William Brewster, Appellant v. William Wakefield

Citation63 U.S. 118,22 How. 118,16 L.Ed. 301
PartiesWILLIAM BREWSTER, APPELLANT, v. WILLIAM WAKEFIELD
Decision Date01 December 1859
CourtUnited States Supreme Court

THIS was an appeal from the Supreme Court of the Territory of Minnesota.

The facts of the case are fully stated in the opinion of the court.

It was argued for the appellant by Mr. Stevens, upon a brief filed by Mr. Brisbin and himself, and for the appellee by Mr. Bradley.

Mr. Stevens made the following points:

1. It is submitted that the court below erred in allowing to the plaintiff interest at the rate specified in the notes, after their maturity. That the legal and correct mode of estimating the amount due the plaintiff was to estimate the interest at the rates specified in the notes, respectively, up to the time of their maturity, (July 14th, 1855,) and from that time to the date of the decree at the rate of seven per cent. per annum.

Our statutes (vide Rev. Stat. of Minnesota, p. 155, chap. 35) fix the legal rate of interest at seven per cent. per annum, in all cases where no other rate is agreed upon by the parties, in writing.

The appellant agreed in writing to pay a certain sum, at a certain time, with interest thereon at a certain rate (or a certain other sum at interest) at the same time. His contract to pay interest did not extend beyond the time at which he agreed to pay it; the plaintiff, therefore, although entitled to interest upon his demand until the same is satisfied, is not so entitled by virtue of the defendant's contract to pay it, but by virtue of the law which allows interest upon all liquidated demands from the time they become due until they are paid.

Suppose the defendant, Brewster, had, at the maturity of the notes, paid the amount of interest then due, and taken the receipt of the plaintiff in full of such interest, would not his contract to pay interest have been thereby fully performed and discharged, and could the plaintiff have recovered interest thereafter upon the principal remaining unpaid at any greater rate than that fixed by law, upon all liquidated demands where the rate is not agreed upon by the parties?- The rate of interest specified in the notes, it is submitted, is qualified and limited by the time therein specified for its payment, and there being no express agreement to pay interest after the maturity of the notes, it can be recovered from that time only as damages for the non-payment of principal when due. This is the true and only construction of the notes in this case; they contain upon their face no agreement, except to pay a certain sum with certain interest at a certain time. If the parties intended, that in default of payment of the notes at maturity, the same rate of interest should continue until paid, they should have expressed that intention by the use of appropriate words, such as 'and at the rate till paid;' or if the notes as drawn do not express the actual agreement which was made between the parties at the time the notes were given, the plaintiff should apply to a court of equity to reform them, and make them correspond with such agreement.

Bander v. Bander, 7 Barb. S. C. Rep., 560, and cases there cited.

2. Authorities directly in point upon the question raised in this case are not numerous.

In Macomber v. Dunham, (8 Wend., 550,) it was held that a loan company, which was authorized by its charter to charge interest for a full month where the loan was for a period over fifteen days and less than one month, was not entitled, where a loan made for twenty days remained unpaid, to demand interest at the same rate for any subsequent time. The loan had remained unpaid for several months after it was due, and it was contended, on the part of the company, that an implied agreement was to be presumed that the interest was to be charged according to the terms upon which the loan was originally made, but the court say (page 553:) 'The true and only rational interpretation of this transaction is, that the loan which was made in December, in pursuance of the charter, not being renewed when it became due, the interest upon the debt then due, like the interest upon every other debt which has fallen due, is to be regulated by the general law of the State on that subject,' that is, seven per cent. per annum. This case establishes the principle, that where the rate of interest reserved by the contract is higher than the rate fixed by the statute, such higher rate continues only until the debt becomes due by the terms of the contract, and that after that the interest is recoverable only at the statute rate. This is precisely the principle contended for by the appellant.

In U. S. Bank v. Chapin, (9 Wend., 471,) it is held that a bank, which by law is limited to six per cent. interest upon all discounts, is entitled to recover at the rate of seven per cent. from the time the debt becomes due; that the clause in the charter limiting the rate of interest to six per cent. referred only to discounts in the ordinary course of business, and that the contract with the bank having been broken, the defendant was liable to pay the rate of interest fixed by the lex loci from the time the debt became due. In this case, the same principle was applied. By it, the lower rate (six per cent.) fixed by the law of the contract was increased to the statute rate, (seven per cent.,) after the debt became due. It operates both ways, simply because it is a principle.

