#### *John C. Singleton*v. *J. D. Allen.*

Columbia,

May, 1848.

When a general payment is made, *in anticipation,*upon an instrument securing the payment of money at a future specified time, with interest thereon, from a prior date, the interest is computed up to the time of thepayment, and the pay" ment is deducted from the aggregate of the principal and interest, first applying it to the interest, and then to principal if it exceeds the amount of interest; but if the payment does not exceed the interest, then it is applied towards its extinguishment.

The covenants for quiet enjoyment, included in our ordinary conveyances, begin to run only from eviction; and where a grantee, after being evicted, subsequently acquires a good title, having, in the mean time, otherwise sustained no loss, nor been deprived of any privilege by the eviction, he is entitled to compensa tion only for the actual injury done the premises during the time they were held adverselyto him.

An appeal relating to costs alone, will not be sustained. But where the decree is found to be erroneous on other points, the Court is to adjudge the costs upon the principles of the decree as reformed.

*Before*Harper, Ch. *at*Columbia, *July Sittings,*1847.

It appears in this case that John C. Singleton, the complainant, on the 22nd day of January, 1836, purchased from William M. Myers his plantation and negioes on the Conga-ree River, for $75,000, and gave his bond conditioned for the payment of that sum, with interest thereon annually, on or before the 22nd day of January A. D. 1846. The bond was further conditioned that complainant should be at liberty to pay the said bond, or any part thereof, in such sum or sums, and at such time or times, as it might suit him to do so, within the ten years. The complainant gave mortgages of the land and slaves to secure the payment of the bond, and received titles with the usual warranty. Afterwards James O’Hanlon set up a claim to fifty acres of the land and commenced using the timber which was upon it, when in March, ’42, the complainant brought an action of tespass to try title against him. The jury found a verdict for O’Hanlon, and in January, 1845, Myers bought the fifty acres from O’Hanlon for the sum of $750, and transferred the title to complainant.

In 1844, the bond with a balance still due upon it was assigned by Myers to Joseph D. Allen, the defendant.

In his bill, complainant claims a deduction from his bond, of interest upon the value of the fifty acres, from which he had been evicted, from the date of the original deed of Myers to him, to the period of time at which he subsequently received a good title, and that the payments made in 1836, should be applied wholly towards the extinguishment of the principal sum. At the maturity of the bond he tendered in *167payment of it an amount calculated upon those *data.*The defendant refusing to receive the sum tendered, as the true amount due, ordered the mortgaged negroes to be sold satisfaction of his debt.

The bill prays a writ of injunction to restrain the sale of the negroes, and an order that the bond should be delivered up to be cancelled. On hearing the application on bill and answer, his Honor Chancellor Caldwell delivered the following decretal order.

