Case Name: Mayo v. Judah
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1817-03-24
Citations: 5 Munf. 495
Docket Number: 
Parties: Mayo v. Judah.
Judges: 
Reporter: Virginia Reports
Volume: 19
Pages: 524–528

Head Matter:
Mayo v. Judah.
Decided March 24th, 1817.
1. Deed of Trust — Stipulation That, on Failure to Pay Interest, Principal Due — Penalty, —Astipulation, in a Bond or Deed of Trust that, upon the debtor’s failing at any tim e, to pay the annual interest, the principal sum (which otherwise would not be payable until a distant day,) shall be considered due, is in the nature of a penalty, against which it is the province of a Court of Equity to relieve.
2. Same — Same—Payment before Sale — Effect.—In such case, the payment or tender of the interest at any time before the sale under the Deed of Trust, authorizes the debtor to call upon the Court of Chancery to prevent the sale. And, by virtue of the Act of Assembly concerning Executions, passed Nov. 35th, 1814, the debtor was authorized to substitute Bond and security in lieu of payment.
Joseph Mayo, sen. presented a Bill to the Chancellor for the Richmond District, stating that, on the 19th day of August, in the year 1813, the complainant purchased of a certain Manuel Judah, a lot of ground in the city of Richmond, upon the terms and conditions set forth in a Bond and Deed of Trust, given to secure the payment of the purchase money; by referring to which documents it would be seen, that the principal sum for which the Lot was sold, was, not to be paid until the year 1824, but the interest was to be paid on the 1st day of January in every year until that time;, that, upon failure to pay the interest on any first day of January aforesaid and the same being unpaid for three months, the benefit of the credit should be lost, and the Trustees should immediately advertise the Lot *for sale, in order to discharge the principal sum, with whatever expenses might have accrued on the trust: that the complainant failed to pay the interest on the first day of January, 1815: that by the first section of the Act of Assembly concerning executions, passed the 25th of November, 1814, Execution might be stayed on any Judgment, &c., by tendering to the creditor Bond, with sufficient security, in double the amount of the “demand,” conditioned in the usual way; and, by the 5th section, proceedings on Deeds of Trust might be stayed in the same manner; that as the principal sum was not due until the year 1824, the interest, which was due was the demand: under this impression, the complainant had repeatedly tendered to the Trustees, according to the provisions of the Act of Assembly, and was still ready to give, Bond with security in double the amount of the interest, but the Trustees had refused to accept it, and were proceeding to-sell according to the above recited condition : the complainant presumed that, as the forfeiture was occasioned solely by the failure to pay the interest, and" as the Act of Assembly declared that the interest need not be paid until January 1816, that Act relieved the forfeiture; and, consequently, theTrusteeshad.no authority to sell: the credit he was to have according to the original contract made the bargain extremely advantageous to him ; and, if the forfeiture should be insisted on, and the property sold, he would necessarily be subjected to great loss and inconvenience. He therefore prayed an Injunction, restraining the Trustees from proceeding to sell, and that the contract be re-instated on the original footing, upon his giving Bond with" security, in double the amount of the Interest, conditioned according to the Act of Assembly.
Chancellor Taylor refused the Injunction, being of opinion that this -was not a case for a Court of Equity, ‘ ‘for this reason : that the Trustees must sell, in conformity with their powers and the Act regulating such sales, if the plaintiff was within its provisions; and, if they did not, any conveyance, made by them of the Cot in question, would be unavailing; that the case was purely a legal one, and Equity should riot interfere.” But the Injunction was awarded by a Judge of the Court of Appeals, on the terms of giving Bond in double the amount of interest claimed. 'On the 19th of January, 1816, the Trustees filed a joint Answer, denying" “that any stay bond was ever tendered to them, until after the forfeiture had accrued, as they supposed; that is, until after the property was advertised for sale the first time, which was on or about April last.” No Answer was filed by Judah.
