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Comrs. (1846) 8 Blackf. 158; Grimes on the annual interest accruing on a v. Blake (1861) 16 Ind. 160.

bond was denied in Sparks v. GarrigMaine.-Doe v. Warren (1830) 7 Me. ues (1806) 1 Binn. (Pa.) 152. Com48; Bannister v. Roberts (1852) 35 Me. pare with Pennsylvania cases, III. 75; Kittredge v. McLaughlin (1854) infra, dealing with annual payments 38 Me. 513; Stone v. Locke (1859) 46 other than interest. That interest upMe. 445.

on interest cannot be compelled is it is impossible to reconcile the de- stated in Leighton v. Leighton Lea cision in Farwell v. Sturdivant (1853) Asso. (1910) 122 N. Y. Supp. 139. 37 Me. 308,' with the foregoing deci- Similarly, annual payments in the sions in that state. Upon a bill in nature of interest have been held not equity to redeem mortgage real es- to bear interest. Thus, annual sums tate, it appeared that the mortgage to be paid by the obligors in a bond, note provided that the interest should which are in the nature of interest be payable semiannually. The master upon the principal sum secured by computed the interest by compounding the bond, were held in Henderson v. it every six months, and this calcula- Hamilton (1828) 1 Hall (N. Y.) 314, tion was sustained.

not to bear interest. The annual inMichigan.—Van Husan v. Kanouse terest due upon a sum set apart for (1865) 13 Mich. 303. See infra, V., an heir out of funds of the estate, for statutory provisions in this state. which was not paid because of failure

Minnesota. - Dyar v. Slingerland to provide a fund which would pro(1877) 24 Minn. 267.

duce the interest, was held in Gray v. Missouri.-Stoner v. Evans (1866) Baie (1848) 8 B. Mon. (Ky.) 573, not 38 Mo. 461.

to bear interest. The general quesNew Jersey. Force v. Elizabeth tion of interest on annuities, however, (1877) 28 N. J. Eq. 403, reversed on is not within the scope of this annotaother grounds in (1878) 29 N. J. Eq. tion. 587; West End Trust Co. v. Wetherill The court in Turrentine v. Perkins (1910) 77 N. J. Eq. 590, 78 Atl. 756. (1871) 46 Ala. 631, recognizes the gen

New York. Townsend v. Corning eral rule that interest falling due an(1847) 1 Barb. 627.

nually upon a debt does not bear inWashington. Cullen v. Whitham terest, but it is held in that case that, (1903) 33 Wash, 366, 74 Pac. 581. where a third of the purchase price

West Virginia.-Genin v. Ingersoll of land for which the purchaser gave (1877) 11 W. Va. 549.

his note was to be payable on the See Massachusetts cases, infra, IV. termination of the life or widowhood

In addition to the foregoing cases, of one who had dower in the land, and there are others which lend support interest upon it was to be paid anto the rule denying the right to inter- nually to the widow's use, the widow est upon unpaid instalments of inter- was entitled to interest on the inest. The right to interest upon unpaid stalments as they became due. A instalments of interest, in the absence similar decision appears in Ware v. of contract therefor, is denied in Bog- Owens (1868) 42 Ala. 212, 34 Am. Dec. gess v. Goff (1899) 47 W. Va. 139, 34 642, where, in an action involving the S. E. 741. It was held in Sherman v. right of a widow to dower in lands Philadelphia & R. R. Co. (1883) 13 W. which her husband had alienated durN. C. (Pa.) 238, an action in debt for ing coverture, the court gave her the semiannual instalments of interest income on one third of the value of due upon a registered bond, that in- the land at the time of alienation, and terest could not be recovered on the held that interest on each year's inunpaid instalments.

