The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1892-07-09
In the Supreme Court of the Ha'
Wailan Islands.
G. BoLTE Va. l.. AKAU, EFT AL.
Ar CHAMBERS, BEFORE VICE CHAN
CELLoFs DOLE.
DECISION.

DECISION.
The proceedings in this case have
been somewhat irregular; the an
swer made after The demurrer was
overruled having disappeared and
a new answer filed some weeks
later. A decree however was made
GA the issue raised by the bill and
first answer, which finds the defend
ants to be in default under the
mortgage in the amount of $780,
s0g1. 20, and refers the accounts to a
master who fled his report April
II, 1892, finding them to be cor
rect. The new answer which was
fled on May 5th, raises some ques-
tions already disposed of, but makes
the new point that portion of the
amount claimed is due to illegal
charges of compound Interest, and
that the account should be corrected
accordingly. This question was
argued before me.
Our statute provides that 'sno ac-
ton silall be malntainable in any
court of this Kingdom to recover
compound interest upon any con-
tract whatever" Civil Code, Sec.
1484.l This reiterates the rule of
the common law on the subject,and,
referring to the common law prece-
dents, we find that although COM
pound interest cannot lawfully be
demanded and taken upon con-
tract for compound interest to ac-
crue, yet after simple interest has
become due, interest upon it may
be contracted for and collected upen
q special agreement. Interest that
mas become due becomes debt,
and the creditor may demand and
sue for immediate payment, or de-
mand that the debtor should allow
interest on it upon the consideration
Of his forbearance, which Is, in
fact, turning the interest into pin
cipal.
(Van Benschooten VS.. Lawson, 6
Johns. chap. 3l3; Conn. VS.. Jackson,
Johns. chap. IS; Lord Ossulston
,vs. Lord Yarmouth, Salk. 449;
Elk parte Bevan, 8 vessey, 223;
Mowry VS.. Bishop, Paige, 98l
Eaton VS.. Bell, 8, B. & Ald,, "a;
Toll VS.. Hitler, IL, Paige, 22s.)
adopt this doctrine, for although
q promissory note to pay compound
interest would be within our stat
ute, and could not be enforced Us tt
the compound interest, yet, wher
interest once becomes due it is {
debt and like any other debt may
be sued for, or the creditor may
agree to delay enforcing it upon thu
consideration of the debtors prom
Use to pay interest upon it. Sucf
an agreement is not within tn
statute, for although it may b,
plausIblyI argued that such prom
Use is contract to pay interest upol
interest, yet as the original interes
has become a debt, the collection o
which may be enforced, the new
agreement is not a contract to pa,
interest on interest, but interest o.
q debt due, and such new interes
is not compound interest from tn
standpoint of the new agreement
though it would be compound in
terest from the standpoint of tn
original note. In other words
such a new contract may be said j
effect to be an arrangement whereof
the interest due is paid and tn
amount borrowed again blythe debtt
upon an agreement to pay interes
This position may perhaps
made more clear by referring
the object of the law, which is
protect debtors who throug
thoughtlessness, or ignorance of tt
rapid accumulation of an accouH
under compound interest, woul
make agreements injurious to then
selves. The same principle, NOR
over, that renders such contrac
prejudicial to the debtor max
them very favorable to the credito
to whom the right of collecting i
terest at stated times would
overborne by the greater right
letting it lie and begin to earn ne
interest on itself; and so the debt
under such a system is likely to
allowed, or rather encouraged
leave the payment of his interest
an indefinite future, during viii
delay, however, it is all the tin
increasing. But under the syste
in which interest ON interest is I
allowed unless the debtor makes
new contract after the interest
due for further time and the pa
ment Of interest thereon, he is f