Stansbury's Adm'r v. Stansbury.

• Decision Date: 27 September 1884
• Citation: 24 W.Va. 634
• Parties: Stansbury's Adm'r v. Stansbury.
• Court: West Virginia Supreme Court

24 W.Va. 634

Stansbury's Adm'r

v.Stansbury.

Supreme Court of Appeals of West Virginia.

Submitted June 5, 1884

Decided September 27, 1884.

After interest on a debt has become due, an agreement, that compound interest shall be allowed on the various amounts of interest which had previously fallen due, in consideration of a forbearance on the part of the creditor to collect the debt, is a usurious contract. But an agreement made, after interest has become due, that this back interest due shall bear interest from the date of the agreement, in consideration that the collection of the debt is forborne, is not usurious and will be permitted, such an agreement not even tending to usury.

Green, Judge, furnishes the following statement of the case:

The bill in this cause was filed in the circuit court of Brooke county by James F. Watts and George McWha, administrators of Nicholas Stansbury, for the purpose of subjecting the real estate of the decedent to the payment of his debts, his personalty being insufficient. It is unnecessary to state the proceedings in the cause except so far as they relate to the appellant, Rebecca Hindman, who by an amended bill was made a party defendant. She in her answer set up that she was the bona fide owner of a negotiable note executed by the testator, Nicholas Stansbury, dated October 22, 1860, payable six months after date with interest from date for the sum of two thousand and five dollars, on which were endorsed two credits in 1863 amounting to thirty-six dollars and seventy-five cents, also an endorsement made May 22, 1872, that all interest was paid up to that date, and on March 25, 1879, another credit of four dollars and twenty-five cents; and the answer states that there were no other credits than these upon this note. The answer further stated, that in October, 1860, a deed of trust was executed by Nicholas Stansbury on his home-farm to secure this note. She claims, that the balance due on this note is two thousand eight hundred and twenty-three dollars, with interest from March, 1879, and states, that she receivad this note from the administrator of James Hindman as apart of her distributive share of his estate, she being his widow. The commissioner, to whom this matter was referred, reported the claim of Rebecca Hindman just as it was set up in her answer and reported it also to be the first lien on the real estate of Nicholas Stansbury. This report was filed July 20, 1880, and it was excepted to very generally by the plaintiff's counsel, because it did not find the proper amount due to Rebecca Hindman, and because it did not give a proper credit for the amount paid May 22, 1872, that is one thousand eight hundred and titty-one dollars and six cents. This exception was overruled by the decree ot July 26, 1880, and a former report as well as this recommitted report confirmed, and a decree was rendered for the sale of the real estate of Nicholas Stansbury, deceased. Subsequently, on the 11th day of December, 1880, the following decree was rendered:

" This cause came on this day to be further heard upon the papers heretofore read and the decrees heretofore entered, and by consent of the parties it is adjudged, ordered and decreed, that so much of the decree of July 26, 1880, as overrules the exceptions to the commissioner's second report and confirms the same to be set aside, and that the said complainants have leave to restate their said exceptions to said second report, with a view to raising any question that may be raised relating to usury or to alleged illegal compound interest; that such question is to be regarded and treated as if presented by the pleadings in the cause; that the deposi-tions of Samuel Hindman and J. R. Hindman, filed with the said second report, with the statement of William Brown showing a calculation between the parties, be taken and considered as evidence regularly in the cause, and that the deposition of Samuel Hindman be taken and read as if the conversation by him first detailed occurred at the time of the transaction referred to by the witness, J. R. Hindman, namely, the giving of the note for one thousand eight hundred and fifty-one dollars and six cents; and this cause is submitted to the court for decision as to the claim of Rebecca Hindman reported by Commissioner Marks."

Thereupon proper and formal exceptions were filed by the complainants to the report of July 20, 1880, which found that there was due to Rebecca Hindman the principal of this note, two thousand and five dollars, with interest from May 22, 1872, subject to a credit of only four dollars and twentyfive cents as of March 25, 1879. These exceptions insist that the commissioner erred in not crediting this note of two thousand and five dollars as of May 22, 1872, with one thousand eight hundred and fifty-one dollars and six cents as of that date, instead of crediting on this note only the interest due on it to May 22, 1872. If so credited, it would have reduced this note of two thousand and five dollars, the exceptions claim, to one thousand five hundred and fifty-three dollars and ninety-nine cents; and this should have been reported as the amount due to Rebecca Hindman with interest on one thousand five hundred and fifty-three dollars and ninety-four cents from May 22, 1872, subject to this credit of four dollars and twenty-five cents of March 25, 1879. The difference between this and the amount reported by the commissioner wrould be, these exceptions state, about nine hundred dollars, this difference being produced, say these exceptions, by the commissioner in effect allowing compound interest on the original debt from its date, October 22, 1860, to May 22, 1872.

The facts appearing from the evidence referred to in the consent-decree of December 11, 1880, are as follows: On the 22d day of May, 1872, by the direction of the parties a calculation was made by William Brown of the amount due on this note of two thousand and five dollars dated October 22, 1860. In this calculation compound interest was allowed, the interest being compounded annually. This compounding of interest was made with the knowledge and assent of the maker of the note, who had at some previous time, it does not appear when, agreed with Rebecca Hindman that he would pay her compound interest, if she would give him time, which she did; and this mode of calculating interest was adopted as carrying out this agreement. According to this mode of calculating the interest on the entire amount of the debt due on May 22, 1872, was three thousand eight hundred and fifty-six dollars and six cents, or subtracting from it the principal, two thousand and five dollars, it left one thousand eight hundred and fifty-one dollars and six cents, which the parties regarded as interest then due. Thereupon Nicholas Stansbury gave his note therefor to Rebecca Hindman and secured it by a deed of trust on his home-farm. This note of one thousand eight hundred and fifty-one dollars and six cents was afterwards paid in full by Nicholas Stansbury; but he never after May 22, 1872, the date of this settlement, paid anything on the original note of two thousand and five dollars, except four dollars and twenty-five cents on March 25, 1879. At the time of this settlement and the giving of the note for the compound interest the following endorsement was made on the note of two thousand and five dollars. "Paid on the within note all interest up to May 22, 1872.".The facts were all perfectly well understood by all parties, when this settlement was made. On March 5, 1881, the circuit court by its decree sustained the complainant's exceptions to the commissioner's report; and in lieu of the amount found due'to Rebecca Hindman decided that the true amount was two thousand five hundred and fifty-six dollars and fiftysix cents with interest from March 5, 1881, and that it was a first lien but subject to a credit for any amount paid her under former orders of this court; and it was directed to be first paid...