Periodic pay

terest from the end of such year to ments of interest called for in a deed the term of court at which a report of land do not bear interest after de- was required to be made should be fault in payment. Waldron v. Pidgeon allowed. A sum of money due anCoal Co. (1907) 61 W. Va. 280, 56 S. nually, under an agreement by the E. 492. The right to charge interest heirs of an estate with the widow to

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pay her an amount equal to interest usurious, is held, also, in Telford v. paid by certain bonds belonging to Gerrels (1890) 132 Ill. 550, 24 N. E. 573. the estate, was held not to be interest But see also Bowman v. Neely (1890) within this rule, and therefore each 137 Ill. 443, 27 N. E. 758, where it is payment bore interest from the day held beyond the power of the parties it became due. Garnsey v. Garnsey to a contract to stipulate in advance (1917) 116 Me. 295, 101 Atl. 447. for the payment of interest upon in

That interest on overdue instal- terest; an exception to this rule is ments is not allowable according to made in respect of interest-bearing the Maine rule is recognized in Stick- coupons, attachment bonds, or other ney v. Jordan (1870) 58 Me. 106, 4 securities, for the payment of money. Am. Rep. 251, but in that case, in- That interest which, according to the volving a New Hampshire contract, terms of the obligation, was to be paid the interest was allowed in accord annually, could not be compounded in with the rule in New Hampshire. The a judgment recovered on the obligarule of the Maine cases that there tion, is held in Ade v. Ade (1913) 181 can be no recovery of interest on in- III. App. 577. terest where the maker of the note That an agreement that interest does not expressly promise to pay it shall be payable annually does not auis recognized in Bradley v. Merrill thorize the compounding of interest (1898) 91 Me. 340, 40 Atl. 132, but it is recognized in Finger v. McCaughey is there held that where the promise (1896) 114 Cal. 64, 45 Pac. 1004, where to pay compound interest is expressed, a provision in a note that, if the it may be enforced just the same as interest was not paid at the end of one any other contract. It is stated in year from date, it should become a Banks v. McClellan (1866) 24 Md. 62, part of the principal and bear 12 per 87 Am. Dec. 594, that money due for cent interest per annum, was held to interest may, by agreement, be

apply only to the first year's interest; changed into principal to bear inter

the court stating that in a note the est in future, but not otherwise. right to compound interest must find

In Gilmore v. Bissell (1888) 124 Ill. support in the terms employed by the 488, 16 N. E. 925, where the payee of parties; otherwise it cannot be ala note which provided for the pay- lowed. ment of interest annually, upon taking A vendee who has made default in a renewal thereof, included interest payments due under his contract, and upon the interest instalments which who after such default asked specific had not been paid, it was held that the performance on making the payments, transaction did not amount to usury. was held in Morris v. Hoyt (1862) 11 The court uses language which does Mich. 9, liable for interest upon the innot entirely coincide with the previous stalments of interest. The court states Illinois cases, as follows: "The mort- that it is not necessary to express an gagors had agreed to pay the interest opinion whether interest upon instalon the mortgage debt annually, and it ments of interest could have been rewas their duty to observe that agree- covered by the vendor in a suit for ment, but they had failed to pay as damages, or on a bill for specific perthe interest each year became due. formance; but that in the action at When the time, however, came to re- bar, as the vendee asked equity, it new the debt, the mortgagors had the must do equity, and put the vendor in right, if they saw proper, to redeem the same position as if the payments their agreement, and pay interest on had been made when agreed. the interest, and their agreement to A number of cases contain general pay that interest was not illegal, nor expressions against the allowance of did it render the transaction

interest on interest. Some of these rious." That the payment of interest cases speak of it as compound interon overdue instalments of interest, est, but it is not clear but that they which, according to the terms of the had reference to the allowance of incontract, was payable annually, is not terest on interest, rather than strictly