The Chancellor dissolved the Injunction ; “being still of opinion, that to interfere, in a case like this, would be against the legitimate power of the Court.”
Érom this Decree, an Appeal was allowed by this Court.
Wirt for the Appellant.
The Chancellor dissolved the Injunction on the same ground, on which he at first refused to grant it.
This case depends on the construction of the Act of 1814, for staying proceedings on Deeds of Trusts, &c. That Act being a remedial law, it ought lo have a benign interpretation: It was its intention that no forfeiture should be incurred by the debtor’s failing lo make payment at the time appointed. The Act of 1815, an Act in pari materia, allowed the Bond to .be given at any time before the sale; and the spirit of that of 1814 appears to require no more.
Wicklmm contra.
If the Chancellor pronounced a right Decree, though for a wrong reason, it ought io be affirmed.
The contract in this case afforded an option to the debtor at what lime he would pay the principal. It is no penalty, but only the debt itself. The debtor having failed to pay the interest according to the contract, the principal became due. The stay' bond ought therefore to have been given for the principal; that being then the debt. If the suit had been brought, Judgment must have been for the principal. The object of the Act was not to charge the contract, but only to stay the proceedings to enforce it. Even if the stay bond had been given before the 1st of January, it could not have altered the contract, and would have made no difference as to the present question.
Another point. The Act of Assembly is in opposition to the Constitution of the United States, according to Mr. Wirt’s "construction ; for it certainly impairs the obligation of contracts. The stay of proceedings on a Deed of Trust is in direct violation of the contract of the parties, A law interfering with the contract of parties ought not to have a benign, but strict construction.
See monographic note on "Deeds of Trust” appended to Cadwallader v. Mason, Wythe 188.
The principal case is cited in Boyce v. Smith, 9 Gratt. 707; Muhleman v. Nat. Ins. Co., 6 W. Va. 533; an'd distinguished in Coleman v. Waters, 13 W. Va. 313.
New Jersey v. Wilson, 7 Cranch, 164; Fletcher v. Peck, 6 Cranch, 89.

Opinion:
March 18th, 1817, the Judges delivered their opinions.
JUDGE 'COAI/TER.
In this case, the Appellant, having purchased o'i the Appellee a Dot of ground in the city of Richmond, for the price of $7000, payable at the expiration of ten years with interest from the date, to be paid annually, and, in default thereof, that the principal sum should, on such default, be due and demandable, as appears by the Bond, executed at the time, he also executed a Deed of Trust, on the Dot so purchased, to secure the payment. This Deed recites that it is to secure the payment of $7000, a debt due to the Appellee, on the 1st day of January, 1824; with legal interest from the 1st day of January, 1814: and, in declaring the trust, and the objects of it, it has rcterence to the Bond aforesaid, and provides, that, if the Appellant shall fail to pay the legal interest on the 1st day of January, 1815, and so on for each succeeding year, or should he fail on the last mentioned day to pay the principal sum, then, or in the event that the interest for any one year shall be three months due and unsatisfied, the Trustees may proceed to sell the Dot; first, to discharge all expenses, &c. ; "secondly, to discharge the Interest and Debt of $7000, which shall be understood to have become due, whenever the interest, before enumerated and spoken of, shall have been three months due and unsatisfied, or any part thereof shall be so due and unsatisfied."
The interest due on the 1st day of January, 1815, being in arrear and unpaid by the space of three months, the Trustees were about to sell the Dot, when the Appellant tendered a Bond for the payment of the interest, under the Act of Assembly "concerning Executions and for other purposes," passed November 2Sth, 1814, for the purpose of stopping the sale. The Trustees having refused to stay proceedings, application was made to the Chancellor for an injunction, which, being refused by him, was granted by a Judge of this Court, and finally dissolved; from which Decree this appeal is taken.
