Court Opinion

ID: 6995024
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:31:45.939232+00
Date Added: 2024-06-11T16:09:44.492202
License: Public Domain

Mr. Justice Boggs delivered the opinion of the Court. At the common law, interest was not recoverable at any rate or in any case. City of Pekin v. Reynolds, 31 Ill. 529; 11 Amer. and Eng. Ency. of Law, 379. Any sum of money received for the use of other money was denominated usury and deemed unlawful at common law. 3 Parsons on Contracts, 102. Our statute, however, permits parties to bargain for interest at a certain rate and allows interest under certain circumstances without a contract to pay it. Becovery of interest, therefore, depends upon the statute. Unless authorized by the statute, interest can not be recovered. Greenhood v. Town of La Salle, 137 Ill. 230; I. C. R. R. Co. v. Cobb, 72 Ill. 148; Munger v. Jacobson, 99 Ill. 347. The statute in force at the time of the transaction under consideration made it lawful for parties to stipulate or agree in any written contract for the payment of not exceeding eight per cent interest per annum and required payment of interest at the rate of six per cent per annum to be made in the absence of a contract under certain enumerated circumstances. Chap. 74, Secs. 2, 3 and 4, R. S., 1881 (Cotheran’s Ed.). The facts of the case at bar do not bring it within any one of the provisions of the statute providing for an allowance of interest by force of law in the absence of a stipulation or agreement to pay interest, nor is it so claimed. It follows that the appellant is not liable for the payment of interest as claimed, unless she stipulated or agreed in the written instrument herein before set out, to pay it. The proper construction of the instrument in this respect must therefore determine the contention. The instrument or contract will be found to be largely devoted to a recitation of the facts upon which it is based. Under a formal whereas, it is first recited that the appellant has purchased the lots of the appellee at the price of $8,000 and has assumed to pay as a part of such sum the indebtedness secured by the mortgage to the trust company, and that the trust company claims that such indebtedness amounts to $7,500 and interest, and that suit for the foreclosure of the mortgage is pending, and the appellee is defending such suit for the purpose of obtaining a reduction of the indebtedness It is then recited under another formal whereas, that the parties to the agreement, as a basis for determining an amount which, under the circumstances, the appellant might safely pay to the appellee out of the purchase price of the lots, had assumed that the sum of $7,500 is the correct amount of the indebtedness to the trust company, and that upon such assumption the appellant had paid $500 to the appellee. The facts thus recited show that the appellant retained $7,500 of the purchase price of the lots. The object of the recitals was to show the reasons upon which the undertaking and promise of the appellant, about to be written, is founded. Having stated by way of such recitals the reasons upon which such promise is based, the instruments proceed to state the promise. It is as follows: “ I (the appellant) in consideration of the premises (facts recited) do hereby agree and promise to pay said Bose H. Fowler the amount of any reduction of said indebtedness she may obtain by the judgment or order of the court in said cause, and to pay the same whenever such judgment or decree may be rendered, or in case of appeal when the appeal is determined and the amount ascertained.” No promise or agreement is here found to pay interest at any rate or upon any sum, and as we have before seen, interest is not recoverable under the statute upon the facts of the case, in the absence of a promise to pay interest. It is argued that the words u and interest ” italicized in the copy of the agreement set out in the statement of the case, bind the appellant for the payment of interest. We think not. The words are but part of the recital as to the claims put forth by the trust company. But it is urged the contract was made upon the basis of such recited claim, and that the promise of the appellant thereafter written in the instrument to pay “ the amount of any reduction of such indebtedness ” must be referred to such recitation, and the appellant held liable to pay an amount to be determined by deducting the sum recovered by the trust company by the decree from the sum of $7,500, claimed by the trust company and interest thereon from the date of the agreement according to the claim of the trust company in that respect. The notes given by the appellee to the trust company provided for the payment of interest at ten per cent per annum, which rate was lawful upon special contract when the debt to the company was incurred. The defense of usury was not based upon this rate of interest as being illegal, but upon other usurious consideration growing out of the negotiations for the loan; hence, if the contract between the parties to the action be given the construction thus suggested the appellant would be required to pay interest, not at the rate of six per cent as claimed by the appellee and awarded by the Circuit Court, but at the rate of ten per cent. Such a result was manifestly not intended. Moreover the parties did not intend that the claim of the company as to the principal or interest of the mortgage indebtedness should be resorted to to determine the “ amount of the reduction of such indebtedness to be paid by appellant to the appellee. We are not left to conjecture as to this. The promise is preceded by an unequivocal statement that the parties to it assumed as the basis for their action and agreement, that $7,500 is the correct amount of the indebtedness in question. Upon that assumption the appellant paid the appellee $500 and executed the promise to pay her “ the amount of any reduction of said indebtedness.” The “ amount of such reduction ” must be determined by reference to the facts assumed by the parties to be true as the basis for the promise. The transaction in brief was that the appellant bought the lots at the price of $8,000; the parties assumed for the purpose of their agreement that the lots were incumbered to the extent of $7,500. The appellant paid $500, the difference between the purchase price and the assumed amount of the incumbrance, retained $7,500 to protect herself against the claim of the insurance company, and contracted that if the appellee succeeded in reducing the incumbrance below $7,500, she would pay the amount of such reduction to her, and the balance of $7,500 she must of course pay in discharge of the decree as required by the stipulation inserted by the appellee in the deed for the property. The words “ and interest,” referred to, have no connection with or bearing upon the undertaking of the appellant. As we construe the contract, the appellant did not agree to pay interest at any rate upon the $7,500, or upon any part of such sum. Uor does it seem to us that interest thereon ought to be required of the appellant, upon the reason or justice of the matter. True, she had possession of and enjoyed the rents and profits of the property, but she paid a portion of the purchase price in cash and stood charged with an obligation to pay the full amount of the remainder of such purchase price at any time when the court should determine to whom and in what amount it should be paid. She could only await such legal determination, charged all the while with the duty of keeping in hand the entire sum of money upon which it is now claimed interest should be paid, so that she might be able to comply at any moment with the obligation of the contract sued upon. Money thus’ held, or an indebtedness thus payable, ought not to be deemed interest-bearing—is not interest-bearing under our statute—in the absence of an express promise to pay interest. It appears from the evidence, and so it is conceded by the appellant, that after the payment of the decree in favor of the trust company, there remained in appellant’s hands the sum of $3,015.66, balance of the $7,500 not required to discharge the mortgage indebtedness. This sum ought have been paid by appellant to the appellee on the 2d day of January, 1892. Under the statute then and now in force, it bore interest at five per cent from that date. The judgment of the Circuit Court should, we think, have been for that sum and interest at that rate from such date. The judgment appealed from is reversed and the cause remanded, with directions to the Circuit Court to render judgment for the appellee against the appellant for the sum of $3,015.66, together with interest thereon at five per cent per annum from January 2, 1892, to the date of the rendition of such judgment. Reversed and remanded with directions.