Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1867-03-22

os an agreement made at the time Of the
/ riginal contract or loan, that compound
interest should begin and run upon the
lawful interest the moment it falls due,
whether payable yearly or semi-annually.
Such agreements are oppressive. To exact
from the debtor interest upon interest,
without a previous special agreement for
that purpose is inadmissible."
The same principle was recognized and
held in 5 Page, 1921 Page, 230. In
the case Of Wilcox Is. Rowland % Picky,
1862 the defendant had executed his note for
the interest. The court upon a review Of
the authorities said, "The result of the doc
trine upon this subject seems to be, that a
contract TO pay compound interest is not
usuriOus or void-that an agreement 10 pay
interest annually or semi-annually is valid
and may be enforced by action. That q
claim for interest on such interest is an
equitable claim, but then in an action
brought, interest will not be allowed on in
terest from the time it fell due, because
would SAVIOR Of usury, and because the hold
er Of the note by forbearing to call for his
interest when il became due, shall be
deemed to have waived his right 10 have
the interest converted into capital"
The same principle was held in Is Met
calf 66-16 Mass. 227--S Mass. 456-2
Cushing 9S. See also II Conn't Reports
4S7-l7 Conn't Reports 247.
In 35 Maine Report, Bannister IS. RO-
berts, il was held that interest upon interest
could not be recovered. In Pennsylvania,
l Buney 165, the same plinciple was recog-
nized and held, that interest upon interest
could not be recovered. In Virginia, in
the case of Granbery IS. Granbery, Wash
ingtOn Reports, il was held interest could
not be converted into principal so as to
carry interest. 8 Mumford's Reports Al,
and Randolph 113.
We have been referred to the case Of
Kenon rs. DickersOn, Taylor's Law and
Equity reports ABS, as an authority to sus-
tain the principle of allowing interest upon
interest The question arose in that case
upon a bond executed at long date, interest
payable annually, given for the purchase
Of tract of land. The courts say, from
the terms of the bond, it was a stipulation
TO pay the amount annually, and became 4
part Of the contract, and interest was
allowed on the several annual instalments,
but say, as a general rule, interest upon
interest is not allowable.
In the case in I'd Mott & McCord's Repls.
So, majority OF the court held that inter
est upon interest was allowable; and cited
Taylor's Rpts. and Cd Mass Rpts. 568 as
authority TO sustain the position. Two of
the judges dissented, and it will be seen the
case in I'd Mass. has long since been over
ruled, by the cases in 8 and 16 Mass, and
% Pickg., referred to in this opinion. In
Michigan and Vermont, it seems to be set
tied, that interest upon interest cannot be
recovered.
This question has been frequently before
the English courts, and no principle Of law
seems to have been more clearly and def
nitely settled than that interest upon inter-
est will not be allowed. In / Williams,
652, the court say, a masters report COM
putting interest makes the interst principal
because it is in the nature of judgment,
but if the mortgager sign an obligation, he
owes so much money due from interest. l
question whether this will make the inter-
est principal, because of itself it does
not show any agreement or intent
TO alter the interest or nature of
that part Of the debt, or turn it
into principal" In Vesey Pr, 223,
like principle was held. Contracts for
compound interest, which signifies the add
ing Of growing interest of any sum to the
sum itself, and then taking interest upon
this accumulation, have been considered in
equity as illegal-yol. !, Law Library, 147.
In Solkhead, 449, it was held interest
upon interest was illegal and would not be
allowed. In Vesey Pr, SO, an applica-
ton was made TO the court to allow interest
upon interest. Lord ThurloW said My
opinion is in favor of interest upon inter-
est, because j do not see any reason, if a
man does not pay interest when he ought,
why he should not pay interest, but / have
found the court in the constant habit of
ruling to the contrary, and must overturn
all the proceedings Of the court if giveiL"
Upon a review of all the authorities,
American and English, on this question,
that we have been able to examine, we are
satisfied that the weight of authority is
against the principle of allowing interest
upon interest, before the rendition of a
judgment. The note for ten thousand dol
lars, due in nine years from date, with in
terest at the rate of ten per cent. from Its
date, having been executed in the State of
Arkansas, and that being the conventional
rate Of interest allowed by law in that
State, will be governed by the lea loci con-
trdctus, and the interest thereon will be
computed at the rate fixed by the parties,
but the mode of computation will be in ac-
cordance with the principles Of this opinion
The decree Of the Chancellor will be re-
versed, the interest will be calculated ac-
cording to the principles laid down in this
opinion and the cause remanded.
SHACKELFoRD, Judge.
HAWKINS, Judge, dissenting.