Act of Assembly provides, that defendants shall have power to stay Execution upon any Judgment or Decree, &c., by tendering Bond and sufficient security, in double the amount of the principal and interest, payable lo the plaintiff or plaintiffs, &c. at the repeal or expiration of the Act; and that proceedings shall be suspended upon every Decree for the sale of real property, and also all proceedings by any Trustee on any Deed, of Trust in the same manner, as a Judgment may be stayed, &c.
Bond being tendered, in this case, for the amount of the first year's interest due and in arrear, only, the first and great question is, whether that sum, agreeably to the contract, was the amount of the creditor's demand? Whether that was the princiiral sum then due, which, with interest thereon, was to be secured according to the provisions of the Act?
This question, according to my view of the case, will be much simplified by considering what judgment a Court of Eaw would have given on the Bond above referred to.
If the provision, that, on failure to make punctual payment of the interest, the principal sum shall then fall due and be passable, is to be considered as a new penalty, in addition to the $14,000 penalty in the Bond, in order to enforce payment of the interest annually, then the annual interest would be considered in the nature of instalments, and the Judgment would be entered for the penalty, to be discharged by the instalment, agreeably to Bridges v. Williamson, Stra. 814, and Master v. Touchet, 2 Wm. Bl. Rep. 7(36. This latter was debt on a Bond, conditioned to pay 6001. and interest, in three years from the date of the Bond,, by instalments of 151. half yearly, and 6151. at the end of the Term: proceedings were stayed on payment of the interest due, I presume under the Stat. 4 and 5, Ann. ch. 16, § 13, which is so far similar to our Act, that it permits the defendant to bring the money really due into Court, whereas our Act directs judgment to be entered for the sum due.
The case cited is the one before the Court, with this difference, that, in tne case cited, there is no stipulation that, on failure to pay the instalment, (which, in that case, as in this, was no more than the interest,) the principal sum should be considered as due.
But why this additional penalty, if the parties so considered it, when, without it, the $14,000 would have been forfeited on ^failure to pay the interest? or was it intended to reduce the penalty, in that case, to $7000? and on which penalty ought the party to bring suit? I cannot believe that the parties viewed it in the nature of a penalty. Here was a debt, debitum in prassenti, solvendum in futuro, or in praesenti, at the election of the debtor, upon his compliance, or not with a condition, by which he could extend the time of payment. He pays no more money, but pays it sooner, or later, at his election. It is no injury to him to pay it promptly, if he is able to do so; and whether he is, or is not, is within his own knowledge; and, at all events, there is nothing in the circumstance of prompt payment, by which the interest is stopped, (which interest is, in law, considered equivalent to the use of the money,) which can swell this into a penalty.
This case is not to my mind distinguishable, in principle, from those of Gowlet v. Hanforth, and Bonafous v. Rybot: the first to be found in 2 Wm. Bl. 958, where the defendant was bound in a Bond conditioned to pay 4961. by instalments, and, if default were made in the payment of any one or more, then the Bond to stand in force for the whole principal and interest: on default, suit was brought on the Bond: the defendant's motion, to stay proceedings on payment of the instalments due, with costs, was over-ruled. The Court said, this was not to relieve against a forfeiture: the plaintiff had agreed to give time to the defendant, provided he would punctually pay by instalments; by neglecting so to do, he has lost the benefit of his condition, and remains in the case of other debtors on Bond. The second will be found in 3 Burr. 1370, where Lord Mansfield, in distinguishing, a like case from those, where greater interest has been reserved, in default of paying a less rate, and which he says would be a penalty, says it is more like the case of a less interest being agreed to be received, if punctually paid ; and, says he, "it is a condition unperformed, therefore the party cannot have relief in a Court of Equity, any more than in a Court of Haw."
The Bill itself, in this case, states that the credit, which the Appellant was to have according to the contract, made the bargain extremely advantageous to him. So a party might say, that the payment of a less rate of interest would be extremely advantageous to him, and therefore it was a penalty on him, *when he was unable to pay punctually, to make him pay the greater sum; but Law and Equity both say, that, able or not, he must comply with the condition, or forfeit the benefit.
