Mathews v. Toogood

• Decision Date: 07 March 1888
• Citation: 37 N.W. 265,23 Neb. 536
• Parties: MATHEWS v. TOOGOOD ET AL.
• Court: Nebraska Supreme Court

23 Neb. 536

37 N.W. 265

MATHEWS

v.TOOGOOD ET AL.

Supreme Court of Nebraska.

March 7, 1888.

Syllabus by the Court.

“Any rate of interest which may be agreed upon, not exceeding $10 per year upon $100, shall be valid upon any loan or forbearance of money, or things in action; which rate of interest so agreed upon may be taken annually, or for a shorter period, or in advance, if so expressly agreed.” Comp. St. 1887, § 1, c. 44.

This section forbids the allowance of interest in excess of 10 per cent., and where the interest upon a promissory note is represented by coupons, providing that interest shall be allowed thereon after maturity, at the rate of 10 per cent. per annum, no interest will be allowed upon such coupons.

An agreement to pay interest upon interest which may thereafter accrue, cannot be enforced, although it does not render the principal contract for the loan or forbearance of monev usurious.

Error to district court, Saline county; MORRIS, Judge.

Luther P. Mathews brought this action against Hattie Toogood, executrix of the estate of Thomas Toogood, and others, to foreclose a mortgage given to secure a promissory note. Judgment was rendered in favor of plaintiff for full amount claimed, except that the court refused to allow interest after its maturity upon the remaining interest coupon attached to the note. For this the defendants bring error.Dawes, Foss & Stephens, for plaintiff in error.

Abbott & Abbott, for defendants in error.

REESE, C. J.

The original action in this case was instituted in the district court of Saline county for the purpose of foreclosing a mortgage given to secure a promissory note for $4,400, dated May 2, 1885, and due May 2, 1887, with interest from date at the rate of 10 per cent. per annum, payable semiannually, as per coupons attached to the note. There is one interest coupon remaining attached to the note which is as follows: “$220.00. May 2, 1887. We promise to pay to Luther B. Mathews, or order, two hundred and twenty dollars, being interest to that date on my note of $4,400.00. This interest note to draw 10 per cent. per annum from maturity.” Upon trial before the district court a decree was rendered in favor of plaintiff in error for the full amount claimed, excepting the interest demanded upon the coupon note after its maturity. This the court refused to allow to plaintiff, and this action of the district court is now assigned for error.

There was no appearance at the hearing in this court by defendants in error, and in the examination of the question before us we have been without the benefit of a brief upon that side of the case. In the examination of the question involved we find a sharp conflict of authorities, and it is impossible to harmonize them. We here give a brief statement of the holdings of the courts upon some of the questions bearing upon the case. The following cases hold substantially that coupons, whether detached from the bonds or not, draw interest after their maturity. Aurora v. West, 7 Wall. 82;Langston v. Railroad Co., 2 S. C. 248;City of San Antonio v. Lane, 32 Tex. 405;Town of Genoa v. Woodruff, 92 U. S. 502;Hollingsworth v. Detroit, 3 McLean, 472, 473;Banks v. Railroad Co., 8 R. I. 375; Com. v. Canal Co., 32 Md. 501. The following cases may be cited as holding a contrary doctrine: Force v. City of Elizabeth, 28 N. J. Eq. 403; Commissioners v. King, 13 Fla. 451; Rose v. City of Bridgeport, 17 Conn. 243. In the following cases it is held that interest cannot be compounded where the note provides that interest shall be payable annually, but that interest must be computed as simple interest: Leonard v. Villars, 23 Ill. 377;Bannister v. Rogers, 35 Me. 75; Miles v. Commissioners, 8 Ind. 158; Hastings v. Wiswall, 8 Mass. 455;Doe v. Warren, 7 Me. 48; Stokely v. Thompson, 34 Pa. St. 210; Pindall v. Bank, 10 Leigh, 481. While the following cases may be cited as holding the reverse, to-wit, that interest will be allowed upon unpaid interest where, by the terms of the note, interest is payable annually: House v. College, 2 Yerg. 128; Pierce v. Rowe, 1 N. H. 179;Preston v. Walker, 26 Iowa, 205;Wheaton v. Pike, 9 R. I. 132; Wright v. Eaves, (Statutes,) 10 Rich. Eq. 582;Lewis v. Pascal, 37 Tex. 315;Aspinwall v. Blake, 25 Iowa, 319;Singleton v. Lewis, 2 Hill, (S. C.) 408; O'Neall v. Sims, 1 Strob. 115;Doig v. Barkley, 3 Rich. Law, 125;Bledsoe v. Nixon, 69 N. C. 89;Talliaferro v. King, 9 Dana, 331. In the following cases it is held that interest may be allowed on interest, if the promise to pay it is made after the interest matures, but not if the promise was made before the maturity of the interest: Stewart v. Petree, 55 N. Y. 621;Van Besschooten v. Lawson, 6 Johns. Ch. 313;Thornhill v. Evans, 2 Atk. 330; Connecticut v. Jackson, 1 Johns. Ch. 13;Waring v. Cunliffe, 1 Ves. Jr. 99; Chambers v. Goldwin, 9 Ves. 254; Banks v. McClellan, 24 Md. 62,Toll v. Hiller, 11 Paige, 228;Henry v. Flagg, 13 Metc. 65; Forman v. Forman, 17 How. Pr. 255;Pindall v. Banks, 10 Leigh, 481;Childers v. Deane, 4 Rand. (Va.) 406. In Wisconsin and Missouri, and perhaps other states, interest is allowed upon unpaid interest, but this is in pursuance of an express statutory provision. By these decisions it is also held that a contract to pay interest upon interest which may thereafter accrue, cannot be enforced, although it does not render the principal contract for the loan or forbearance usurious. It is held that such contract to pay the interest upon the interest does not in fact contaminate the original contract, but that its provisions are against public policy, and will not be enforced....