The sun. [volume] (New York [N.Y.]) 1833-1916, 1892-12-29
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A Question OF Interest.

In 1879 tho Legislature OF New York re-
duced the legal rate Of interest from seven
per cent. to six per cent by statute which
took effect on Jan. 1. 1880.
Tho question whether this reduction Of
the rate Of interest. as applied to judy
ment recovered in our courts prior to 1880.
does not impair the obligation Of contract.
has recently como before tho Supreme Court
OF the United States.
Mr.. JOHN s. PRoUTY OF this city recovered
q Judgment in the Supreme Court here
against the Lake Shore and Michigan
Southern Railway Company for upward OF
$4,000. This Judgment was affirmed by tho
General Term and afterward by the Court
OF Appeals. and was finally entered in the
ONCE Of the County Clerk on Jan. 20. 1873.
Execution was issued In May, 1881, and the
Judgment was paid with interest. but only
with interest at the rate OF per cent. from
the beginning OF 1880. The plaintiff do
manded more. claiming that the statute TO-
ducing the rate OF interest. 30 far as 1t ap-
piled to his prior judgment. was enacted in
violation Of that provision OF the Federal
Constitution which forbids any State from
passing law impairing the obligation OF
was against him in the Court OF Appeals.
and he took the case to the Supreme Court
OF the United States for review.
In that tribunal the opinion was delivered
by Mr.. Justice SH1RAs OF Pittsburgh. the
new Judge. and we believe it Is his first
judicial utterance. At oil events. it is the
first which has fallen under our notice.
In this opinion Judge SH1RAs. speaking
for majority OF the court. declares that
the question whether interest shall accrue
upon judgment Is not matter OF contract
between the parties to the Judgment. but n
matter controlled by tho discretion OF the
Legislatures Of the several States. which.
so far as the Constitution OF tho United
States Is concerned. are left free to do ns
they like In regard to allowing interest rs
penalty or as liquidated damages for the
non-payment OF n judgment. In other
words, the interest allowed for delay in
paying q judgment is in the nature Of
statutory damages. the amount OF which
the Legislature is authorized to determine
and to vary at will. The legislative dis
erection In such q case Is based on reasons
OF public policy. and does not fall within
the sphere OF private contracts. Hence it
would seem that the Legislature might. IL
it saw fit. provide that judgments should
not carry any interest at ALL
Three Of the nine members OF the court.
Justices HARLAN, FIELD. and BREWER. dis
sent from tho Judgment as expressed in
tho opinion OF Mr.. Justice SHIRAs, and de-
clare that under his reasoning the I.eSisla-
ture. after the Judgment was rendered.
might have forbidden the collection OF any
interest whatever upon it. They insist.
furthermore. that where n party has re-
covered Judgment for money growing out
OF the breach OF n contract he has acquired
right to collect the amount OF the judg-
ment. with interest upon that amount. at
the rate then established by law. Until it is
paid. and that no cannot be deprived OF
this right by mere Legislative enactment.
The contrary view. however. was adopted
by majority OF the Judges. and is there
fore the established law OF the land.