Court Opinion

ID: 6947983
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:27:54.016313+00
Date Added: 2024-06-11T16:07:59.143190
License: Public Domain

Treat, C. J. The act of the 12th of February, 1835, relative to the school fund, provided: “ If any person shall make default in the payment of interest as it becomes due and payable, such interest shall thereafter be considered principal, and interest at the rate of twenty per cent, per annum shall be chargeable and recoverable thereon; and if any person shall fail to pay the principal sum borrowed at the time the same becomes due and payable, such person shall be chargeable with interest on such principal sum, at the rate of twenty per cent, per annum, until paid.” The rate of interest was twelve per cent, per annum, payable semi-annually in advance. The provisions of the act were clear and explicit. If the borrower failed to pay the interest promptly, he became liable to pay interest thereon at the rate of twenty per cent, per annum. And if he failed to pay the principal debt when it fell due, he was bound to pay interest thereon at the rate of twenty, instead of twelve per cent, per annum. The act of the 12th of February, 1849, which is a revision of the prior laws on the subject of the school fund, provides : “ If default be made in the payment of interest due upon money loaned by any school commissioner or township treasurer, or in the payment of the principal, interest at the rate of twelve per cent, per annum shall be charged upon the principal and interest from the day of default, which shall be included in the assessment of damages, or in the judgment in suit or action brought upon the obligation to enforce payment thereof; and interest, as aforesaid, may be recovered in action brought to recover interest only.” Under this act, the rate of interest is ten per cent, per annum, payable semi-annually in advance., The two statutes are substantially alike in their provisions, and must receive the same construction. The only difference respects the rate of interest. That is changed from twelve to ten per cent.; and the penalty imposed upon the borrower for not paying punctually, is twelve instead of twenty per cent. Two classes of cases are embraced by this act; one, where interest is due and unpaid ; the other, where principal is due and payable. In the former case, the amount of unpaid interest bears interest at the rate of twelve per cent, per annum; and it may be sued for and recovered in a separate action. In the latter case, the principal debt bears interest at the rate of twelve per cent, per annum from the time it falls due. The provisions of this act do not apply to the principal, where the debtor is in no default respecting it. It is only when the principal is due and payable, that the rate of interest upon it is increased. This, we are satisfied, was the real intention of the legislature, although, it must be admitted, that intention is not as clearly expressed as in the act of 1835. A different construction would render the law highly penal in its character. If twelve per cent, interest was to be charged upon the principal, on every failure to make a payment of interest, it would operate very severely upon the debtor. Loans are made for’five years, and the penalty for failing to pay a few instalments of interest might exceed the principal debt. Such a construction ought not to be put upon the law, unless it manifestly appears that it was the design of the legislature. .The circuit court construed the law properly, and its judgment must be affirmed. Judgment affirmed.