Van Husan v. Kanouse

• Decision Date: 13 May 1865
• Citation: 13 Mich. 303
• Court: Michigan Supreme Court
• Parties: Caleb Van Husan v. John Kanouse and others

13 Mich. 303

Caleb Van Husan v. John Kanouse and others

Supreme Court of Michigan

May 13, 1865

Heard May 9, 1865

Appeal in chancery from Washtenaw circuit.

By the decree of the court below, the bill of complaint was dismissed.

The facts are stated in the opinion.

Decree affirmed, with costs.

Wm. A Moore, and G. V. N. Lothrop, for complainant:

In cases where it is expressly stipulated that interest shall be payable at certain fixed times, it has been held that interest may be charged on interest from the time appointed for its payment; that the same, in fact, becomes principal Gibbs v. Chisolm, 2 N. & McC., 38; Singleton v. Lewis, 2 Hill (S. C.), 106, 408; Doig v Barkley, 3 Rich. (S. C.), 125; Pierce v. Rowe, 1 N. H., 179; 1 John. R., 137; O'Neall v. Bookman, 9 Rich. L., 80; O'Neall v. Sims, 1 Strobh. 115; Eaton v. Bell, 7 Eng. C. L., 13; De Bruhl v. Neuffer, 1 Strobh. 426; Wright v. Eaves, 10 Rich. Eq., 582; Farwell v. Sturdivant, 37 Me. 308; Bainbridge & Co. v. Wilcocks, Bald. C. C., 541; Camp v. Bates, 11 Conn. R., 488; Mowry v. Bishop, 5 Paige 98; Fobes v. Cantfield, 3 Ham. 17; Pindall's Ex's v. Bank of Marietta, 10 Leigh 481, 484; Pawling v. Pawling, 4 Yeates 220; Cheek v. Waldrum, 25 Ala. 152.

Again, the interest, by the terms of the covenant, is made payable at the end of each year, and is as much demandable as if a specific sum equal to the amount of interest had been promised, and in default of payment, as much entitles the plaintiff to demand interest upon the amount so due and unpaid.

The fact that the amount so promised to be paid is described as interest accruing upon a larger sum, which is made payable at a future time, cannot the less entitle the plaintiff to demand interest upon the amount in default of payment, as a just remuneration in damages for the detention or non-payment: Talliaferro v. King, 9 Dana 331; Pawling v. Pawling, 4 Yeates 220.

Interest on rents in arrear, ground rent, etc., is usually allowed, and these installments of interest are analogous: Naglee v. Ingersoll, 7 Penn. 185; McQuesney v. Hiester, 33 Penn. 435; Guthrie v. Stockton, 5 Harr. 123; Elkin v. Moore, 6 B. Monroe, 462.

Gold and silver coin constitute the only legal tender in the United States, and an act of congress making treasury notes legal tender is unconstitutional and void.

Although a tender be sufficient, yet the defendant loses the benefit of the tender, unless he pay the money into court at the time of filing his answer: Livingston v. Harrison, 2 E. D. Smith, 197; Freeman v. Fleming, 5 Iowa 460-3; Mason v. Croom, 24 Geo. 211; Brock v. Jones, 16 Tex. 461; Clark v. Mullenix, 11 Ind. 532; Jarboe v. McAtee, 7 B. Monroe, 279; Brown v. Ferguson, 2 Den. 196; Cullen v. Green, 5 Harr. 17; De Wolf v. Long, 7 Ill. 679; Foote v. Palmer, Wright's R., 336; Wing v. Hurlburt, 15 Vt. 607

Joslin & Blodgett, for defendants:

An agreement to pay compound interest must be in writing, and it must be upon additional consideration: 6 John. Ch. R., 313; Wilcox v. Howland, 23 Pick. 167; Milliken v. Southgate, 26 Me. 424; Dunbar v. Woodcock, 10 Leigh 628; Pindall v. Bank of Marietta, 10 Leigh 481; Childers v. Deane, 4 Rand. 406; Mowry v. Bishop, 5 Paige 98; Ferry v. Ferry, 2 Cush. 92.

The mode of computing interest on long bond is well settled. See Dean v. Williams, 17 Mass. 417; Fay v. Bradley, 1 Pick. 194; Doe v. Warren, 7 Greenlf. 48; Story on Contracts, §§ 596, 1033.

The complainant's authorities on the computation are exceptions to the American rule, unless when the suit is for the interest, in which case some of the states have allowed interest upon the interest due.