There is nothing hard, oppressive or unfair, alleged as to this part of the contract: it is not alleged in the Bill, (if such circumstances could have weight,) as it has been in argument, that an enhanced and speculating price was given; but rather the reverse, as would seem from the above quotation; nor is it even alleged that the party, from the pressure of the times, was unable to pay the interest; so as to give the Court of Equity any head of jurisdiction, which would not equally have availed at law in a suit on the Bond; nor is it stated that this was intended as a penalty; on- the contrary, the statement in the Bill is, that the condition of the Bond, and the terms of the Deed of Trust were, that, if the interest was not punctually paid, the benefit of the credit should be lost: in short, the Bill puts it merely on the ground, that the interest alone was the demand, which the Appellant had a right to secure under the Act, so as to avail himself of its provisions. Had any of the other grounds been taken, they might have been denied and disproved. Taking this case up, then, on the Bond and Deed of Trust, and supposing the Act of Assembly had never been passed; it may be considered, if the doctrine contended for is law, that, if a man has money to lend at legal interest, for the support of himself and family, he cannot provide for calling in his principal, if that support is not punctually paid him, because it will operate as a penalty on the borrower, however pointedly he may agree to borrow the money on those terms. If this is a penalty in Equity, it is equally so, I apprehend, at Law, and Judgment would be entered up accordingly. It does not appear to me that the place or manner of introducing this stipulation into the Bond, or Deed, can vary the nature of the contract, which, not only by those instruments, but according to the Bill itself, was an agreement to sell property and give a distant day for payment, provided the purchaser would pay the interest punctually ¡.without which stipulation, the seller, it is to be presumed, would not have given the day. I can see nothing unfair, unreasonable, or more like a penalty, in this, than in a case of money, lent as above supposed; and I can, therefore, neither *on the score of authority, ncr reason, give my sanction to the doctrine contended for.
But, if a penalty could be supposed, I should incline to consider it, at most, in the nature of a stipulated, or agreed compensation, to be made in default of punctuality. Courts of Equity, though, will not interfere, as far as I am at present advised, to relieve against such penalties, unless there is something unfair, or very unreasonable in the transaction, But what more reasonable compensation can be given for the price of money, where that price is withheld, than the money itself? It is the very thing, neither more nor less, which the law gives; money being worth its interest, and vice versa. If I am right, then, in my conclusion that, independent of the Act of Assembly above referred to, the Appellant, on failure to pay the interest, would have been compelled to pay both principal and interest; and that neither a Court of Daw, nor Equity would have relieved him therefrom; the second question, if it may be called one, is, w'hether that Act alters the case? If the preceding part of my opinion is law, it will be admitted, I presume, that, if the Appellee had sued on the Bond, the Appellant could not have pleaded a tender of a Bond, for the Interest, on the 1st of January, in discharge of the action, so as to make such Bond tantamount to a payment of the Interest on the day, and so a compliance with the condition. If such plea would have been overruled on demurrer, and the Court would have given Judgment, (for want of a sufficient plea,) for the penalty, to be discharged by the $7000, with Interest and Costs; then, to avail himself of the Act, the Appellant must have tendered Bond and Security for this sum: and, I presume, after such Judgment, no Court of Equity, resting on the Act of Assembly alone, would have enjoined that Judgment, on the Appellant's allegation that he had tendered Bond and Security for the Interest ; a fact, which he could have shewn was admitted by the Demurrer in the action at Eaw. If the Court could not interfere in the case supported, neither, I apprehend, could they, to stop the Trustees, unless Security for the $7000, and Interest, had been tendered; and this, independent of the consideration, that, according to the Deed of Trust, as it appears to me, there is no remedy under it, to sell for the Interest annually; which *is a farther proof of the full understanding of the parties, that, in default of payment of interest, the payment of the principal was to be enforced. The Act, I apprehend, did not intend to stop or change the operation of contracts, but to stop, to a certain extent, the operation of the Courts of Justice in carrying into effect their Judgments and Decrees, and to place proceedings, under Deeds of Trust, in the same situation as Judgments or Decrees in Chancery for the sale of property.
