JULY TERM, 1812.*

#### Gales *v.*Buchanan & Pollok.

From Wake.

A gives liis bond to B. for *$*1000, payable six months after date, with, interest from the date on so much of said bond as should remain unpaid at the end of sixty days, after the said bond became payable. This interest is secured by way of penalty, and equity will relieve against it.; and where such interest has been paid, equity will decree it to be refunded.

This was a bill filed in the Court of Equity for Wake County, against Buchanan & Pollok, merchants, of the town of Petersburg, in Virginia. The Complainant charged, that on or about the 12th day of July, 1804, Robert Johnson and Robert Fleming, merchants, trading under the name and firm of Johnson & Fleming, with Andrew Fleming, Henry Hunter and Complainant, their securities, gave three several writings obligatory to one *146J acob Mordecai, who, before either of the said writings obligatory became due, assigned them to the Defendants. That Johnson & Fleming made largo payments towards the discharge of these bonds, and that Defendants had failed to apply those payments as in good conscience they were bound to do, and had instituted suits in Hillsborough Superior Court against Complainant, on two.of the said bonds, and had recovered judgments for larger sums than in equity were due to them, Complainant being ignorant, at the time of the trial, of the amount of payments made to Defendants by Johnson & Fleming. The first bond was to secure the payment of two thousand dollars on or before the 20th day of April, *1805;*the second bond was to secure the payment of one thousand six hundred sixty-two dollars and thirty-eight cents, on or before the 20th day of October, 1805 and •the third bond was to secure the payment of the said sum on or before the 1st day of March,. 1806. In each bond the obligors bound themselves "to pay interest, from the date of the bond, on such part thereof as should remain unpaid at the end of sixty days after the said bond became payable.” Johnson & Fleming having failed to discharge the first bond, within sixty days after it became due, were required by Defendants to pay interest from the date of the bond, upon the sum remaining due, at the end of the said sixty days *;*and such interest had been satisfied to Defendants out of the monies paid to them by Johnson & Fleming, and the balance of such monies, only, carried to the credit of the second and third bonds, upon which Complainant had been sued $ and these being penal bonds, judgments had been rendered for the penalty in each, and Complainant charged that Defendants threatened to sue out their executions and cause to be raised the interest attempted to be secured by the said bonds. • The Complainant prayed for an injunction as to this interest, and that Defendants might be decreed to come to an account for the mo-*147rúes paid to them by Johnson & Fleming, and give ere-dit to Complainant for the amount of interest which they had improperly received upon the first bond. t

An injunction was granted, and the Defendants ing filed their answer the cause came on to be heard upon the bill and answer, when the following question was made and ordered to be sent to this Court, to wit: “Whether interest on the three bonds mentioned in Complainant’s bill, or on either of them, shall be computed from the time they bear date, or from the time they were made payable

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 The Honorable *Leonard Henderson,*Esquire, Was prevented by indisposition from attending at this term.

Lowkie, Judge,

delivered the opinion of the Court:

The question submitted to us in this case is simply this ; whether the interest secured by the bonds and to bejpaid from the dates thereof, on such sums as should remain Ampaid sixty days after each bond became due, was so secured by way of penalty or not ? And the Court think that such interest was so secured by way of penalty, and that a Court of Equity, ought to relieve against it. This is like the case of *Orr*v. *Church*—(1 *Hen. Bl.*227.) It is true, that the w'ord *penalty*is there inserted in tiic bond *;*but we think that makes no difference. The principle in both cases is the same. In this case, as well as in that, the interest was only demandablo on the failure of the obligors to pay at the day. Had the principal of the bonds been paid on the day on which they became due, or within sixty days thereafter, such interest would not have been demandable by the terms of the contract; hence it could only be. demanded as a penalty for nonperformance, The obligors wanted no interest until the days of payment mentioned in the bonds, and the clauses securing the interest, were inserted to insure punctuality. It is the peculiar province of a Court of Equity to relieve against penalties. We, therefore, think that the injunction should be made perpetual as to the interest, which by the terms of the contract, accrued on the two *148bonds, on which Complainant hath been sued, from the date of the said bonds up to the time when they respectively became payable ,- and that Defendants come to an account for the monies paid to them by Johnson. & Fleming, and that Complainant be credited with the. amount of interest which, they have improperly received upon the first bond.