OPINION

Campbell J.:

The bill in this case was filed to foreclose a mortgage, payable in three annual installments, with annual interest. The defense set up was a tender in treasury notes of the United States, declared to be a legal tender by act of congress. The amount tendered was conceded to be sufficient, unless each installment of annual interest, as it became due, was turned into principal.

Some evidence was introduced for the purpose of showing an agreement to compound interest upon that basis, but we are satisfied no such agreement appears. The only questions, therefore, which we are called upon to decide are--first, whether the law implies any agreement to compound in the manner referred to; and, second, whether the treasury notes offered are a legal tender in payment of private debts.

The authorities upon the subject of allowing annual or other periodical interest to be converted into principal were very fully referred to upon the argument. It was not disputed that the weight of authority is against any such legal implication, in the absence of an express agreement for such conversion; but it was claimed that there were legal analogies which would justify it. That there are many cases where the rule of damages is quite similar to the rule here contended for, we are very well assured; but, as remarked by Shaw Ch. J. (in Ferry v. Ferry, 2 Cush. R., 92), "it is a proposition to be taken with its well established qualifications, as well settled as the rule itself." The general understanding and practice in our courts has followed the prevailing current of authority, in allowing no new principal to be struck upon securities, until the payments made exceed the amount of simple interest which has accrued, and upon which all moneys received will be first applied. The arguments based upon the change of public sentiment concerning usury laws, cannot be considered by a judicial body. Our legislation has gone far in modifying the ancient system. But we cannot properly allow our individual sentiments to keep us either behind or before the legislative action on this subject. As the law stands, we do not regard it as sanctioning any implication that interest may become principal without a clear agreement. We are not called upon in the present case to decide when or how such an agreement is to be made, in order that courts may enforce it. We think the amount tendered was sufficient; and if made in a proper medium, such a tender discharged the lien of the mortgage entirely, so that no bill could be filed to enforce it; and, therefore, it became immaterial whether the tender was kept good or not. That question could only become important in an action at law upon the debt. This rule was settled in Caruthers v. Humphrey, 12 Mich. 270.

We are, therefore, called upon to determine whether the law making the treasury notes in question a legal tender in payment of debts is within the constitutional power of congress.

This question having been answered in the affirmative by most of those courts which have been required to decide it (including, among others, the court of appeals of New York), we should not deem it necessary to reconsider it, were it not a question of public importance, affecting the public credit and general welfare of the United States. The point being insisted on upon the argument, we can only perform our duty by indicating our opinion, and the ground of it, as briefly as the nature of the case will permit.

The reasons for doubting the validity of the law under which this paper was issued, are found in a denial of power in congress to authorize the emission of any bills of credit at all, and the denial of the right to make anything a legal tender but gold and silver. The power to issue bills of credit has not been expressly given, and it is claimed such power should be expressed. It is also urged the power was designedly denied, upon full deliberation, by the convention which framed the constitution. These reasons are asserted as precluding any well founded doubt upon the issue.

We do not deem it necessary to examine the question of express power. It certainly is not to be found in the constitution. We are only concerned to see whether, in the absence of any prohibition, the power is or is not fairly deducible from those provisions which declare the duties and authority designed to be vested in the general government.

Reference has been frequently made, in the discussions on this subject to the fact that the draft of the constitution contained a clause authorizing congress "to borrow money and emit bills on the credit of the United States," and that the words "and emit bills" were stricken out. From an examination of the very meager sketch of the debate on the motion to strike it out, it is evident that members did not agree concerning the effect of such action. Some regarded it as amounting to prohibition; some as leaving the power by implication, unless directly prohibited. It is evident that some desired to leave it out, so that it might not be suggested to congress as a power to be exercised on ordinary occasions. Out of the many members of the convention, very few are recorded as having hinted at their views. Such action, if made public, would throw no light whatever upon the real design of the convention. But courts are not at liberty to draw light from the secret debates of any legislative assembly. The intention of the convention, if it could be got at, is not so important as that of the people, who ratified the constitution. They acted upon the written instrument, in the light of passing events, and their intention must be derived from a fair interpretation of its contents. We have no evidence that the giving or withholding the power to issue bills of credit formed any part of the questions publicly discussed before the people. The "Federalist" is silent upon the subject, while it speaks very plainly of the propriety of forbidding the emission of bills, or the interference with currency, by the separate states. There is no reason to believe that the matter was called to the public attention. The constitution was...