Caldwell, Ch. This is an application on bill and answer to enjoin defendant from selling seven slaves that complainant mortgaged to William M. Myers, Esq., to secure the payment of a bond for seventy-five thousand dollars. The bond and mortgage have been assigned to defendant, who claims over one thousand dollars as yet due, and has instructed his agent, Theodore Stark, Esq., to sell the slaves to satisfy his demand. The bond was dated the 22d of January, 1836, and was due 22d January, 1846, with interest from the date, “payable annually;” its condition contains the following stipulation. “That the said John C. Singleton shall be at liberty to pay the said sum of seventy-five thousand dollars, or any part thereof, as he may think proper, and in such sums as he may find convenient, at any time or times within the said ten years, when it may suit him to do so, and to have credit therefor endorsed upon the said bond when such payment shall be made,” &c. From this amount the parties agreed to deduct four thousand dollars, the value of twelve slaves retained, at the date of the bond. In the year 1836 complainant paid on the 18th of February, twenty thousand dollars, on the 12th of April, twelve thousand dollars, and on the 23d of July fifteen thousand dollars, making in the aggregate forty seven thousand dollars ; several payments were subsequently made, and complainant, on the 17th of July last, tendered defendant forty-three dollars and ninety-three cents as the balance due, which defendant refused to accept. The first question is, shall the interest, as the defendant insists, be calculated from the date of the bond to the first payment, and the payment be applied to the interest, and the balance of the payment be credited on the principal ? The general rule for calculating interest where partial payments have been made, ■ is to apply the payment in the first place to the interest due and the surplus to the principal; subsequent interest is to be calculated on the balance of principal remaining due ; if the payment be less than the interest, the surplus of interest is hot to be added to the principal, but to be kept in a separate .column, and the next payment is to be applied to extinguish it, so as not to compound the interest. This principle has been deduced from cases where principal and interest are due, or .the interest is due, and where there is no special contract *168between the parties as to the appropriation of the payments; cannot therefore be consideredas strictly applicable to this case, which must be determined by the construction of the C0ntraC(;j ^e intention and act of the parties, and by the credits entered upon the bond. In addition to the common law right that the debtor has, where his creditor holds different demands on him, to apply his payment as he pleases, this contract gives complainant the express right to pay the whole or any part of the debt at any time within the ten years when it may suit him to do so, and to have credit therefor endorsed upon the bond when such payment shall be made. The interest was accumulating from the date of the bond to the end of the year, but the debtor was not bound to pay it beiore it became due; it was neither his duty or his interest to do so, and the creditor had no right either to expect or exact it: the debtor, by appropriating his money to pay the interest beiore it was due, would lose its use until it became due; not so with the payment of the principal, any sum so applied would stop the interest *pro tanto*from the time of payment. When we consider the large amounts of the payments so promptly made and within such short periods of each other, when no interest could be required by the creditor, and such payments would, if applied to extinguish the interest, give an advantage to the creditor, and work an injury to the debtor inconsistent with the right which he had so carefully reserved in the contract, there seems to be little doubt as to the intention of the debtor to appropriate his payments in 1836, to the discharge of the principal. As his right was clearly expressed it cannot be waived by implication; such a construction would defeat one of the prominent objects of the contract, and convert that which was intended as a benefit into a burden: the promptness of payment was intended to secure the privilege of stopping the interest, and shall equity make that the means of accumulating it? The phraseology of several of the credits strengthens this conclusion ; the first, “as part of the within bond,” the third, “in part of this bond,” and the fourth on the 23d of January, 183?, for twenty hundred and forty-eight dollars and eighty cents *“in part of the interest due on the above bond.”*According to the defendant’s mode of calculation, there could not then be near that amount due for interest, but if the previous payments ought to be deducted from the principal, as complainant contends, that sum would be only in part of the interest due. If the declarations of the debtor at the time he pays money to his creditor be sufficient to control its application, the acquiescence of the creditor in the appropriation may fairly be inferred from his acts cotemporaneous with his receipt of the money; and when the construction of the contract and the apparent intention and repeated acts of the par*169ties in performing it, correspond, the conclusion is inevitable. In the three credits nothing is said about interest; in the, fourth credit the amount paid is applied to extinguish interest “in part,” as it was then due and had become an interest-bearing demand. There must be some error in the estimate connected with the fifth credit on the 26th of May, 1837, as there is no mode of calculation that will make the interest on the 23d of January, 1837, amount to twenty-six hundred and forty-eight dollars and eighty cents: the terms of this credit are in corroboration of the complainant’s calculation, and the receipt purports to have been made for interest due at the previous payment. There are comparatively few cases where the debtor pays either principal or interest before due ; if he do, there is generally some express stipulation from which he, as well as the creditor, derives a benefit: hence the difficulty of finding an analogous case. In *Tracy*v. *Wicoff,\*Chief Justice McKean says “the rule of computing interest must be such that the interest of money *paid in before the time*must be deducted from the interest of the whole sum due at the time appointed by the instrument for making the payment. For instance a bond to pay £100 with annual interest at 6 per cent., and at the end of six months £50 are paid; this payment shall not be apportioned at £3 to the discharge of the half year’s interest, and £47 to the diminution of the principal, so as to calculate the remaining interest at six per cent, upon £53 for six *months, but the*interest shall be charged at the end of the year upon £100, the payment of £50 shall then be deducted from the aggregate sum of £106, and the obligor receive a credit of £1,10 as interest of £50 for six months.” If the account were stated on the contrary principle, the obligor would not only pay £1 11s 9-Jd. more in the year, but the obligee would gain £3 more upon his £100 if he put out the £47 at interest when he received it. The illustration of the rule renders the reasonableness and propriety of its application in this case much stronger than in that quoted ; in > the latter there was no reservation of the right of the debtor to extinguish the principal before due, nor any evidence that he so applied the payment at the time, nor that it was so accepted by the creditor. This mode of calculation is not a novelty; it has been long sanctioned by the custom of Bankers. When a lodgement (usually a deposit of money) is made by the customer, interest up to that day is calculated upon whatever balance is due, this is entered in a separate column in the account, and the lodgement deducted from *the*principal sum then due, and so on with any succeeding lodgement; at the end of a year, a balance is struck on foot of the principal and interest, and the consolidated sum is introduced as the first item in the subsequent account, and carries interest. The mode of stating an account between *170debtor and creditor only differs is this, no balance is struck until the accounts are closed. No objection can be sustained "on the ground that if the principal be paid, interest on it cannot be recovered, as the rule is now well settled that where there is a stipulation for interest it may be recovered after the principal debt has been paid. The payments made by complainant in 1836 are to be applied to the principal; and the interest accumulating to the different periods are to be set down in a separate column and aggregated at the end of a year; from that time the interest being *“*payable annually” bears interest. The next question is, how shall the payments be applied that have been made subsequently to the accrual of the annual interest ? If the debtor does not choose to avail himself of the terms of the contract and appropriate his payments to the principal, which he can pay when he pleases within ten years from the'date, he may be considered to have expressly waived his right when the payment is not applied to the principal, and the creditor enters a receipt for it on the bond in extinguishment of the interest. The payments on the 23d of January, and on the 26th of May, 1837, as far as they go in discharge of the annual interest and its accumulating interest, stand upon the same footing. The creditor might have recovered the annual interest (which became an interest-bearing demand) when it accrued, but could not sustain a suit for the balance of the principal: the annual interest is not secured like the principal, by converting its interest into principal annually, and these circumstances no doubt controlled the application of the payments. Every subsequent payment is embraced in these two classes of credits, and must be applied in making up the accounts between the parties agreeably to these principles.