How far the Act, as to this subject, staying proceedings under Deeds of Trust, was an unconstitutional interference with, or change of the contract of the parties, was touched upon by the Appellee's Counsel ; but was afterwards, as I understood, waived by him, and is not intended to be considered or decided on by the present Court, consisting of but three members, unless it shall again be brought before them, when it must stand over for a fuller Court. According to my view, however, be that question as it may, the party is not entitled to the benefit of the Act, having tendered Security only for the amount of the Interest due. For these reasons, and not those assigned by the Chancellor, I am for affirming his Decree.
JUDGE CABERR.
As Rord Mansfield said in the case of Bonafous v. Kybot, Burr. 1370, there is a. distinction in Courts of Equity, "that, if five per cent, be reserved for interest on a Mortgage, with a condition to accept four, if punctually paid; this condition must be strictly performed: and the Debtor shall not have relief in equity after the day of payment elapsed; because the one per cent, was to be abated upon a condition, which is not performed. But if four per cent, be reserved, with an agreement that, if the four per cent, be not punctually paid at the day, the Mortgagee shall pay five, that shall be consid* ered as a penalty added: and the Court of Equity will in such case relieve against it."
These principles are well elucidated in the case just cited from Burrow. There, "the Bond was conditioned for the payment of a gross sum then due, to be paid at a certain fixed day. There was a subsequent agreement, made in favour of the Debtor, easing him of that stipulated single payment at that fixed day, and allowing him to pay it by *more distant instalments; provided that he pay it punctually on the day agreed upon : otherwise the agreement and defeazance to be void." The Debtor did not pay the instalments punctually, and the Court determined that therefore the agreement and defeazance were void, and that the gross sum was due to the Obligee. That case was within the former part of the distinction above referred to; "for it was a condition unperformedand consequently the Debtor could not be relieved even in a Court of Equity.
The case of Gowlet Ex'or. of Gladwell v. Hansforth, (2 Sir Wm. Black. Reports p. 958) was decided on the same principles. The facts of that case are not so fully stated, as those of the case in Burrow, although the decision turned on the special condition of the Bond; but it is evident, from the reasons assigned by the Court in its decision, that the facts were substantially the same; and more especially, that the stipulation, to pay by instalments, was introduced for the benefit of the Debtor, by enabling him to discharge by more remote instalments, a gross sum which, but for that stipulation, would, according to the original contract of the parties, have been sooner due and demandable. For the Court expressly says that, "the plaintiff had agreed to give time to the defendant, and to forbear prosecuting his just demand, provided the defendant would punctually discharge it by instalments. By neglecting to do so, he has lost the benefit of his condition, and remains in the case of other Debtors on Bonds."
These were cases, where relief was refused to the Debtor; but the principles, on which it was refused there, shew that it ought to be granted in the case, now to be decided.
In all cases of this kind it-is necessary to ascertain the true intention of the parties, and tc distinguish carefully between the original contract itself, and any subsequent stipulation, which,,purports to effect a qualification or modification of that contract; between what the parties originally intended to be done, and what they may agree to substitute therefor, on certain events. Thus, in the cases cited above, from Burrow and Sir Wm. Blackstone, and the original contract was to pay a gross sum by a certain fixed day; the subsequent stipulation was for discharging that sum by distant and easy instalments. In the case of an ordinary Bond, the original contract is to *pay a certain sum by a given day; the stipulation en-grafted on it is, that, in case of failure to pay at that day, the Debtor is to pay double the sum. It is all important to ascertain the character of these stipulations. If they were introduced for the benefit of the Debtor, (as in the cases above cited) by expending to him a more easy mode of payment, he will be permitted to avail himself of them, provided he comply with the terms; because it is competent to the Creditor to abate a portion of his own just rights. But if the object of the stipulation be to ensure to the Creditor a punctual compliance with the original contract, by imposing upon the Debtor farther and greater obligation in case of failure, it is considered as a penalty which is always relieved against; for Equity is satisfied with the execution of contracts according to their true and original intent.