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compound interest. It is stated in maturity has by all courts, whether Toll v. Hiller (1844) 11 Paige (N. Y.) exercising equity or common-law ju228, that for special reasons courts risdiction, been held to be compound will not allow interest upon interest interest and in violation of law. This unless there is a special agreement to question is one that has been frequentpay interest thereon after the origi- ly presented, and, it is believed, as uninal interest has become due and pay- formly held to be unauthorized. We able. A similar statement appears in are not aware of any well-considered State v. Jackson (1814) 1 Johns. Ch. case which has held that there is an (N. Y.) 13, 7 Am. Dec. 471, and in Van implied legal or moral obligation to Benchooten v. Lawson (1822) 6 Johns. pay interest upon unpaid interest, Ch. (N. Y.) 613, 10 Am. Dec. 333. after its maturity.” In the absence of evidence of an ex- In Cullen v. Whitham (1903) 33 press promise to pay compound inter- Wash. 366, 74 Pac. 581, the court says: est, there can be no recovery of such "To create an obligation to pay cominterest. Reusens v. Arkenburgh pound interest, there must be an (1909) 135 App. Div. 75, 119 N. Y. agreement to pay interest upon interSupp. 821. The statement contained est; otherwise there is no legal obligain Young v. Hill (1876) 67 N. Y. 162, tion on the part of the borrower to do 23 Am. Rep. 99, that compound in- so; it is not enough that the note proterest can only be recovered upon vides for the annual payment of insome new and independent agreement terest. To agree to pay interest anmade upon a good consideration, is ap- nually does not make the accumulated proved in Spain v. Talcott (1915) 165 interest a separate debt in the sense App: Div. 815, 152 N. Y. Supp. 611, that it will draw interest, per force of and in Re Ellis (1917) 176 App. Div. the statute, without any further prom425, 163 N. Y. Supp. 27. The right to ise to pay interest thereon; on the concharge compound interest was denied trary, there must be a direct promise in Stokely v. Thompson (1859) 34 Pa. to do so before such an obligation 210. It is stated in Wilson v. Davis arises. The note in question contains (1870) 1 Mont. 183, that interest upon no promise or agreement to pay ininterest was not allowed at common terest upon overdue interest. It was, law, although awarded by a special therefore, a simple interest-bearing contract to that effect. No exhaustive obligation, and the interest should list of cases containing such general have been calculated at the rate of expressions is attempted in this an- 10 per centum from date until the ennotation.

try of Judgment.” The note in quesIt is not clear in some cases how tion provided for the payment of inthe computation of interest on inter- terest at 10 per cent per annum, payest which was rejected was made. able' annually, as indicated in the That is true of Doe v. Warren (1830) above quotation. 7 Me. 48. The court speaks of it as

III. Rule that interest is recoverable. compound interest, and holds it not allowable. Apparently the interest

According to other cases, instalwhich was rejected in Kittredge v.

ments of interest falling due at stated McLaughlin (1854) 38 Me. 513, and

intervals, according to the terms of Stone v. Locke (1859) 46 Me. 445, was

a note, bear interest upon failure to a compounding at the intervals

make payment as stipulated. stipulated for in the contract. Ap

United States.- Northwestern Mut. parently the interest which was de

L. Ins. Co. v. Perrill (1879) Fed. Cas. nied in Van Husan v. Kanouse (1865)

No. 10,339 (Ohio contract); Wilson v. 13 Mich. 303, was compound interest.

Neal (1885) 23 Fed. 129 (Ohio con

tract). b. Theory.

Georgia.-Tillman v. Morton (1880) According to the court in Leonard 65 Ga. 386; Butler v. First Nat. Bank v. Villars (1860) 23 Ill. 377: "To com- (1913) 13 Ga. App. 35, 78 S. E. 772. pute interest upon interest after its Iowa. Mann v. Cross (1859) 9

Iowa, 327; Preston v. Walker (1868) come an interest-bearing fund, in 26 Iowa, 205, 96 Am. Dec. 140; Bur- Farmers Bank & T. Co. v. Fudge rows v. Stryker (1877) 47 Iowa, 477; (1919) 113 S. C. 25, 100 S. E. 628, and White v. Savery (1879) 50 Iowa, 515; Berry v. Caldwell (1922) S. C. Hamilton County v. Chase (1915) 114 S. E. 405. Iowa, — 152 N. W. 580.

