Ross v. Russell

The mode of computing interest upon promissory notes seems to have been perfectly settled by the usages of business and by judicial decisions, in many jurisdictions, and we are not aware of any deflections from the rule countenanced by any extended usage, or by any respectable authorities. The rule is the same which has been adopted by the auditor in this case. The authorities cited in the plaintiffs’ argument are uniform in support of it, and the unvarying practice of this court is likewise believed to have been in harmony with it.

We do not understand the argument of the defendants as drawing the rule into question, but as insisting upon a distinction between the present contract and a promissory note, as well upon the ground of the- nature of the contract itself, as for the reason that the frequency with which the payments were made render the application of such a rule *391unreasonably onerous to the party, and, therefore, not within the general maxim of allowing such interest as shall be just and reasonable. In other words, they claim to have the money due on the contract, and the several payments from time to time made in discharge of it, treated like items of mutual account, in which the relation of debtor and creditor is not recognized between the parties, except upon final settlement, or upon the recurrence of such periodical rests as are allowed by courts sometimes, when the justice of the case seems to require it.

If this were the correct view of the case, the question for the court would be as to what interest ought to be allowed, and what rests established for computing it. Such a case was that of Hollister v. Barclay, 11 N. H. Rep. 511, cited by the defendants.

But such is not the present case. It was from the beginning a debt for goods sold to the defendants, and by the admissions of the party drawing interest; and the sums of money from time to time received by the plaintiffs of the defendants were not in the nature of items of mutual account, but as the auditor finds and clearly appears, payments made 'towards the extinguishment of the debt, and applicable as payments ordinarily are or should by law be, towards interest or principal, according to the direction that the law gives to such payments, in the silence of the parties with respect to them.

We find no ground upon which we can exempt this contract to pay money with interest, from the general rule shown to govern promissory notes in the particulars in controversy. The principal sum was payable on demand, and the interest, of course, also. The plaintiffs had a right to insist upon the payment of interest as often as interest accrued, and could have encountered any attempt of the defendants to apply a payment towards the principal, by a demand of fresh payment on account of interest. The legal presumption, then, was, that the payment was made first in *392reduction of the claim, which did not carry interest, that is, of the interest itself.

This rule, as we understand it, was held applicable to judgments in the case of Hodgdon v. Hodgdon, 2 N. H. Rep. 169, and must be taken and adjudged to be the general rule applicable to contracts, unless general provisions are made by the parties. The allowance made by the auditor, as in this particular, was, therefore correctly made, and the motion to recommit, for the cause stated must, in consequence, be denied.

Judgment on the report.