Let these principles be applied to the present case. Both the Bond and the Deed of Trust shew that the Contract was for the sale of a Dot at the price of $7000, payable on the 1st of January, 1824, with Interest from -the 1st of January, - 1814; the Interest to be paid annually on the first day of January in each year. This was the real Contract between the parties, to which a stipulation was superadded, that if the Interest be not paid, the whole principal was to become due and recoverable. The distinction is most obvious between this case and those cited. There the stipulation was for the benefit of the Debtor; here for the benefit of the Creditor. This stipulation, if it be allowed to operate at all, effectually changes the contract of the parties, by subjecting the Debtor to the immediate payment of a sum, which, by the original contract, was not to be paid 'till the year 1824, and is as much a penalty, as the obligation to pay double the amount of the Debt, in case the Debt itself be not punctually paid. Upon general principles of equity, therefore, I .think Mayo should be relieved against the forfeiture, which has occurred, and that no sale shall take place but for the interest, which has occurred.
Mayo's title to relief from the forfeiture, being thus independent of the Act of Assembly, it is unnecessary' to enter into the constitutional question, raised in the argument. I did not, however, understand the Counsel for the Appellee, as contending, *that the Act of Assembly is unconstitutional, so far as it operates merely to postpone the payment of a Debt under the circumstances, and in the manner, contemplated by the Act. And the Act is not relied upon, in this case, farther, than as it postpones the payment of the Interest, which Interest, in my opinion, constituted the whole of the demand, that Equity will tolerate.
I am therefore for reversing the Chancellor's Decree, and re-instating the injunction.
The following was the opinion of the Court, pronounced by JUDGE ROANE:
The Court is of opinion, that the stipulation, both in the bond and deed of trust exhibited with the Bill, whereby it is provided that, if the said Mayo should fail to pay the annual interest, the principal sum of seven thousand dollars should be considered as due, is in the nature of a penalty, against which it is the province of a Court of Equity to relieve; that the amount, which the creditor was entitled to demand of his debtor in this case, was the interest, due on the first day of January, 1815; that the payment or tender of this sum by the debtor, at any time before the sale under the Deed of Trust, authorized the debtor to call upon the Court of Chancery, to preven*, such sale; and that, by virtue of the Act of Assembly, "concerning Executions, and for other purposes," passed on the 25th day of November, 1814, the debtor was authorized to substitute bond and security for the interest, in lieu of the money; (which sum so secured would have borne interest;) a tender of which bond and security is admitted by the answers of the Trustees to have been made.
Eor these reasons, the Order of the Chancellor, dissolving the complainant's Injunction, is reversed, and the Injunction is reinstated; and the Court, proceeding to make such order in the cause, as should have been made in the Couit below, doth adjudge and order, that the Injunction, so far as it seeks to inhibit the sale of the property for the payment of the principal sum of seven thousand dollars, by reason of the non-payment of the interest, due on the first day of January, 1815, be perpetuated. And the Court doth farther adjudge, order and decree, that, if the creditor Judah shall make the ^-'endorsement on the said Deed of Trust required by the Act in such case made and provided, then the Injunction shall be open to a motion for dissolution, and an order of sale for the said sum, due for interest as aforesaid, with interest thereupon; but, on the payment of such last mentioned sum, by the said Mayo, at any time before the sale, after deducting therefrom the Costs in this Court, and the Supreme Court of Chancery, that then the said Injunction be wholly perpetuated.
Fonbl. Bk. 1st, ch. 3, § 2. note (<1); 2 Atk. 190, Soy v. the Duke oi Beaufort; 4 Burr. 2228, Lowe v. Peers.
Note. See the Acts of 1816, oh. 40, § 1, p. 70.