CASES ARGUED AND DETERMINED IN THE SUPREME JUDICIAL COURT FOR THE COUNTIES OF SUFFOLK AND NANTUCKET, [CONTINUED FROM VOL. III.] PRESENT: HON. LEMUEL SHAW, CHIEF JUSTICE. HON. SAMUEL S. WILDE, HON. CHARLES A. DEWEY, JUSTICES. PRESIDENT, DIRECTORS, &c. OF THE ORIENTAL BANK vs THE TREMONT INSURANCE COMPANY. A contract, in a policy of insurance, to pay the loss on a certain day after proof there of, is not a contract to pay interest after that day if the loss be not then paid. Where underwriters do not contract to pay interest on a loss after the day on which, by their contract, the loss is payable, they are not chargeable with interest after that day, during the time a trustee process is pending against them, which is commenced by a creditor of the assured before that day, if they practise no delay, and are ready, at all times after the loss is payable, to pay it on being discharged from the trustee process; although they do not keep the amount of the loss constantly on deposit, but mingle it with their other funds, and use it in their business. Aliter, it seems, if they practise unreasonable delay in making their answers in the trustee process, for the purpose of obtaining a longer use of the money. ASSUMPSIT to recover a balance alleged by the plair.tiffs to be due on a policy of insurance. The case was submitted to the court on the following facts agreed: The defendants, by a policy dated August 16th 1838, caused Isaac Clapp, for whom it concerned, to be insured $2500, on a building in Boston, against loss by fire for one year. When the policy was made, the plaintiffs had the legal Oriental Bank v. Tremont Ins. Co title to said building, and the policy was in fact made to cover their interest; but this was not disclosed to the defendants, nor known by them, till they filed their answer in a trustee process, as hereinafter mentioned. On the 17th of December 1838, seid building was destroyed by fire, and the defendants had notice thereof and proof of loss, on the same day. Two days afterwards, the defendants were summoned as trustees of said Clapp, on account of their liability under said policy, in a suit by John Brown and others against Clapp, which suit was duly entered in court and prosecuted. The defendants having filed their answer, and disclosed therein a notice, given to them by the plaintiffs, of their claim as owners of the building insured, to the amount insured, and annexed to their answer the affidavit of said Clapp, in support of the plaintiffs' claim, the suit was dismissed, and the defendants were discharged therefrom, on the 15th of May 1840. By the terms of the policy, the loss was to be paid in sixty days after proof thereof. On the 18th of February 1839, when the sum insured by said policy became payable, the receiver of the Oriental Bank presented to the president of the Tremont Insurance Company the original policy, with the following order indorsed upon it, viz. "Boston, Dec. 20th, 1838. Please pay any loss, that has occurred or may hereafter occur under the within policy, to the President, Directors & Co. of the Oriental Bank. Isaac Clapp"- and demanded payment. The defendants declined payment, on the ground that they had been summoned as trustees of Clapp. After the trustee suit was discharged, the plaintiffs claimed of the defendants the sum insured and interest from the 18th of February 1839. The defendants refused to pay the interest claimed, because payment of the principal was prevented by the pendency of the trustee process, but were ready and willing to pay the principal; and on the 20th of May 1840, the defendants paid to the plaintiffs' attorneys the sum of $2500, neither party waiving any right in regard to the interest. From the time the loss was payable by the policy, to the time of the payment of the $2500, the defendants had, generally, in Oriental Bank v. Tremont Ins. Co. a bank, a sum of money on hand, much larger than $2500. At some times, however, the amount actually on hand was reduced below that sum; but by an arrangement with the bank, the defendants' check for that sum would at all times have been paid. And they were at any and all times ready to have paid that sum, when discharged from the trustee process. On the 26th of May 1840, the defendants tendered to the plaintiffs' attorneys $2.08, for interest from the 15th to the 20th of the same May. This tender was refused, and the defendants brought the money into court. W. I. Bowditch, for the plaintiffs. As the defendants agreed to pay the loss in 60 days after proof thereof, it was an agree ment to pay at a day certain; and the law, as a general rule, implies, from such an agreement, a contract to pay interest from and after that day- though interest is sometimes said to be allowed as damages for breach of the contract. Dodge v. Perkins, 9 Pick. 385, 386, 388. Robinson v. Bland, 2 Bur. 1086. Dennison v. Lee, 6 Gill & Johns. 383. 