Case ID: ohio-st_25/html/0621-01.html
Source: Caselaw Access Project
Author: {"author": "Gilmore, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Marietta Iron Works et al. v. William Lottimer.
    1. Under the act of May 4, 1869, parties may stipulate in a note for any • rate of interest not exceeding, eight per cent, per annum, and such note, after maturity, without an express agreement to that effect, will' continue to hear the stipulated rate until payment.
    
      :2. Under section 1 of the act, a note made payable three years after date, with “interest at the rate of seven per cent, per annum, payable quarterly,” is not usurious.
    '3. A judgment taken on such a note for the amount due, including unpaid interest, will bear the stipulated rate of interest only, without rests, until payment.
    Motion for leave to file petition in error, to reverse the judgments of the District Court, and Court of Common Pleas of "Washington county.
    The action was brought against the Marietta Iron "Works :as principal, and others as indorsers, of two promissory notes •of $25,000 each, made, delivered, and dated at Marietta, on-the 31st of March, 1870, and payable at the Bank of the Republic, New York city, in three years from date, with interest at the rate of seven per cent, payable quarterly.
    The interest was paid on the notes up to the 31st day of December, 1872.
    There was no defense, and at the May term, commencing May 26, 1873, judgment was taken against the principal .and indorsers for the sum of $51,427.59, in the usual form, to which the following was added: “ And it is further adjudged that this judgment bear interest at the rate of seven per cent, payable quarterly until paid.”
    The defendants below, then filed a petition in error in the District Court, to reverse the judgment of the Common Pleas, assigning for error:
    1. “ That said judgment was rendered for more than the .amount due to said defendant, principal and interest, as appears in the face of said record.”
    2. “ That said judgment was rendered for the sum of '$51,427.59, when it should have been rendered only for the sum of $51,400.”
    The District Court affirmed the judgment of the Common Pleas, and the plaintiffs in error, defendants below, now ask leave to file a petition in error to reverse the judgments of the courts below, relying on the same errors assigned in the District Court.
    
      
      Ewart & Sibley, for the motion:
    I. The contract for a special rate of interest is limited by the date of the maturity of the notes, and the principal and interest are to bear the same rate of interest from the maturity of the notes until paid, which on the interest is six per cent. Anketel v. Converse, 17 Ohio St. 11.
    II. As to the rate after three years, or upon default in payment of principal or interest, the contract says nothing. The law fixes the rate in the absence of express stipulation; that rate, consequently, and not the conjecture of a court ■.as to some presumed intention which parties would not declare, must govern. And with this is the clear reason of the thing, and the weight of authority. Brewster v. Wake-field, 22 How. (U. S.) 125 ; Tuffle v. O. L. & T. Co., 2 Dis. 121; Hamilton v. Van Rensselaer, 43 N. Y. 244; Longston v. S. C. R. R. Co., 2 S. C. 248; Searle v. Adams, 3 Kan. 515; Robinson v. Kinsey, 2 Kan. 184; Macomber v. Dunham, 8 Wend. 550; United States Bank v. Chapin, 9 Wend. 471; Ludoise v. Huntzinger, 5 Watts & S. 51; Henry v. Thompson, Minor (Ala.), 209; Kitchen v. Branch Bank, 14 Ala. 233; Gray v. Biscal, 6 Bush (Ky.), 687.
    
      Monett v. Sturges (25 Ohio St. 384) was decided on a note providing in terms that the special rate should continue after maturity. Hence it does not touch this case.
    Apart from our statute, there is a settled rule of damages ■for the detention of money due, in the absence of an agreement to pay interest. The plaintiff in such case recovers the legal rate of interest, which is adopted as the conveni-ent and uniform rule for determining the amount of damage resulting from such detention of the money. Fisher v. Bidwell, 27 Conn. 363; Lamb v. Lambert, 15 Minn. 416; Minard v. Beans, 64 Penn. St. 411; Hamilton v. Van Rensselaer, 43 N. Y. 244.
    III. Rests can not be allowed in computing interest upon a judgment or decree.
    1. At common law judgments do not draw interest. Freeman on Judgments, see. 441.
    2. They carry interest, therefore, in this state, only by ottr statute, and that does not authorize rests in its computation. Even should Lottimer be held entitled to the special rate on this judgment, still that must be computed for the* entire period the judgment remains unpaid. Stuart v. Day, 3 West. L. M. 214; Wilson v. Marsh, 2 Beas. 289; L. M. R. R. Co. v. Collet, 6 Ohio St. 183.
    
      R. K. Shaw, contra:
    I. A contract, prescribing a rate of interest, bears the-same rate, after it becomes due, as that prescribed, unless-the rate prescribed in the contract, be less than the statute-rate, when it takes the statute rate. Bates v. Wernwag, 4 Blackf. 472; Kilgore v. Powers, 5 Blackf. 22; Beckwith v. Hartford, P. & L. R. R. Co., 29 Conn. 269; Adams v. Way, 33 Conn. 419; Mitter v. Boroughs, 4 Johns. Ch. 436; Spencer v. Maxfield, 16 Wis. 185, and cases cited; Pryn v. Milwaukee, 18 Wis. 386; Spalding v. Lord, 19 Wis. 560 Entyre v. McDaniel, 28. Ill. 201; Pliny v. Baldwin, 16 Ill. 108; Hopkins v. Crittenden, 10 Texas, 189; Kohler v. Smith, 2 Cal. 597; Pridgen v. Andrews, 7 Texas, 46; Burkhard v. Laffery, 1 Morris (Iowa), 107 ; 1 Green (Iowa), 66; 1 Scammon, 137; 3 Scammon, 261; 22 Iowa, 194; Keen v. Keen, 3 Com. Bench, 144
    II. Under the interest law of Ohio, of 1850, known as-the ten per cent, law, a contract carries the same agreed rate, after due, until paid, as well as during the time it was made to run. Monett v. Sturges, 25 Ohio St. 384.
    A comparison of the interest law of 1850, and the eight per cent. law of 1869, will show that the law of 1869 is like the law of 1850 (Curwen tat. 1569, 66 Ohio L. 91), except that in the law of 1869 contracts specifying no rate of interest are included in a separate section. And it is rendered more certain that where a rate is specified, that rate-continues till payment. Curwen Stat. 1569; 66 Ohio L. 91.
   Gilmore, J.

