Court Opinion

ID: 6667711
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:07:17.889354+00
Date Added: 2024-06-11T16:00:23.475458
License: Public Domain

Opinion by
Lewis, C. J.,
Brosnan, J., concurring.
The principal questions involved in this appeal are : first, does a promissory note, providing for the payment of three and a half per cent, per month interest, but which does not, in express terms, continue that rate of interest after the maturity of the note, bear the stipulated rate after maturity, or only the legal rate; and, second, are the defendants entitled to counsel fees and commissions under the stipulations of the note. The note or instrument upon which these questions arise reads as follows :
“ Virginia City, August 12,1863. — One year from date, for value received, we jointly and severally promise to pay to M. Abrams, or order, the sum of three thousand dollars; also interest thereon at the rate of three and one-half per cent, per month, said interest to be paid monthly at the end of each month, calculating from this date ; and if said interest is not so paid, then the whole sum, principal and interest, shall become at once due, payable, and collectable ; and in case said principal and interest, or either, are not paid when due, and the holder hereof shall have occasion to bring suit for collection of the moneys due hereon, and shall bring such suit, then we promise to pay the further sum of ten per cent, upon the whole sum due and unpaid for attorneys’ fees and commissions upon said collection. This note is given for a loan made to us of three thousand dollars in the gold coin of the United States, and all payments to be made in the gold and silver coin of the United States, and not otherwise.”
.It is urged, on behalf of the appellant, that upon this note interest at the legal rate only can be recovered after maturity, and the following authorities are relied on in support of this position : Brewster v. Wakefield, 22 How. 118; Ludwick v. Huntsinger, 5 Watts and Serg. 59; Henry v. Thompson, 1 Minor, 209.
*204To the correctness of these decisions, under the statutes upon which they were made, we give our ready assent. It is a familiar rule of the law of damages (in the absence of express statute providing a different rule) that upon the breach of a contract for the payment of money the measure of damages shall be the legal interest on the sum due to the plaintiff from the time of the breach ; and notwithstanding parties may have agreed upon a different rate of interest in the investment, it would not by any means be presumed that such interest was to continue after the maturity of the instrument, unless the parties to it expressly contracted that it should, because it could never be presumed that the promise to pay interest extended beyond the time when the principal was agreed to be paid. After the maturity of a promissory note, the express promise or undertaking of the maker ceases, and the instrument itself, as it were, becomes functus officio. As in the absence of express provisions it could not be presumed that the promise of a party extends beyond the time limited in the written contract for payment, the statutes existing in all the States give the party a remedy which otherwise he probably would not have by allowing him to recover legal interest on his debt from the time of its maturity until it is collected, as damages for the breach of contract. But it will not be denied that, when not prohibited by usury laws, an agreement between parties, fixing a higher rate of interest or damage after maturing, would be enforced. So too, it must be admitted that it is perfectly competent for the legislature of any State to provide by law that the same rate of interest agreed upon by the parties to be paid before the debt becomes due, shall be allowed after its maturity, instead of the legal rate. As it is admitted that the makers of the note and mortgage in this case have not expressly promised to pay any rate of interest at all after the maturity of the debt, it becomes necessary to determine Avhether the statute of this State does in fact make the interest agreed upon in writing by the parties to be paid, without expressly mentioning that it shall be paid after maturity, the measure of damage to be allowed after the maturity of debt, or whether, to authorize a recovery of more than the legal rate of interest after a debt becomes due, it is necessary that there be an express promise to pay more than the legal rate after maturity, or until the debt is paid.
*205The result of our examination of the statute is, that all instruments whereby interest is agreed to be paid shall bear the same rate after maturity and until the debt is paid as they do before. It is provided by section four, page 100 of the Laws of 1861, that “ when there is no express contract in writing fixing a different rate of interest, interest shall be allowed at the rate of ten per cent, per annum for all moneys after they become due on any bond, bill, or premium note,” etc. And section five declares that “ parties may agree in writing for the payment of any rate of interest whatever on money due, or to become due on any contract. Any judgment rendered on such contract shall conform thereto, and shall bear the interest agreed upon by the parties, and which shall be specified in the judgment.” Giving to the language of this fourth section a liberal, and its most natural construction, the purpose sought to be accomplished by the framers seems to have been simply to establish an uniform rate of interest in all those cases where there is no express contract in writing fixing a different rate. It is only where there is no contract in writing fixing a different rate that interest at ten per cent, per annum is provided for. By necessary implication, where there is a contract in writing fixing any rate of interest, that rate shall prevail in all cases. But the learned counsel for appellant claims a more restricted and, what seems to us, an unwarrantable construction of the sections above referred to, which is, that the words, “ when there is no express contract fixing a different rate of interest,” must be taken tornean a contract whereby a different rate of interest is expressly agreed to be paid after maturity, as for instance, until the principal is paid. It is true, the language of the fourth section might bear this interpretation; not, however, without restricting the words employed more than we can see any reason for. The language employed is sufficiently general to include all contracts wherein the parties have fixed a rate of interest, though there be no express agreement that that rate shall continue after the maturity of the principal. Why, then, hold that the Act refers only to those contracts wherein the parties have expressly provided that the interest fixed by them shall continue after the maturity of the debt, or until it is paid ? The provisions of the fifth section cannot be made to harmonize with such construction. It declares that the “ parties may agree in writing for the payment of any rate *206of interest-whatever on money clue or to become due,” and the judgment rendered on such contract shall conform thereto, and shall bear the interest agreed upon by the parties. These general words are certainly sufficiently comprehensive to include all contracts wherein the interest to be paid is fixed in the instrument, though not expressly to be continued after its maturity.