2 Phil. Ins. (2d ed.) 750, 751. If there had been no trustee process, the defendants would have been bound to pay interest, as part of their implied contract. They deny that they are so bound, in this case, because they have always been ready and willing to pay, and have been prevented by legal process. But they never set apart the money; on the contrary, they mingled it with their general funds at the bank, where their balance was sometimes less than the amount of the principal sum. And as they impliedly contracted to pay interest, and as the money was in constant use, they are chargeable with interest. Adams v. Cordis, 8 Pick. 267, 268. Templeman v. Fauntleroy, 3 Rand. 434. In the latter case, the court say, "the safe and sound doctrine is, that if the party, though restrained from paying, holds and uses the money, (and we must presume he uses, if he continues to hold it,) he ought to pay interest; because, if the debtor could, under the restraining process, hold the debt for years, without interest, it would offer a strong temptation to him to throw obstacles in the way of the decision of the questions raised " "' in that process. See also Hunter v Spotswood, 1 Wash. 145. Oriental Bank v. Tremont Ins. Co. Tazewell v. Barrett, 4 Hen. & Munf. 262, 263. If Fitzger ald v. Caldwell, 2 Dall. 215, & 1 Yeates, 274, conflicts with the above position, that case has been much shaken by Willings v. Consequa, Peters C. C. 321, where it was held that the defendant was not liable for interest, because, being liable to pay at any moment, it should be presumed that he had not used the money. Hence it would seem, that if it could have been shown that he had used the money, the decision would have been different. If the case at bar is to be governed by Adams v. Cordis, already cited, it cannot be affected by Prescott v. Parker, 4 Mass. 170; for the court, in delivering their opinion in the former case, distinguished it from the latter. On the same principle which prevailed in Adams v. Cordis, a trustee who mixes trust funds with his own, at his banker's, is held to have the use of the fund, and is chargeable therefor. Hilliard's case, 1 Ves. jr. 89. Rocke v. Hart, 11 Ves. 58. Sutton v. Sharp, 1 Russell, 146. Dunscomb v. Dunscomb, 1 Johns. Ch. 508. Clarkson v. De Peyster, 1 Hopk. 424. Garniss v. Gardiner, 1 Edw. Ch. 128. Boynton v. Dyer, 18 Pick. 6. Paley on Agency, Pt. I. c. 1, § 9. And the fact, that the trustee is advised that he cannot safely pay over the money, without a decree of a court of equity, will make no dif ference in such case. 1 Russell & 1 Johns. Ch. ubi sup Franklin v. Frith, 3 Bro. C. C. 433. Fletcher, for the defendants. Interest, as such, is recoverable only on the ground of contract. But the defendants have made no contract to pay interest in this case. They contracted to pay at a certain time, and if, by their own default, they had failed to pay at that time, they would have been liable to pay, as damages for non-payment, a sum equal to the legal rate of interest. But damages, by way of interest, or interest, by way of damages, can never be recovered, unless the party is in fault. Here the defendants were in no fault. The money was impounded by legal process. Prescott v. Parker, 4 Mass. 170, proceeded on these principles. And the only true ground on which interest was allowed in Adams v. Cordis, 8 Pick. 260, was. that the defendant had agreed to pay interest. The cas Oriental Bank v. Tremont Ins. Co. of Fitzgerald v. Caldwell, 2 Dall. 215, & 1 Yeates, 274, is dear for the defendants. So are Knight v. Reese, 2 Dall. 182. Sickman v. Lapsley, 13 S. &. R. 224. Child v. Devereux, 1 Murph. 398. Du Belloix v. Lord Waterpark, 1 Dowl. & Ryl. 16. Willings v. Consequa, Peters C. C. 303. They all proceeded on the ground that interest is not to be charged, where there is neither an agreement to pay it, nor default in not paying the principal. And though there be an agreement to pay interest, yet if war exists between the nations of the creditor and debtor, interest cannot be recovered after peace is restored; because the debtor could not lawfully pay either principal or interest during the war. Hoare v. Allen, 2 Dall. 102. Foxcraft v. Nagle, 2 Dall. 132. Conn v. Penn, Peters C. C. 524. Bordley v. Eden, 3 Har. & McHen. 167. Where a party is in no fault for not paying, he is never charged with interest because he uses the money. There is no case at law, in which a party has been so charged, unless by the use of the money he had violated his own duty or another's rights. Not only is there no such case, but Haven v. Foster 9 Pick. 112, decided the contrary. The case of Dodge v. Perkins, 9 Pick. 384, went on the ground of an unjust detention of the money; otherwise, it is contrary to Haven v. Foster. The cases in chancery, where interest is charged on trustees, &c. who mingle their own funds with those of their cestuis que trust, all go on the ground of misconduct in the trustee, either by omission or commission. B. R. Curtis replied. HUBBARD, J. The only question for the consideration of the court is, whether the defendants are bound to pay interest on the amount of the loss on the policy underwritten by them, from the time the same was payable by the terms of the policy. to wit, the 18th of February 1839, to the 15th day of May 1840, when they were discharged from the trustee process which had been pending against them, from the 19th of December 1838, to that time. The plaintiffs assume several positions, upon which they rely to charge the defendants with mterest; and among others, that this was a contract to pay |