Conn. Mut. Life Ins. Co. v. Westerhoff

• Decision Date: 06 April 1899
• Citation: 78 N.W. 724,58 Neb. 379
• Parties: CONNECTICUT MUT. LIFE INS. CO. v. WESTERHOFF ET AL.
• Court: Nebraska Supreme Court

58 Neb. 379

78 N.W. 724

CONNECTICUT MUT. LIFE INS. CO.

v.WESTERHOFF ET AL.

Supreme Court of Nebraska.

April 6, 1899.

Syllabus by the Court.

1. A mortgage provided that if default was made in the payment of the interest on the debt, the payment of which was secured by the mortgage, the whole of the indebtedness should become due and collectible, without notice of condition broken. Held a contract within the power and right of the parties to enter into, and enforceable according to its terms. Banking Co. v. Seeley, 75 N. W. 1102, 55 Neb. 660.

2. Held, that a default in payments was admitted by the answers.

3. An interest coupon which provides for a higher rate of interest from its maturity than is exacted on the principal sum by the note to which the coupon is attached may be legal, and may be enforced in strict accord with its terms.

4. A provision, in a note and mortgage by which the payment of the debt evidenced by the note is secured, that, in the default of the payment of the semiannual interest installment, the whole debt shall bear interest at a higher rate than it would, by its terms, otherwise bear, is in the nature of a penalty, and will not be enforced.

5. If parties have agreed upon a rate of interest less than 7 per cent. per annum for the forbearance of a debt, a judgment predicated upon the contract will bear interest at 7 per cent. per annum. Havemeyer v. Paul, 63 N. W. 932, 45 Neb. 373.

6. If parties have contracted for a rate of interest greater than 7 per cent. per annum, a judgment which has for its basis said contract will bear the rate of interest fixed by the contract. Havemeyer v. Paul, supra.

Appeal from district court, Seward county; Bates, Judge.

Action by the Connecticut Mutual Life Insurance Company against John Westerhoff and others. Judgment for defendants, and plaintiff appeals. Reversed.Samuel J. Tuttle, for appellant.

E. C. Biggs and J. J. Thomas, for appellees.

HARRISON, C. J.

On April 2, 1894, the appellee John Westerhoff and his wife executed and delivered to the appellant a promissory note in the sum of $1,800, payable five years after date, to bear interest at the rate of 6 per cent. per annum, payable semiannually. The note had attached to it 10 coupons, each of which evidenced the indebtedness of the makers of the principal note for an installment of the interest which was to become due thereon. In the principal note appeared this sentence: “This note to draw 9 per cent. interest per annum after default in payment of principal or interest.” And in each coupon there was the statement that “this note bears interest at 9 per cent. after due.” To secure the payment of the note and interest, there was made and delivered a mortgage on a piece of real estate, and in the mortgage was embodied the following provision: “And it is agreed that if default shall be made in the payment of the said notes, or any part of the interest thereon, promptly as they mature, * * * then all of the said notes, and the whole of the indebtedness secured by this mortgage, * * * shall become due and collectible at once, by foreclosure or otherwise, and without notice of broken conditions. * * * And it is hereby agreed that, after any default in the payment of the principal or interest, the whole indebtedness secured by this mortgage shall draw interest at the rate of nine per cent. per annum.” It appears that the note was executed for the amount of a loan made by the appellant to John Westerhoff, one of the appellees; that the agreed rate of interest of the loan was 7 per cent. per annum, of which 1 per cent. per annum for the time of the loan, or $90, was collected at the time of the inception of the loan. The appellant commenced this action in the district court of Seward county on April 17, 1895, and alleged for cause that there had been default in payment of each of the first two installments of interest due on the note, whereby the whole indebtedness had become due, and the conditions of the mortgage had been...