Court Opinion

ID: 7813065
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:15:02.799315+00
Date Added: 2024-06-11T16:30:31.648035
License: Public Domain

Hart, J., (after stating the facts). It appears from the record that Morgan purchased the land from'Rogers for the sum of $3,600, and gave his note for the purchase money, bearing interest at the rate of 8 per cent, per annum from date until paid. He intended to give Rogers .a mortgage on the land to secure the payment of the purchase price, but the mortgage described another tract of land by mistake. When the mistake was discovered, Morgan having failed to pay the interest, it was added to the principal, so that principal and interest together, with the sum of $112,“which Rogers then loaned Morgan, made a total of $4,000, for which the note sued on was executed, bearing interest at the rate of ten per cent, per annum from date until paid. This court has held that it is not usury to add the interest, when it becomes due, to the principal and take a new note for the whole, with interest at the rate of ten per cent, per annum from date until paid. Grider v. Driver, 46 Ark. 50. Therefore there was no usury in the taking of the new notes for $4,000, this being the amount of the principal and interest on the first note, together with $112 additional which Rogers loaned to Morgan. The record shows that the interest on the new note was payable semi-annually. This court has also held that a contract charging the highest rate of interest allowed by the Constitution is not rendered usurious by the fact that payments of interest are required at intervals of less than a year. First National Bank v. Waddell, 74 Ark. 241. The note also provided that, if the interest was not paid annually, it should become a part of the principal and bear the 'same rate of interest. This was not in violation of our Constitution on usury. A person may lawfully contract for the payment of interest as it accrues, and it -is not necessary that the principal debt should be due at the time the payment of accrued interest is exacted. The agreement was not a positive undertaking to pay compound interest at all events, but only.in case of default in the payment of the annual interest when it fell due. Morgan could readily relieve himself from all liability thereon by the payment of the interest annually as it fell due. Our Constitution and statute are silent as to the time when the interest may be paid, and only prescribed the rate for a specified term. The language of our Constitution is that all contracts that have a greater rate of interest than ten per cent, per annum shall be void as to principal and interest, and the General Assembly shall prohibit the same by law. Article 19, § 13, of the Constitution of 1874. This court has expressly held that taking a note bearing ten per cent, interest per annum and providing that, if interest be not paid annually, it shall become principal and bear the same rate of interest, is not such a compounding of interest as would render the note usurious. Carney v. Matthewson, 86 Ark. 25. It might be that the installments of interest might be made so lrequent or unusual as to indicate a disposition to evade the spirit of the law and to compound the interest so rapixlly .as thereby to secure a greater rate of interest than that allowed under the Constitution, but there is nothing in this transaction to evince such an intention. • It follows that the decree will be affirmed.