*1691 Dal. Rep. 134.

*170The third question made is, shall complainant pay the interest of the purchase money of the fifty acres of land that Major O’Hanlon claimed and recovered out of the tract sold and conveyed by Myers to complainant? On the 5th of March, 1842, complainant brought an action of trespass to try titles against O’Hanlon for the fifty acres on which he had begun to cut down the timber; vouched Myers, and a verdict was given for O’Hanlon; but defendant insists that the acts and admissions of complainant *in*relation to the land, had great weight with the jury, and in all probability turned the scale in favor of O’Hanlon. After the trial, on the 18th of January, 1845, Myers purchased the fifty acres, for seven hundred and fifty dollars, and on the 22d of the same month transferred the title (that O’Hanlon made to him) to complainant. Complainant insists that no interest should be estimated on the seven hundred and fifty dollars of the purchase money until after the title was transferred to him, and that the land was diminished in value, from his purchase to the transfer, by O’Hanlon’s cutting down and using *171the timber, which was of especial value to the plantation. As it cannot be satisfactorily inferred from the pleadings whatv have been the admissions and acts of the complainant in relation to the fifty acres of land, or the circumstances under which Myers purchased it and transferred the title to him, or the extent of the deterioration in the value of the land while it was used by O’Hanlon, and the injury that thereby resulted to the complainant, it would be premature at present to decide the question. *It is therefore*ordered, That the defendant and his agent foe enjoined from selling t'he seven slaves mentioned in the pleadings, on complainant’s entering into the usual bond with sufficient surety until the further order of the Court, and that it be referred to the Commissioner in Equity of Richland District to ascertain and report what payments have been made on the bond, and what amount (if any) is still due, and that he do take and report the testimony on the points arising out of the third question involved in •this case.

On the coming in of the Commissioner’s report, made in accordance with the above order, his Honor, Chancellor Harper, decreed as follows r

Harper, Ch. Upon hearing this case, it is ordered and decreed that the complainant be allowed a discount upon his bond for the fifty acres of land recovered by James O’Hanlon in the action at law against him. That he be credited at the date of his bond with the sum of seven hundred and fifty dollars, beingfhe amount paid by William M. Myers to J. O’Han-lon for the same, aud that this sum be brought into the account against the complainant on the twenty-second day of January, eighteen hundred and forty-five, when a title for the said fifty acres was made to him by William M. Myers.

Lt is further ordered and decreed that the report of the Commissioner, by which a balance of one hundred and ninety dollars and fifty-eight cents is ascertained to be due upon the bond on the twenty-second day of January, eighteen hundred and forty-seven, be, and the same is hereby, confirmed, and that the complainant pay to the defendant the amount so ascertained to be due, with interest thereon from the said twenty-second day of January, eighteen hundred and forty-seven ; and that tíre defendant pay the costs of the suit. The injunction to be perpetual, upon the payment of the said balance and interest.

The defendant appealed and moved the Court of Appeals to reform the decretal order, in relation to the mode of computing interest on said bond, upon the ground that it was erroneous ; and also to reform Chancellor Harper’s decree, allowing a discount upon said bond for the said fifty acres of land, upon the ground that complainant voluntarily and without the consent or approbation of defendant’s assignor, aban*172doned the use of it arid acknowledged the title in another ; and also upon the gronnd that defendant should not be required to pay the costs of suit.

IN. &MeC. Rep. 38,

*1*Steobli, R,. 426.

Gregg & Gregg, for the motion.

W. F. DeSatjssure, contra.

JohnstoN, Ch.

delivered the opinion of the Court.

The first question to be considered relates to the interest account upon the bond. The rule is well settled, with respect to payments made upon an instrument which is over due. The interest is computed up to the time of the payment, and the latter is taken out of the aggregate, first applying it to the interest, and then to the principal. If, by this process, the interest is only partially extinguished, the residue of it does not become an interest-bearing fund, but interest runs upon the principal as before. If, however, the payment extinguishes, not only the interest, but part of the principal, the balance of principal left, continues to bear interest. This is too well understood to require further explanation..

