Court Opinion

ID: 4004198
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:05:27.253979+00
Date Added: 2024-06-11T07:44:35.203578
License: Public Domain

The plaintiff, in his bill of complaint clearly and unequivocally alleges that "all of said depositors have been paid the principal of their respective deposits in full but have been paid no interest thereon." (Italics supplied.) No pleading or evidence in the case in any degree contradicts this statement. The court clearly accepted and acted *Page 510 
upon it, since the final decree provides that the receiver "do pay said sum of $3,639.18, or a dividend of 2.2%interest to the depositors on claims proven in said bank". (Italics supplied.) It is, therefore, absolutely clear that the principals of all deposits were found by the court to have been paid in full and that the decree gives these depositors by this suit, interest only. This, I understand, cannot be done except where there was an express agreement to pay interest on the debt.
The rule of law applicable to these facts seems to be undisputed. Where interest is recoverable, not by virtue of an agreement therefor, but wholly as damages for the retention of the principal debt, acceptance of the payment of the principal in full, makes recovery of interest thereafter impossible. Interest in such a case is regarded legally as a mere incident to the principal and when there remains no principal or part of the principal to be recovered there is nothing to which the interest can be incident. This principle is expressly accepted in Bennett v. Federal Coal  Coke Co., 70 W. Va. 456,74 S.E. 418, 419, 40 L.R.A. (N.S.) 588, Ann. Cas. 1913 E. 578. Judge Miller, speaking for the court, said: "For the proposition that interest on an implied contract is a mere incident to the debt, and that after payment of the principal interest cannot be recovered by separate action, defendants counsel rely upon the following authorities: Brewster v. Wakefield, 1 Minn. 352, 1 Gill. 260, 69 Am. Dec. 343; Graves v. County, 104 F. 61;Southern Ry. Co. v. Dunlop Mills, 76 F. 505; Smith v.Buffalo, 39 N.Y.S. 881; Fake v. Eddy, 15 Wend. (N. Y) 76;Stewart v. Barnes, 153 U.S. 456, 14 S.Ct. 849, 38 L.Ed. 781, and the leading case of Moore v. Fuller, 47 N.C. 205, 2 Jones (Law) 205, a North Carolina case, and 22 Cyc. 1572, 1573. These authorities fully support the proposition contended for." Judge Miller further quotes with express approval the language of Mr. Justice Shiras, in Stewart v. Barnes, 153 U.S. 456,14 S.Ct. 849, 38 L.Ed. 781, as follows: "Interest in such cases is considered as damages, and does not form the basis of the action, *Page 511 
but is an incident to the recovery of the principal debt. The right of action is the right to compel the payment of the money which is being retained. When he who has this right commences an action for its enforcement, he at the same time acquires a subordinate right, incident to the relief which he may obtain, to demand and receive interest. If, however, the principal sum has been paid, so that, as to it, an action brought cannot be maintained, the opportunity to acquire a right to damages is lost." This principle seems to be accepted by the courts generally. In addition to the authorities cited by Judge Miller, see: Hopkins v. Erskine, 118 Me. 276, 107 A. 829; Yazoo M. V. R. Co. v. W. C. Craig  Co., 111 Miss. 297, 71 So. 561;Alabama City, etc. Ry. Co. v. City of Gadsden, 185 Ala. 263,64 So. 91, Ann. Cas. 1916 C, 573; Arnold v. Sedalia NationalBank, 100 Mo. App. 474, 74 S.W. 1038; Gordon v. City of Omaha,71 Neb. 570, 99 N.W. 242; Maloy v. Board of Commissioners,10 N.M. 638, 62 P. 1106, 52 L.R.A. 126; Brady v. Mayor etc.,City of New York, 14 A.D. 152, 43 N.Y.S. 452; Union TrustCompany of Rochester v. Kaplan, 249 A.D. 280, 292 N.Y.S. 152;Moran Towing  Transportation Co. v. Fleming, 23 N.Y.S.2d 750,175 Misc. 408; Fender v. Waller,139 Neb. 612, 298 N.W. 349; Merrigan v. Metropolitan Life Ins. Co.,43 F. Supp. 209.
It is true that in the Bennett case there is also the element of a settlement which barred recovery. But the decision did not pretend to narrow the rule to cases where a settlement was present. From the opinion it clearly appears that either the settlement or the payment of the principal in full was regarded as sufficient to bar recovery of the interest sued for.
This rule of law would of itself require a reversal of the decree appealed from were it not that I think we may take judicial notice of the fact that banks in general have some deposits, which by special agreement do bear interest. We may, therefore, assume in the absence of any showing to the contrary, that such was true in the Bank of Morgan County. Hence, the balance now in the receiver's hands *Page 512 
should have been applied to the discharge of the contract interest (not legal interest) on time deposits and savings accounts. As this balance is small, it would in all probability be exhausted by these payments, so that we cannot see that the stockholders would receive any part thereof. The only persons who would benefit by a reversal are the depositors whose deposits bear interest by contract, and they are not complaining. I, therefore, also, would affirm.
These views are to be understood as applying only to cases where the payment in full has been actually applied to the principal. If the payments are general and to be applied to the debt as a whole a different conclusion would probably be necessary although it might be difficult to explain how a series of many payments in odd dollars and cents which aggregate the exact amount of the principal, could be considered as other than the payment of the principal itself.