The case of Ludwick v. Huntsinger, (5 Watts and Serg., 51, 60,) it seems to us, is directly in point. In that case it was held that 'a note payable at a future day with three per cent. interest from the date, carries that interest till the day of payment, and after that, carries lawful interest.'

This case is cited in a note to Chitty on Bills, (11 Am., from 9th Lond. ed.,) 682, marginal paging.

There are several cases in the Reports of the State of Alabama.

The first is the case of Clay v. Drake, (Minor, 164,) in which it is held, that where the rate of interest is not expressed in a contract, only the statute rate can be recovered in an action on such contract.

Another is the case of Henry v. Thompson, (Minor, 209,) and is as follows: 'In Alabama, a contract to pay interest at a rate exceeding eight per cent. per annum (the statute rate) must be in writing, signed by the party to be charged, and express that it is for the loan of money, &c. and such interest is recoverable only for the stipulated time of forbearance.'

See, also, Kitchen v. Branch Bank of Mobile, 14 Alabama- It is submitted that, upon principles of justice and of public policy, such extravagant and ruinous rates of interest as those specified in the notes in question should not be encouraged, but that on the contrary they should be discountenanced by the courts. Such contracts ought to receive a strict, rigid, and literal construction. If 'so nominated in the bond,' give 'the pound of flesh,' but 'no jot of blood.'

'The policy of all usury laws in modern times is to protect necessity against avarice, and to fix such a rate of interest as will enable industry to employ with advantage a borrowed capital, and thereby to promote labor and national wealth.' Per Ch. J. Best, in the House of Lords, (3 Bing., 193;) and his Lordship might have added, with equal truth, that the policy of these laws is to check the spirit of wild and extravagant speculations.

Mr. Bradley. Two preliminary questions arise on the face of this record:

1. Can the case be brought to this court by appeal?

2. Can Brewster alone take the appeal, and without making the other defendants parties?

As to the first: The case is somewhat anomalous. The proceeding certainly is not in a court of equity, or of admiralty and maritime jurisdiction, but a court of law created by statute which has abolished the distinction of law and equity. It is a final judgment in a civil action other than in a case of equity, or of admiralty and maritime jurisdiction, and as such is by statute the subject of a writ of error.

Act 24 Sept., 1789, sec. 22, 1 Stat., 83.

3 March, 1803, sec. 2, 2 Stat., 244.

Courts of equity are distinct in their forms and modes of proceeding, as well as their jurisdiction, from courts of common law, and they are peculiarly placed under the direct control of this court; with this limitation, they are understood to be governed by the principal usages and rules of the English courts of chancery at the time of the Revolution.

See 1 Stat., 276.

4 Stat., 278.

5 Stat., 499.

Vattier v. Hinde, 7 Pet., 274.

Their jurisdiction, rules of decision, and remedies, are the same in all the States.

Boyle v. Zacharie, 6 Pet., 658.

Neves v. Scott, 13 How., 268.

From any other court except a court of equity or admiralty jurisdiction, a case can be brought to this court by writ of error only.

The San Pedro, 2 Wheat., 132.

McCollum v. Eager, 2 How., 61.

Parish v. Ellis, 16 Pet., 451.

As to the second question: It is a case in which there are several defendants claiming in the same right immediately or derivatively, against whom the same joint decree has passed, finally settling their rights, and the appeal is prayed by one only.

An appeal will not lie in such a case by one only.

Owings and others v. Kincannon, 7 Peters, 399.

Todd and others v. Daniel, 16 Peters, 521.

It is submitted the case ought to be dismissed.

If the case is properly before this court, the points following will be relied on by the defendant in error upon its merits:

I. The rate of interest having been agreed on by the parties, and reduced to writing, the contract is authorized by the statute.

Rev. Stat. Min., p. 155, ch. 35.

II. The contract being in writing, it is the province of the court to interpret and carry it into effect according to the intention of the parties.

Story on Con., p. 556, sec. 633, 634.

7 Barb. S. C., 560.

Chitty on Con., 74, (7 Am. ed.)

III. If the terms are ambiguous, or the intention is doubtful, they are to be taken most strongly against the promissor.

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