Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1867-03-22
DECISIONS OF THE SUPREME
COURT.


COURT.
Nashville, December Term, 1866.
Reported for the Union a Dispatch by Lindsey
4 Reid.
l. INTEREST, DATE or COPuTATION: The
time from which interest may be computed.
shall be the day when the debt Is payable, uu-
less another day be fixed in the contract.
2 Upon the maturity of a note, the interest
that has aecruCldoes not become principal up
on which interest will run; interest upon inter
est is not allowed before the rendition Of n
judgment
Union Bank rs. WRlougiJy Williams.
The only question presented for our con-
sderation in this cause, arises upon the
computation Of interest on the notes ex-
ecuted by the defendant for the collection
of which the complainant has filed this bill
in the Chancery Court of Davidson. The
chancellor directed a reference to the clerk
and master, to ascertain and report the
amount due, from which report it appears
the defendant, in January, 1855, executed
his four promissory notes, Of ten thousand
dollars each, with interest from date, sever
ally due in six, seven, eight and nine
years. The last note bearing interest at 10
per cent, stated on the face of the note that
il was the legal interest in Arkansas, where
the contract was executed. In computing
the interest the clerk calculated the inter-
est on the note 10 the time of its maturity,
according TO its tenor and date, and
added the interest thus calculated to
the principal, and then calculated
the interest upon the sum of both
principal and interest from the ma
turity of the note TO the rendition Of
the decree. The constitution Of 1884 pro-
vides, "The Legislature shall fix the rate
Of interest and the rate so established shall
be uniform throughout the State" Section
1914 of the Code provides, that interest
shall be at the rate Of six dollars for the
use of one hundred dollars for one year;
any excess over that is usury. Section
1916 provides, that all bills single, bonds
notes, and bills Of exchange, shall bear in
terest from the time they become due. Sec
ton 1916 provides, The time from which
interest may be computed shall be the day
when the debt is payable, unless another
day be fixed in the contract" The Code
ia section 1913, has defined interest 20 be
the compensation which may be demanded
by the lender from the borrower, or the
creditor from the debtor" Interest, there
fore, is a consequence growing out Of the
use Of money loaned, or the damages fixed
by law for non-periormance Of contracts.
Il is a legal incident attaching to all
contracts that come within the pur-
view of the law allowing interest.
The parties cannot stipulate for great
er rate than six per cent, unless
the law where the contract is made allows
a higher rate. In the contract. in the case
under consideration, the parties fix the time
at which the interest shall commence, which
was at the date of the note The sum that
would accrue from the date of the note to
iis maturity, was a part Of the Considera-
ton Of the contract, or was a compensation
for the use Of the money loaned. 1t can
not, by the terms of the contract, be treated
as principal unless made 20 by operation Of
law. The law defines il to be the compen-
sation by the debtor to the creditor for the
use Of the money; OF where property is sold
and the interest commences running from
the date Of the contract, the amount thus
accruing is an incident or consequence
growing out Of the contract, which the
parties have the right TO stipulate for.
And on the maturity of the note, TO add
the accrued interest to the principal would
be giving interest upon interest, and would
SAVIOR Of usury, which is forbidden by law.
The creditor has the right 10 receive
the contract, but IL being an incident
growing out Of it, unless he collects the
same, il cannot, by operation of law, be-
come apart of the principal, before the rem,
dition of a Judgment, in which interest can
be charged. The question under consider
alton came incidentally before this court
in the case Of Numalee as. Morten, Cooks
Reports 81. Ii arose upon a question of
4 - 4 i n. 4.
demanded as debt or damages. The court
said "that there was no good reason why
party should demand, as principal, that
which is really a consequence Of il, and !
which will not carry interest. Perhaps the !
interest is in each case, whether accruing |
by contract OF by operation of law, only !
considered dcjHcrCmcRtO. Aiter Judgment I
is recovered, under our laws, interest is /
converted into principal, and both demand |
interest until the money is paid. Campbell, /
justice, dissented from the opinion Of the ,
court, in the case referred 10, and was of /
opinion that the interest became principal l
upon the maturity Of the note; but as the
question arose in the pleadings, the prin-
ciple was not definitely settled. The mode
OF computing interest, when payments have
been made, came before this court in the
case Of Jones as. Ward, 10 Yer. l7O, in
which IL was held, that the principle was
correctly laid down in Johnson's Chancery
Reports, IL, Jackson rs. the State Of Con-
neciicut. Upon an examination Ca that
ease, it will be found, interest upon interest
is not allowed, and the uniform course Of
decisions is against il, as being a hard and
action, tending tOusury. Even
in an original agreement the courts say.
" at the time Of the loan or the contract.
il interest be not paid at the end of the
wear, il shall be deemed priRcipal and
carry interest, such a provision would not
amount TO usury, but the court would not
give effect 10 such provision" The Eng
fish authorities were reviewed in that court,
and the conclusion Of the Chancellor was,
that the principle was founded in reason
and sound policy. He saws, Interest
upon interest, promptly and necessarily Z
accruing, would az a general rule be harsh
and oppressive. Debt would accumulate
with a rapidity beyond all ordinary calcu-
lafion and endurance. Common business
could not sustain such overwhelming &C
cumulanons. IL would tend also 20 |
inhame the avarice and harden the heart
of the creditor. He can collect itand turn
Il into principal when be pleases, and we
may safely leave this benefit to act upon !
his own vigilance or his own indulgence
This Is the principle settled in the case re-
ierred 10 hy this court az correctly laid
down for the computation Of interest. We
might rest the case here upon the authority
Of Chancellor Kent, as approved bv our
own court, but az there is much conflict Of
decision in the American authorities, we
will briefly examine them.
In johnson Chancery Reports, 3l3, |
this question again came under review, in
which it was held compound interest can
only be admitted on the face Of a written |