The judgments here referred to are. those rendered upon contracts, wherein the parties have agreed for the payment of some specified rate of interest; not where they have agreed upon its payment after the maturity of the debt. There is nothing in the language of the Act to justify its restriction to any peculiar class of contracts. But on the contrary it seems expressly to comprehend not only those contracts where interest is agreed to be paid before the debt becomes due, but also where it is fixed after its maturity. Where the interest is agreed upon in writing for money due or to become due, the judgment shall conform to the contract, and 'shall bear the same rate of interest. The agreement to pay a certain rate of interest on money to become due is certainly not an agreement to pay it after it becomes due, and yet it is clear the judgment on such an agreement would bear the rate of interest agreed on by the parties. If the judgment on such contract is to bear the rate of interest agreed on by the parties, it will hardly be claimed that after .maturity and before judgment, the debt shall draw a different rate of interest. The provision that the judgment shall bear the rate of interest agreed on by the parties in the contract is clear evidence that it was the intention that such interest should continue from the time fixed in the contract until the debt is paid. There is another and very cogent reason why this construction should be adopted. It is a rule of construction too familiar to require the citation of authorities, that where one State adopts the statute of another, it is adopted with the construction placed upon it by the highest Court of judicature of the State from which it is taken. The reason upon which this rule rests, gives it an importance and weight which should not be disregarded except upon the most urgent reasons. When the Legislature of one State adopts the laws of another, it is presumed to know the construction placed upon those laws in the State from which they are adopted, and therefore that it adopts that construction with the law — that it *207incorporates into the law the construction which is placed upon it at the time it is adopted. Hence, for the Courts of the State adopting such laws to disregard such construction would be almost as unjustifiable as to disregard the clearly expressed will of the Legislature itself. Before the Legislature of the Territory of Nevada adopted the Act under consideration, it had received the construction which we have placed upon it from the Supreme Court of the State from which it was taken. (Kohler v. Smith, 2 Cal. 597.)
We therefore consider ourselves bound by that decision, in the absence of clear and convincing reasons that its authority should not be respected. But much weight is given to the fact that the case of Brewster v. Wakefield, 22 How. 118, was a later case than Kohler v. Smith, and that the latter case was virtually overruled thereby. True, the case of Brewster v. Wakefield is the later case, but we cannot see that it in the least impairs the authority of Kohler v. Smith, for though the first and second sections of the Minnesota statute in effect correspond with the fourth section of our Act, yet there seems to have been nothing in the Minnesota statute which corresponds with the fifth section of our Act, which section we think clearly favors the construction adopted by the Supreme Court of California. The case of Brewster v. Wakefield is therefore not entitled to the same weight in this Court as that of Kohler v. Smith; and in view of the fact that in the latter case the Supreme Court of California gave a construction to a statute subsequently adopted verbatim by this State, we deem it incumbent upon us to give it the same construction, and to hold. that the defendants are entitled to the interest agreed on in the note and mortgage until the debt is discharged. And to a qualified extent we think the Court below held correctly on the second point. There is no doubt but that it is perfectly competent for parties to stipulate in a mortgage that a certain sum, or a certain per centage shall be allowed the mortgagee for attorneys’ fees or expenses, if if he be compelled to bring suit to recover his debt. (Cox v. Smith, January term, 1865.) By contract in this case, it is agreed that “in case said principal and interest, or either, are not paid when due, and the holder hereof shall have occasion to bring such suit, then we promise to pay the further sum of ten per cent, upon the *208whole sum due and unpaid for attorneys’ fees and commissions upon said collection.” It is claimed by appellant that the defendants have not been compelled to bring suit; that filing a cross bill, as they have done in this case, is not bringing a suit. It cannot be denied that they have not brought suit in the strict sense of the words, but a reasonable construction must be given to the language employed by the. parties, and effect given to their real intention, if it can be done without violence to the language employed by them. Now the intention of these parties is obvious. It was to provide for reimbursing the mortgagee for any expense which he is necessarily put to in collecting his debt. In this case they are compelled to come into Court to protect themselves ; they file a cross bill which places them in the same position as if they had filed their bill for foreclosure.
So they are compelled to incur the expense which the parties seem to have provided for by the allowance of ten per cent, upon the amount due and unpaid. But in all cases where attorneys’ fees are provided for in instruments of this character, only a rear sonable sum should be allowed. The entire sum stipulated should not be allowed to parties where it would be an exorbitant or unreasonable fee. So this Court decided in the case of Cox v. Smith, above referred to.
There is nothing in the record in this case which would authorize us to say that ten per cent, is an unreasonable compensation for counsel. The judgment must therefore be affirmed.