Sherwood v. Moore

• Citation: 35 F. 109
• Parties: SHERWOOD v. MOORE. [1]
• Decision Date: 25 February 1888
• Court: U.S. District Court — Northern District of Georgia

35 F. 109

SHERWOOD v. MOORE. ^[1]

United States Circuit Court, N.D. Georgia.

February 25, 1888

J. D Conyers and Broyles & Johnston, for defendant.

Mynatt & Carter, for plaintiff.

NEWMAN J.

After a verdict had been directed in this case, the question was informally raised and discussed as to the rate of interest the note, which was the foundation of the suit, bore after maturity. The language of the note, after the usual promise to pay the principal, is 'with interest from this date at the rate of eight per cent. per annum, payable as per five interest notes hereto attached. ' The interest notes alluded to covered interest to the maturity of the note. In Georgia, where this note was executed and is payable, the ordinary legal rate of interest is 7 per cent., but a higher rate may be stipulated for by contract in writing, not to exceed 8 per cent. per annum. It may be considered as settled, I think, in the federal courts, controlled as they are by the decisions of the supreme court of the United States, that, if a conventional rate of interest higher than the ordinary legal rate is stated in a promissory note, such higher rate will not be allowed beyond the maturity of the paper, unless the terms of the instrument itself extend it beyond maturity. Brewster v. Wakefield, 22 How. 118; Burnhisel v. Firman, 22 Wall. 170; Holden v Trust Co., 100 U.S. 72. There is a qualification however, to this ruling by the supreme court, namely, that the local law of the state will control. It is claimed by counsel for the plaintiff that the decisions of the supreme court of this state have established a different rule in Georgia, and some decisions have been cited in support of that position. The first case cited is that of Ware v Bank, 59 Ga. 840. I have been unable to see anything in that decision controlling here. The only point decided with reference to interest is that the holder of the draft in that case could collect the same rate of interest that the acceptor might have collected. Two other cases are cited and relied upon, namely, Cauthen v. Bank, 68 Ga. 287, and Daniel v. Gibson, 72 Ga. 367. In both of these cases the note provided for a conventional rate of interest (in the first case 12 per cent., and in the latter case 15 per cent.) after maturity; and the question before the court in both cases was whether the judgment should bear the rate of interest provided in the contract, and it was decided in the affirmative. That is to say, it was held in those two cases that, where the contract provided for a conventional rate of interest after the maturity of the paper, the judgment should bear the same rate. The question here is, where a contract only expressly provides for a conventional rate of interest higher...