Various situations have been inKentucky. - Talliaferro v. King volved in the foregoing cases.

In (1840) 9 Dana, 331, 35 Am. Dec. 140; Watkinson v. Root (1831) 4 Ohio, 374, Hall v. Scott (1890) 90 Ky, 340, 13 S. an action to recover arrearages of inW. 249; Burke v. Trabue (1910) 137 terest which had accrued under a conKy. 580, 126 S. W. 125; Graves v. Wal- tract providing for the payment of ler (1882) 4 Ky. L. Rep. 452; Shanks annual interest, it was held that inv. Stephens (1883) 4 Ky. L. Rep. 838; terest was allowable upon the succesMacgruder v. De Haven (1899) 21 Ky. sive annual charges of interest after L. Rep. 580, 52 S. W. 795; Mastin v. they fell due. The annual interest inCochran (1903) 25 Ky. L. Rep. 712, stalments called for on a bond which 76 S. W. 343.

provided for the payment of a prinLouisiana.--Mudd v. Stille (1833) cipal sum in three equal annual in6 La. 17.

stalments, “with interest on the whole Maine.-Stickney v. Jordan (1870) principal sum to be paid annually at 58 Me. 106, 4 Am. Rep. 251 (construing the end of each year,” were held to a New Hampshire contract. For bear interest, in Gibbes v. Chisolm (S. Maine rule, see supra).

C.) supra. In Anketel v. Converse · New Hampshire. - Peirce v. Rowe (1866) 17 Ohio St. 11, 91 Am. Dec. 115, (1818) 1 N. H. 179; Little v. Riley where a question arose as to the legal (1861) 43 N. H. 109; Townsend v. Ri- method of computing interest where ley (1865) 46 N. H. 300.

it was payable annually and where North Carolina.-Bledsoe v. Nixon partial payments had been made, the (1873) 69 N. C. 89, 12 Am. Rep. 642. court states that in such cases the in

Ohio.-Watkinson v. Root (1831) 4 terest on the principal bears simple Ohio, 373; Anketel v. Converse (1866) interest from the time it falls due till 17 Ohio St. 11, 91 Am. Dec. 115; Cook it is paid, and when payments are v. Courtright (1883) 40 Ohio St. 248, made they apply, first, in payment of 48 Am. Rep. 681; Dunlap v. Wiseman the interest due on interest; secondly, (1858) 2 Disney, 398.

in payment of the interest due on the Rhode Island. Wheaton v. Pike principal; and thirdly, in payment of (1868) 9 R. I. 132, 98 Am. Dec. 377, 11 the principal; but in no case can any Am. Rep. 227.

part of the interest upon interest be South Carolina.-Gibbes v. Chisolm made to bear interest. In Mann v. (1819) 11 S.C. L. (2 Nott & M'C.) 38, Cross (1859) 9 Iowa, 327, the interest 10 Am. Dec. 560; O'Neall v. Sims on the annual instalments of interest (1846) 32 S. C. L. (1 Strobh.) 115; De was computed at the legal rate preBruhl v. Neuffer (1846) 32 S. C. L. vailing, in the absence of a written (1 Strobh.) 426.

agreement, although the note bore a Texas.--Lewis v. Paschal (1872) 37 higher rate. In Graves v. Waller Тех. 315.