The same rule obtains where general payments are made, *in*anticipation, upon an instrument securing the payment of money at a future specified time, with interest thereon from a prior date.

The case of *Gibbes*v. *Chisholm*decides that where the agreement is to pay a principal sum at a future day, with interest from the date, the aggregate of principal and interest, at the maturity of the obligation, becomes an interest-bearing, fund ; and may, for that purpose, be considered as forming, from that time, one capital or principal sum. The substance of this doctrine is, that where interest is stipulated to be paid at a fixed period, and the stipulated time has arrived, or is passed, the interest then due is no longer interest, but principal, and, as such, carries interest *in*future.

But until the period arrives, the interest, being contemplated by the parties *as interest,*— incident to and flowing from the principal debt or sum advanced, is also so regarded and treated by the Court: and general payments made upon the instrument, before its maturity, are applied first to the interest and then to the principal, exactly as payments made on a contract over due are applied. This is the doctrine of *De Bruhl*v. *Neuffer,*a decision of our own Law Courts : and which must govern this case. It is contended that by the terms of the bond, Mr. Singleton stipulated that all payments made by him, before the 22d of January, 1846, should be credited exclusively, or primarily, upon the principal of the debt. But such is not our construction of the instrument. By “ the said sum of $76,000,” we understand reference to have been made to the previous part of the instrument, by which that sum was to be paid with interest thereon fropi this date, pay*173able annually;” and this construction is strengthened by the stipulation that the payments were to be “endorsed upon the said bond,” (generally) “ when such payments shall be made.”

The next question relates to the deduction to be made for the 50 acres taken off by O’Hanlon’s title. The bill claims that interest upon $750, the value of this land, be deducted from the bond, from the date of the contract, until Myers purchased from O’Hanlon and conveyed to Singleton, his ven-dee : and, also, that allowance be made to the vendee for the waste committed by O’Hanlon.

If Mr. Singleton is, in consequence of the defect of title, entitled to any remedy, reaching further back than his eviction, it must result either from the legal effect of the covenants of his deed, or from considerations purely equitable.

His deed was executed and possession taken in 1836, and' his possession does not appear to have been disturbed until 1842.

It has been held that our ordinary conveyances include covenants of *title*and of *quiet*enjoyment: but there is this difference between them; that the former begin to run from the date of the conveyance, the latter only from eviction. If Mr. Singleton had any remedy on his covenant, arising from a partial defect in his title, it was barred in 1840. So that we must take him to have waived that remedy, and to have restricted himself to such right as might arise upon his being afterwards evicted, if that should ever happen. If he knew of O’Hanlon’s title before the trespass of the latter, good faith required that he should have given notice of it to Myers, and either required the defect to be cured, or that a partial resci-sión and abatement should be made on the contract: — unless he was willing to depend upon the other alternative of his deed, to arise upon eviction.

When the trespass was committed, and he was fully advertised of O’Hanlon’s claim, he does not appear to have desired either a rescisión or abatement. His course was different. He called upon his grantor to sustain the suit; evidently intending to retain his bargain, if not evicted. And when he was evicted, he did not then claim the remedy which his deed afforded, but within a few days afterwards accepted the conveyance by which his title was perfected.

We think that under these circumstances he has no legal claim for redress, if indeed he sustained any injury.

Then as to his equitable claims. The bill does not state that he was for one moment prevented from the full enjoyment of this part of the premises of which he was let into possession ; or hindered, in any respect, from making any use of it which he pleased. It was not cultivated land yielding a rent; in respect to which if a party, and debarred the use, he has sustained a serious injury. But it was wild land, lying at a distance from the opep lands, and even the timber *174was only valuable, as a resource for fencing, at some remote period.

We do not perceive that he has any solid claim for compensation, beyond the trifling injury for the few days which elapsed between the eviction and the restoration of title to him; and the value of the timber cut down by O’Hanlon. For the -first he is entitled to deduction of interest; and for the last the value of the trees. The last question relates to the costs. An appeal relating to costs alone, will not be sustained. But here the decree is found to be erroneous on other points; and the Court is to adjudge the costs upon the principles of the decree as reformed.

The plaintiff tendered the sum which he considered due upon the contract, and filed the bill for an injunction, because his tender was not received and the bond given up. It must depend upon the sum really due at the time, whether he or the defendant is to pay the costs. If the sum tendered be found to be all that was due, the defendant should pay them: if otherwise, they should be paid by the plaintiff: and it is so ordered.

It is further ordered, that the report be recommitted to the Commissioner, to take the accounts agreeably to this opinion.

DunkiN, Ch. and Dargan, Ch. concurred.

*Decree reversed.*