Case Name: Bander vs. Bander
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1849-12-17
Citations: 7 Barb. 560
Docket Number: 
Parties: Bander vs. Bander.
Judges: 
Reporter: Barbour's Supreme Court Reports
Volume: 7
Pages: 560–564

Head Matter:
Montgomery Special Term,
December, 1849.
Paige, J.
Bander vs. Bander.
Upon a promissory note in these words: “For value received I promise to pay M. B. or bearer the sum of $1000, payable in ten annual installments, with use, the first payment to become due on the first day of June, 1848,” interest is payable on the several installments as they respectively become due, and not annually on the whole principal sum remaining unpaid.
There is no general principle of law which requires the interest on notes, bonds, or other written contracts for the payment of money, to be paid annually. The time at which it is to be paid must depend upon the agreement of the parties, as expressed in the contract.
This was an action upon a promissory note in these words: “ For value received 1 promise to pay M. Bander or bearer the sum of $1000 payable in. ten annual installments, with use, the first payment to become due on the first day of June, 1848.
March 6, 1847. Daniel Bander.”
The cause was tried, by the court, without a jury. The only question was as to the amount of interest due upon the note.
G. Yost & D. G. Lobdell, for the plaintiff.
L. Ford, for the defendant.

Opinion:
Paige J.
The only question presented, for decision, in this case, is, whether by the terms of the note on which the suit is brought, interest is payable annually on the whole principal sum, or only oq the respective installments at the several times when they become due.
A promissory note is, like any other written contract, to be construed in accordance with the intention of the parties, as declared by the express words of the note, or as it is deducible by clear and manifest implication from its terms. The force and effect of the note must be determined by its terms, and not by proof aliunde. And when the operation of a statute is clearly settled by the general principles of law, the parties must be deemed to have entered into the contract in reference to such principles. (Thompson v. Ketchum, 8 John. 189. 2 Cow. & Hill's Notes, 1460.) There is no general principle of law which requires the interest on notes, bonds, or other written contracts for the payment of money, to be paid annually. Whether the interest ,is to be paid semi-annually, annually, biennially, or at any other times, must depend altogether upon the agreement of the parties as expressed in the contract, Interest is a mere incident or accessary to the principal debt, It is not a part of the debt. And where there is no express contract to pay interest, it can only be recovered as damages for the non-payment of the principal when it becomes due. (Per Savage, Ch. J. 13 Wend, 640, 641. Per Walworth, Chancellor., 15 Id. 80.) In all cases where there is no express agreement to pay interest, if the creditor accepts the amount agreed to be paid, in full satisfaction of the principal, without requiring payment of the interest from the time the principal became due, no action will lie to recover such interest. (Stevens v. Barringer, 13 Wend. 639. Fake v. Eddy's Ex'r, 15 Id. 80. Tillotson v. Preston, 3 John. 229. Johnston y. Brannan, 5 Id. 268. Williams v. Houghtaling, 3 Cow. 87.) So where there is no express contract to pay interest, independently of the principal, if the demand for the principal is barred the accessary falls along with it. (Hollis v. Palmer, 2 Bing. N. C. 713, per Tindal, C. J. 3 Scott, 265. 2 Hodges, 55, S. C.) And if a party pays the principal of a debt barred by the statute of limitations, such payment does not revive the claim for interest thereon. (4 Bing. 315.) On contracts for the payment of money, which contain no express agreement for the payment of interest, interest is only recoverable from the time when the principal debt falls due. ( Williams v. Sherman, 7 Wend. 109. Gaylord v. Van Loan, 15 Id. 310. Chit. on Bills, 678.) And if the contract contains an agreement for the payment of interest, but is silent as to the time when it is to be paid, the interest is not payable until the principal debt becomes due. This is undeniable, upon principle, and is apparent from the cases. (2 Mass. Rep. 568. 3 Id. 221. 1 Bouv. Law Dic. 700, tit. Int. Blake v. Lawrence, 4 Esp. 148. Catlin v. Lyman, 16 Verm. Rep. 48.) There is nothing in Blake v. Lawrence which countenances the idea that interest upon a note like the one in this case, is payable annually on the whole principal. In that case the note was payable by installments of ten pounds every three months, and in default of payment of any installment the whole was to be payable immediately. Lord Ellenborough held that, as on default of payment of any installment, the whole amount of the note became due, there was no severance as to time, with respect to the debt's becoming payable ; and as by the first default the whole became one debt, interest became payable from that time.
In this case the interest is not by the terms of the note made payable on the whole principal sum annually. If the words payable "in ten annual installments" had been omitted, and the words "ten years," or words expressing any other period of time had been substituted, there would have been no ground for insisting that the interest on the whole principal sum of the note was payable annually. In that case the interest would not have been payable until the principal fell due. If the parties had intended that the interest on the whole of the principal debt should be paid annually, they ought to have expressed such intention by the use of appropriate words. If the parties had inserted after the word "use" the words "on the whole principal sum, to be paid annually," such intention would have been clearly manifested. I think that the words "with use," which convey the same meaning as " with interest," refer to the words "payable in ten annual installments," the last antecedent; and that the true interpretation of the note is, that interest was to be payable on the several installments as they respectively became due, and not annually on the whole principal sum remaining unpaid. If the words "with use" referred to the principal sum, a different construction could not be given to the note, as they are not followed by appropriate words declaring that the interest should be paid annually; or by words from which the intention of the parties that the interest should be so paid, could be clearly inferred. The principle that the interest on a promissory note, payable with interest, is not payable until the principal becomes due, where the note is silent as to the times when the interest is to be paid, must control the construction of the note in this case. The note in question contains no words declaring when the interest should be paid; and as there is no rule of law which require interest to be paid annually, where the parties have omitted to declare when it shall be paid, I must decide that the interest on the note is not payable annually on the whole principal sum; but only on the several installments as they respectively fall due. If this construction is not in conformity with the actual agreement of the parties which was made and intended to be carried into effect when the note was given, the remedy of the plaintiff is by an application to the equitable jurisdiction of the supreme court, to reform the note, so as to make it correspond with the agree ment which was actually made in relation to the interest. (15 Wend. 82.)
Judgment must be entered in favor of the plaintiff for the amount remaining unpaid of the installments of the note which have already become due, with interest on the same up to this day.