The errors assigned may be resolved into - the following:

The judgment was rendered for more than was due-to the plaintiff below, including principal and interest, at the time of its rendition.

That the judgment was made to hear interest at the rate of seven per centum, payable quarterly until paid.

To determine the first, reference must be had to an act “ to amend an act fixing the rate o'f interest,” passed May 4, 1869 (66 Ohio L. 91), the first and second sections of which read as follows :

“ Sec. 1. That the parties to any bond, bill, promissory note, or other instrument of writing for the forbearance or payment of money at any future time, may stipulate therein for the payment of interest upon the amount of such bond, bill, note, or other instrument of writing at any rate not exceeding eight per centum per annum, payable annually.
“ Sec. 2. That upon all judgments, decrees, or orders rendered upon any bond, bill, note, or other instrument of writing containing stipulations for the payment of interest,, in accordance with the provisions of the first section of this act, interest shall be computed till payment at the rate specified in such bond, bill, note, or other instrument of writing.”

In all other cases, section 3 provides that the rate of interest shall be six per cent., and no more.

The loan in this case was made, and the notes sued on were executed and delivered in Ohio, and being an Ohio-transaction, it is to be governed by the laws of our state.. The fact that the notes were made payable in the city of New York does not affect the questions.

In support of the first assignment of error, counsel for the plaintiffs claim, substantially, that a proper construction of the contracts will not, extend the stipulated rate of interest beyond the maturity of the notes; and that the contract being silent as to the rate of interest after the maturity of the notes, the legal inference is that the principal and interest due and unpaid, are to bear the same rate of interest, which, after the maturity, is six per centum, and no more, until the notes are paid.

This claim, so far as it relates to the unpaid installment of interest in this case, is correct, for the reason that there is no stipulation in the contract that the installments of interest, if not paid as they fall due, shall hear any special rate of interest, and, in the absence of such a stipulation, section 8 of the law fixes the rate at six per centum per annum, and which rate the unpaid installment would bear from the time it was due until judgment was rendered. But the claim is not correct, as applicable to the principal of the notes. The rate of interest stipulated therein is lawful under section 1 of our statute, and it is expressly provided by section 2, that upon all judgments on such notes, “interest shall be computed till payment at the rate specified in the note.” If the judgment rendered upon the notes is to bear the stipulated rate of interest from its rendition until payment, the inference is irresistible that the notes after maturity and before judgment must bear the stipulated rate. In other words, the principal of a note will bear the stipulated rate of interest from the time it is due until it is paid, whether payment is made voluntarily or enforced by judgment and execution.

The provisions of the ten per cent, law of 1850 (Curwen’s Statutes, 1599), except as to the rate of interest allowable, were, in effect, the same as those of the act of 1869, above quoted, so that a construction given to a contract under the first, will apply equally under the latter act.

The case of Monnett v. Sturges, decided at the present term, ante 884, arose under the first named act, on a ten per cent, note, in which thex-e was a provision that if the note was not paid when due, “ the interest should be paid at that time, and on the first of December and first of June, semi-annually, thereafter, till paid;” and it was held: “ That a contx’act to pay a specified rate of interest, is a contract to pay interest at that x’ate until the principal debt is paid, and not merely for the time that the note is to run.” Counsel for plaintiffs in error seem to suppose that the decision depended upon the express provision in the contract as to the payment of interest after maturity, and will not apply to the contracts in the present case, where the agreement is to pay “ interest at the rate of- seven per cent, per annum, payable quarterly,” during the time the notes had to run, and not after maturity. But this is not the case. The court was declaring the legal effect of an agreement to pay a rate of interest greater than six per cent., but not in excess of that allowed by the statute, without reference to the form, of the contract in that case. The- decision in Monnett’s case furnishes the rule that governs in this, on the point under consideration. The principal of the notes will bear seven per cent., and the quarterly installments of interest six per cent, from the time they respectively fell due, to the first day of the term at which the judgment was rendered; and computation on this basis will show the amount for which the judgment should have been entered.

If the amount for which judgment was taken is found on -computation to be too great, the excess may be remitted by the defendant in error, and the judgment for the correct amount affirmed; if this is declined, the judgment will be reversed.

The second error assigned is that the judgment is made to bear interest at the rate of seven per cent, payable quarterly until paid.

The contract is merged in the judgment, and its-terms are, therefore, no longer operative. At common law, judgments did not draw interest, nor would they do so in Ohio, in the absence of statutory provisions on the subject. The statute requires the judgment in this case to bear seven per cent, per annum, from its rendition till payment, without rests.

The order requiring the interest on the judgment to be paid quarterly was unauthorized and therefore erroneous. If, however, the defendant in error will enter in the Court of Common Pleas a modification of the judgment in this respect, or a remittitur of the right to receive more than seven per cent, on the judgment, computed without rests, the judgment will be affirmed; othewise, it will be reversecU

MoIlvaine, C. J., Welch, White, and Rex, JJ., concurred