Court Opinion

ID: 6675231
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:15:11.217085+00
Date Added: 2024-06-11T16:00:41.030443
License: Public Domain

Mr. .Chief Justice Simpson,
dissenting. Where annual interest is agreed to be paid on money foreborne, the-general rule is that it stops at the maturity of the principal sum. It is not illegal, however, for a party to contract to pay annual interest after the maturity of the principal sum, as well as before, so that in every case, where the question arises whether annual interest should be computed after the maturity of the principal sum, it must be decided upon the construction of the contract. The true meaning and intent of the parties as derived from the terms of the instrument must be inquired into, and, when ascertained, will govern. See appendix to Johnstone’s Digest, where the cases on this subject are collected and analyzed.
It has been decided that where a certain sum has been promised at twelve months, or any shorter period after date, with *147interest, payable annually, that this is a contract to pay the interest annually, after the maturity as well as before. This is inferred, from the word “ annually,” as there could be. no other purpose in using this word, but to convey the idea that the interest was to be paid at the end of each year, till the debt was paid. Singleton v. Lewis, 2 Hill 408; O’Neall v. Bookman, 9 Rich. 80.
It has also been decided, that where a principal sum is promised at two or more years after date, with interest from date, payable annually, that the obligation of the debtor to pay annual interest stops at the maturity of the debt, because the term “annually” is satisfied by such a construction, the promise of the debtor being to pay the principal sum at the end of the two or more 'years, with the interest of each intervening year as it. accrues, which, not being paid, would bear interest as these amounts fell due, respectively, as if a note had been given for these unpaid annual interests at the end of each intervening year. Gibbes v. Chisolm, 2 N. & McC. 38; O’Neall v. Sims, 1 Strobh. 115; DeBruhl v. Neuffer, Id. 426.
But where the promise is to pay a principal sum at the end of two or more years, with interest payable annually “ till the whole debt is paid,” these words, or any of similar import, would require the party to pay annual interest after the maturity as well as before, because such is the plain meaning of the contract, the promise of its terms being to pay the debt at a fixed time and also annual interest on it, not as in the former case up to that time, but continually until the whole debt is paid. Thus, as has already been said, each contract depends upon its own terms, the question in every case being what was the understanding of the parties as expressed in the instrument under consideration.
Now apply these principles to the case before the court. Here the appellant gives bond that he would pay the respondent §1,195, in five equal annual installments from date, with annual interest on this sum. Suppose that the bond had stopped at this point, could the instrument be construed otherwise than that the appellant promised to pay the principal debt within five' years, and also the annual interest that might accrue thereon *148within that time ? Could it be said that he had promised to pay annual interest after the five years ? I think not, because the bond, as to all of the installments, would mature at the end of the five years, and while there is a promise to pay the interest on each installment at the end of each intervening year, there is nothing which shows that he was to pay the annual interest after the five years.
The bond in question, however, does not stop at this point; it provides further, “ that the interest is to be paid annually on the whole amount unpaid,” and the majority of the court has reached the conclusion that this term “unpaid” has the same effect as if the term “ till paid ” had been employed. It is conceded that if these latter terms had been used, this would carry the annual interest to the ultimate payment of the whole debt, because such would have been the distinct promise of the debtor. But, as I understand the case, the term “unpaid” was not used by the parties here synonymously with “ till paid.” Look at the bond. Its evident purpose was to bind the appellant to pay the respondent $1,195, the price of a certain tract of land. The appellant was to have five years to pay this sum as a whole, to be paid, however, in installments of one-fifth annually, the whole amount to be realized in five years, at the end of which time the ultimate maturity of the bond as a whole was to take place.
Now it was uncertain whether each installment would be met at the period of its special maturity. It was not known but what some of them, though falling due within the° five years, might remain unpaid up to that time, and no doubt theoterm “ unpaid ” was employed to denote that if any of these installments were unpaid as they fell due, they should still carry annual interest up to the ultimate maturity of the bond as a whole, and not beyond the'five years as held .by the majority, the term “unpaid” having reference to the different installments, but within the five years. And this is the more reasonable when it is remembered that it is by no means certain, if this term bad not been used, that the annual interest .could have been carried beyond the maturity of each installment.
There is some doubt whether, in the absence of this term, the *149bond might not have been construed as containing five different obligations, falling due at one, two, three, four and five years, with annual interest on each, consecutively, in which case, under our decisions, the first bond being due at one year, with interest payable annually, this term, by its own force, would carry the annual interest until the installment was paid. The other four installments, however, falling due at longer dates than one year, would be governed by the other decisions, which hold that the annual interest stops as the debts become due. The term “ unpaid ” prevents this as to all of the installments and requires the annual interest to run on upon each, though not paid when due — not indefinitely, however, but until the expiration of the five years, when the whole bond was expected to be satisfied. The limit of the contract, as a whole, was five years, and the intervening stipulations had reference to that period.
Under this theory, the interest on the bond in question should have been computed annually on all installments remaining unpaid from the date of the bond for five years, at the rate specified in the bond; after that time the annual interest to cease and the regular legal interest to attach upon the whole. Differing, as I do, in this construction from the Circuit judge who heard the case, and from the majority of this court, no doubt I am in error; but I have been unable to see the case as my brethren have. Hence this dissenting opinion.
Judgment affirmed.