(1882) 4 Ky. L. Rep. 452, where the Utah. Jensen Lichtenstein note bore interest at 10 per cent, pay(1915) 45 Utah, 320, 145 Pac. 1036. able annually, the interest on the ac

Vermont.-Catlin v. Lyman (1844) cumulated instalments of interest was 16 Vt. 44.

computed at 6 per cent. See Farwell v. Sturdivant (1853) 37 In addition to the foregoing cases, Me. 308, supra.

there are others which lend some supThe aggregate of principal and in- port to the view that interest on unterest which was due on a mortgage paid instalments is collectable. The debt when the creditor declared the court in Kennon v. Dickins (1800) 1 whole debt due on a default in the N. C. pt. 2, 435 (Conference, 357), 2 payment of interest was held to be- Am. Dec. 642, says that as a general



rule interest upon interest is not al- reasonably be supposed to have inlowable, but that when the sum is as- tended the annual payment as a parcertained and the annual payment of tial support for the person to whom it forms a part of the contract, where they were to be made, and for this it is so specific that an action of debt purpose his desire was that it should might be sustained and interest re- be punctually paid to her; that the covered by way of damages for the annual payments were not to be looked detention, and particularly where the upon as interest on money that was payment of the principal sum is post- due or owing to her, but as themselves poned to a very distant period upon principal. Compare with Sparks v. the faith of the regular and punctual Garrigues (1806) 1 Binn. (Pa.) 152, discharge of the interest, it ought, in supra, II. a. In Bowles v. Drayton justice, to be allowed. In such a case (1796) 1 S. C. Eq. (1 Desauss.) 489, the principle upon which the interest 1 Am. Dec. 689, interest was allowed is generally allowed is that it sup- on annual arrears of interest on plies the place of prompt payment and legacy provided for in a will. indemnifies the creditor for his for- In Preston v. Walker (1868) 26 Iowa, bearance. It was held in Robertson 205, 96 Am. Dec. 140, where a note v. Parrish (1897) Tex. Civ. App. provided that the interest was to be

39 S. W. 646, that a provision in a paid annually, the court said: It note for semiannual instalments of in- seems to us that, as defendant was terest is authority for compounding under a legal obligation to pay interthe interest.

est at the end of the (each) year, it There seems to have been no dispute was a sum of money then due, without in Woffold v. Wyly (1884) 72 Ga. 863, a contract fixing the rate of interest over the proposition that annual in- upon it, and for which he might have stalments of interest which, according been sued, and that he was therefore to the terms of the contract, were pay- bound to pay its legal value. Or, in able annually, bore interest at the the language of the statute, it is ‘monlegal rate. The contract in that case ey due by express contract,' or ‘money provided for interest at 10 per cent, due,' and as such the promisee is enand it was held simply that the 10 per titled to his interest from the time it cent rate did not apply to the annual is so due.” instalments of interest. Interest was The court in Talliaferro V. King computed in Cramer v. Lepper (1875) (1840) 9 Dana (Ky.) 331, 35 Am. Dec. 26 Ohio St. 59, 20 Am. Rep. 756, upon 140, said: “The interest, by the terms unpaid instalments of interest, but no of the covenant, is made payable at question seems to have arisen in that the end of each year, and is as much case as to the rights of it, the ques- then demandable as if a specific sum tion there being as to the rate.

equal to the amount of interest had The annual payments due under a been promised, and, in default of paybond for securing a sum of money to ment, as much entitles the plaintiff to a widow in lieu of dower were held in demand interest upon the amount so Stewart v. Martin (1834) 2 Watts due and unpaid. The fact that the (Pa.) 200, to bear interest, if not paid amount so promised to be paid is dewhen due. A similar decision appears scribed as interest accruing upon a in Knettle v. Crouse (1837) 6 Watts. larger sum which is made payable at (Pa.) 123. In Seitzinger's Estate a future day cannot the less entitle (1895) 170 Pa. 531, 32 Atl. 1101, the the plaintiff to demand interest upon allowance of interest upon instal- the amount, in default of payment, as ments of dower as they fell due was a just remuneration in damages for held proper. In Addams v. Hefferman the detention or nonpayment.” (1840) 9 Watts (Pa.) 529, the court The court in Wheaton v. Pike (1868) in holding that annual payments 9 R. I. 132, 98 Am. Dec. 377, 11 Am. charged upon land bore interest after Rep. 227, reviews at some length the default in making them, says that the cases on the question, and after stattestator, who made the charge, may ing that in Rhode Island there is no

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