 Blackf., 158; Leonard v. Administrator of Villars, 23- Ill., 377; Connecticut v. Jackson, 1, John. Ch., 13; Henderson & Cairns, v. Hamilton, 1 Hall (N. Y.), 314; Ward v. Brandon, 1 Heis., 490.
   Fbeeman, J.,

delivered the opinion of the Court.

The only question presented in this case arises on the mode of computing interest on the following note:

“$2000. One day after date we, or either of us, promise to pay William Park, guardian, etc., two thousand dollars, with interest from this day until paid, for value received. The interest on' said sum to be promptly paid at the end of every six months until the principal shall be paid.”

The point made is, whether the interest is simply to be calculated from date of the note to its payment, ■or whether interest was contracted to be paid at the end of every six months, and on failure whether such interest shall be held as a debt due by contract" and ■bear interest.

We hold the latter to be the proper construction ■of the paper.' To construe it in any other way would be to ignore the latter part of the contract entirely, and to read the note as if no such stipulation had been inserted in it.

The provision is clear and unmistakable, that “the interest on said sum is to be paid promptly at the end of every six months until the principal shall be paid.” It is then a contract by which the interest becomes due as a debt at the end of every six months; and this, like any other debt due, bears interest at the legal rate from the time due till paid.

The Chancellor having taken this view of the question, the decree below is affirmed, with costs of that court and of this.

Note. — To same effect are 69 N. C., 89; 3 Richardson, S. C., 125; 2 Disney (Ohio), 398; 11 American Reports, 228 (9 R. I., 132), and authorities there cited.