Saint Paul weekly Minnesotian. [volume] (Saint Paul, Minn.) 1858-1859, 1859-04-16
Highly Important Decision.


We hasten to lay before the public the most
important legal decision, in its immediate con-
sequences and future bearings, ever pro-
nounced by judicial tribunal in Minnesota.
Yesterday, the bench of the Supreme
Judges of this State decided that, after the
maturity of promissory note, it continued,
until judgment, to bear only the same rate Of
interest which, on its face, it bore up to the
time it became due; and that the agreement
of the parties for a higher rate Of interest at-
ter maturity, was not contract for interest
within the meaning of the law, but was to be
regarded only as penalty, no more of which
could be recovered than the sum of the dam
ages actually sustained.
In other words, that what is commonly
called overdue interest is really not interest,
but must be considered in the light of DANA
ges; the measure of which, the court decides,
shall be whatever was the original rate of real
interest, or the worth Of money reciprocally
agreed upon and placed in the note by the
parties when it was first drawn.
This we understand to be the decision in
substance and effect though the Court when
they come to file their opinions, may state it
in different phraseology.
understand, likewise, that Chief Justice
EMMET, though concurring in the position that
the overdue interest rates were to be viewed
solely in the light of penalty" and only so
nf Cd oil
ges, yet dissented from the two associate
Judges in fixing the before-due rate of interest
on the face of the note as the measure of the
damages contending that the law had de-
signated seven per cent as the worth Of money
in the absence of legal contract, and that
therefore this rate was the proper measure of
the damages.
The question Of allowing interest upon in
terest came before the Court under the condi.
tons of one of the notes in suit; and the
bench of Judges unanimously decided that
compound interest in a note could not be con-
lected.
Thse decisions of the Court have inferential
consequences which it may be we'll to refer
to.
In the first place, where persons have fore
closed mortgages, and bid the property in so
as to cover merely the amount of their notes
and interest and costs, with the overdue in
terest reckoned in, then the difference between
the overdue and the before-due interest may
be recovered back from the mortgage.
Another inference is, that where Bankers
have discounted notes-taking their interest
out before hand-and the notes bear no inter-
est that is expressed upon their faces until
they are due, but calling for certain interest
after due, that then the measure of damages
will be only the statutory rate of seven per
cent per annum.
Still another inference is, that where the
interest was added in to the principal, and no
interest expressed on the notes, that seven per
cent. per annum is all the damages collectable
after maturity; and this is also the inference
where, for the amount of the original interest
payments, and for the principal sum, separate
notes are given, without specifying any inter-
est on their face, until after maturity.
The cases Immediately before the Court and
decided by them were two: one based on
note calling for " three per cent. a month until
due, and five per cent month after due, on
both principal and interest until paid.'' The
parties from whom the amount of this note
was due, offered to pay the three and five per
cent month interest, but refused to nav five
per cent on the sum of the three per cent
interest. The money loaner, however, claimed
his "bond," and so the case was taken up bv
II. F. MAsrERsoN, Esq, Of the firm of MAS.
PERSON & SMoNs, and most thoroughly inyes.
tgated and argued by him in all its bearings
The other case arose also on note calling for
three per cent. a month, and latter maturity
five per cent" SMITH & GILMAN were in this
case, counsel for the defence. SANBoRN,
FRENCH & LuND, and H. HALE, were the
counsel, in both instances, for the plaintiffs
is likely these points will be still further
tested before the U. s. Courts.