Ashland Sav. Bank v. Bailey

• Citation: 21 A. 221,66 N.H. 334
• Court: Supreme Court of New Hampshire
• Decision Date: 25 July 1890
• Parties: ASHLAND SAV. BANK v. BAILEY.

21 A. 221

66 N.H. 334

ASHLAND SAV. BANK

v. BAILEY.

Supreme Court of New Hampshire. Grafton.

July 25, 1890.

Writ of entry to foreclose a mortgage. The only question was the amount of the mortgage debt. The mortgage note was dated July 3, 1880, for $7,000, with interest after six months. Interest was paid on this note at the rate of 7 per cent. from its date to January 3, 1888, and from January 3, 1888, to September 3, 1888, at the rate of 6 per cent. per annum, and indorsed on the note simply as interest paid. The writ was dated April 29, 1889. The amounts paid were understood by the parties to be paid and received as interest. July 26, 1882, the defendant gave the plaintiff a note for $2,350. This note was not secured by the mortgage, and had no connection with the mortgage debt. On this note the defendant paid the plaintiff interest, at the rate of 6 1/2 per cent. per annum until July 11, 1887, when the plaintiff sold and transferred the note to a third person to whom any payments made since have been made. The payments made by the defendant to the plaintiff upon this note were understood by the parties to be payments of interest, and were indorsed as such, no amounts being named in the indorsements. The defendant claimed a deduction from the $7,000 note of three times the excess of interest at 6 per cent. paid upon both notes. If this could not be allowed, he claimed a deduction from the amount of the mortgage note of the whole sum actually paid in excess of the legal rate of interest on both notes, together with interest upon such excess from dates payments were made to the date of judgment. The defendant claims a deduction of the excess actually paid, and interest on the mortgage note, from that note by virtue of chapter 78 of the laws of 1889. The court denied these claims of the defendant, and allowed a deduction from the amount of the mortgage note of the excess paid beyond the legal rate of interest on that note alone during the period of six years preceding the commencement of the action. The defendant excepted.

Burleigh & Adams, for plaintiff.

Jewell & Stone and J L. Wilson, for defendant.

BINGHAM, J. The sum of three times the excess of 6 percent, interest, the recovery of which was authorized by Gen. Laws, c. 232, § 3, is a penalty, and more than one year having elapsed after the last payment on unlawful interest, before the commencement of the action, the right of recovery, if available as a set-off, had become barred by the statute...