Court Opinion

ID: 6652862
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:55:40.761975+00
Date Added: 2024-06-11T15:59:45.782278
License: Public Domain

Harrison, C. J.,
on motion for rehearing.
The adjudication by the district court of Seward county of the matters of litigation in this, an action of foreclosure of a real estate mortgage, was appealed to this court and submitted; and in an opinion reported in 58 Neb. 379, there was set forth the decisions of the questions *383presented. A motion for a rehearing was filed, which is now pending. In one ground of the motion there is complaint of the portion of the opinion in which it was determined that the appellant was not entitled to nine per centum per annum interest on' the principal of the debt secured by the mortgage from a maturity of it, which became of existence by reason of a failure to pay an installment of interest (for the provisions of the note and mortgage relative to interest, maturity of principal, and other facts, see the opinion to which we have referred), and it has been' suggested that we have in the determination of this point announced a doctrine in conflict with that established by some of the late decisions of this. court, and have returned to the doctrine on this subject of Richardson v. Campbell, 34 Neb. 181, which was overruled in Havemeyer v. Paul, 45 Neb. 373, wherein it was held: “Where a. note provides for a lawful rate of interest from date until maturity, and a higher and lawful rate of interest afterwards, the rate of interest which the note draws from its date to maturity is the contract rate for that time; and the rate which the note draws after maturity is the contract rate from that date, within the meaning of section 3,. chapter 44, Compiled Statutes 1893. First point of the syllabus in Richardson v. Campbell, 34 Neb. 181, overruled.” To the same effect see Omaha Loan & Trust Co. v. Hanson, 46 Neb. 870; Omaha Fire Ins. Co. v. Fitch, 52 Neb. 88; Crapo v. Hefner, 53 Neb. 251. In the cases to which we have just referred, commencing with Havemeyer v. Paid, the sum of money loaned bore interest at a specified rate from the time loaned until its definitely fixed maturity; and it was provided in the contract of the parties that if the principal sum was not paid at its stated fixed maturity it should draw interest at an increased rate; or the lender said to the borrower, “You will pay me a designated rate of interest to a certain named date on this money, and if you do not then pay it to me, for the time subsequent which you keep it you *384must pay for its use an increased rate of interest,” and to this the borrower acceded, and this it was held is enforceable. In the case at bar a different question arises. It was not because the fixed date for payment of the principal had arrived, and default had been made, that the holder of the evidence of the indebtedness and its security sought relief under them, and for an increased rate of interest as provided in the contract, but it was by reason of the non-payment at the time agreed upon, and prior to the designated maturity of the principal, of an installment of the amount to be paid for the use of the principal and by which default the lender might claim a maturity — an accelerated maturity — of the principal, and collect the amount contracted to be paid for the use of the money increased by a further sum, added, not because of a failure to pay the principal when it was due, and for its further use or forbearance, but because of the failure to pay a stated portion of the sum due for the use of the principal. This is in the nature of a penalty for non-payment of the installment of interest, and not an amount paid as per contract for the use of the money borrowed. This is not in conflict with the doctrine of the cases'to which we have alluded, nor is it a return to the discarded rule of Richardson v. Campbell, supra. In the opinion we stated: “It follows from what has been said that the judgment of the district court will be reversed, and the cause remanded to that court, with instructions to enter a decree of foreclosure for the amount of the note and mortgage and interest at six per cent per annum from the commencément of the action, — this portion of the decree to bear interest at seven per cent per annum; also for the amount due on interest coupons with interest at nine per cent per annum from the defaults in payments, and interest at the same rate on this branch of the decree.” (Connecticut Mutual Life Ins. Co. v. Westerhoff, 58 Neb. 382.) This should be modified to read after the word “action”: “To the date of the original contract maturity of the debt, and thereafter *385the interest on the debt to date of decree and on the decree to be at nine per centum per annum; to be included in the decree the amount due on coupons with interest from the maturity of each at nine per centum per annum.”'
Reversed and remanded.