Robbins v. Maddy

• Decision Date: 10 April 1915
• Docket Number: 19,428
• Citation: 95 Kan. 219,147 P. 826
• Parties: F. K. ROBBINS, Appellee, v. W. H. MADDY and MARY E. MADDY, Appellants
• Court: Kansas Supreme Court

147 P. 826

95 Kan. 219

F. K. ROBBINS, Appellee, v. W. H. MADDY and MARY E. MADDY, Appellants

No. 19,428

Supreme Court of Kansas

April 10, 1915

Decided. January, 1915.

Appeal from Sumner district court; CARROLL L. SWARTS, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

PROMISSORY NOTE--When Interest is a Penalty and Forfeited. Promissory notes and a mortgage to secure their payment were executed at the same time. In each note it was provided that if it was not paid when due it should draw interest at the rate of ten per cent per annum from its date until paid. In the mortgage it was recited that the notes bore interest at ten per cent after maturity and if not paid when due to draw ten per cent per annum from date. Held, that the interest provided for from the date of the notes to their maturity was a penalty and is forfeited under the provisions of section 4348 of the General Statutes of 1909, but that the holder is entitled to recover the stipulated rate after the maturity of the notes.

W. W Schwinn, of Wellington, for the appellants.

W. T. McBride, and Harold W. Herrick, both of Wellington, for the appellee.

OPINION

JOHNSTON, C. J.:

The interest recoverable upon a series of notes is the only question involved on this appeal. The action was brought by F. K. Robbins against W. H. and Mary E. Maddy to recover on the notes and to foreclose a mortgage which was given to secure their payment. Each note was given for the sum of $ 8 and the terms of all were alike except as to the time of maturity. The following is a copy of one of the notes:

"$ 8.

"Wellington, Kansas Mar. 31, 1893.

"For Value Received December 1, 1895, after date I promise to pay to the order of F. K. Robbins & Co. Eight Dollars, at the Farmers Bank, Wellington, Kansas.

"If not paid when due, this note to draw interest at the rate of ten per cent per annum from its date until paid.

"We, the sureties, guarantors and endorsers herein, agree to extensions of this note without notice, hereby ratifying such extensions and binding ourselves for payment hereof, as if no extensions of time for, or forbearance of payment had been granted or made."

In the mortgage which was made when the notes were executed they were described as follows:

"Each note for $ 8.00 of even date herewith, the first one falling due May 1, 1893, and falling one due each month thereafter with 10% interest per annum from maturity, and if not paid when due to draw 10% per annum from date."

The plaintiff asked for interest on the notes after maturity at ten per cent per annum, but made no claim for any interest on the notes from date until maturity. The defendant conceded that the notes bore interest from maturity, but only at six per cent per annum, instead of the stipulated rate. The trial court sustained the plaintiff's contention and ruled that the notes bore interest from maturity at ten per cent interest per annum, and accordingly gave judgment for $ 638.63 and provided that the judgment should bear interest at the rate of ten per cent per annum.

The defendant insists that the judgment should not have been rendered for more than $ 406.07, and that the judgment should only bear interest at six per cent per annum. The governing statute provides that:

"When a rate of interest is specified in any contract, that rate shall continue until full payment is made, and any judgment rendered on any such contract shall bear the same rate of interest mentioned in the contract, which rate shall be specified in the judgment; but in no case shall such rate exceed ten per cent per annum, and any bond, note, bill, or other contract for the payment of money, which in effect provides that any interest or any higher rate of interest shall accrue as a penalty for any default, shall be void as to any such provision." (Gen. Stat. 1909, § 4348.)

The promise in the notes to pay an excess rate from date because the notes were not paid at maturity is void under the statute quoted, and so much of it as may be regarded as a penalty is not recoverable. (Ansel v Olson, 39 Kan. 767, 18 P. 939; Holmes v. Dewey, 66 Kan. 441, 71 P. 836.) Both of the parties agree that no interest can be collected on the notes between their date and their maturity, but they disagree as to whether payment of the...