Southern Central Railroad v. Town of Moravia

By the Oourt, Johnson, J. The action was brought by the plaintiff to recover a balance alleged to be due on the subscription of the defendant, in its corporate capacity, to the stock of the plaintiff, under chapter 433 of the laws of 1866'. The defendant subscribed for 840 shares of such stock, of $100 per share, to be paid, as the justice before whom the cause was tried finds, “ in such installments and at such times as the plaintiff’s board of directors might lawfully direct.” The plaintiff’s board of directors made eight several calls for distinct and separate portions of the said* subscription, which calls, in the aggregate, amounted to the exact sum of $84,000. The several amounts called for were all paid by the defendant, but not at the time designated for payment in the respective calls. ■ ‘ The sole question presented by the case is, whether the action can be maintained to recover interest on the several amounts called for, while they severally remained unpaid, after the time specified for payment by the call. The judge, who tried the cause without a jury,' has found, as a fact, that the whole principal of the subscription has [188] been paid. That this finding is entirely correct appears from the several receipts given by the plaintiff’s treasurer, for the* moneys received by him from the defendant. The last three receipts specify, that the amounts received were upon “ the eighth and final call,” and the full amount of that call is paid. It appears from the receipts, that the third, fourth and sixth calls were paid at one time, and in one payment, and in each of those cases the receipt is in terms, “ being in payment of ten per cent on his subscription. This being the third call,” &c. In regard to the other payments, the amount called for was paid at different times, aud in those cases the receipt is for each payment as made, and is properly expressed, “ in part payment.” Indeed, the whole case shows very clearly, that calls were made for the payment of the principal of the subscription,, and nothing else, and that such principal was fully paid and receipted. Hothing was said about interest, and no claim made for it, until several months after the whole principal had been paid. This being the case, it is well settled, upon abundant authority, that an action for mere interest cannot be maintained. There is no agreement to pay interest, by the terms of the subscription, at any time, nothing became due upon the subscription until a call was' duly made, and then, such amount only as was specified in the call. And if any interest accrued, it was only upon the amount called for, and after default in making payment at the day specified therefor. In all such cases, interest, when allowable, is allowed, not as part of the contract, but as an incident, and by way of damages for the default, to make the creditor good for the loss he has sustained by reason of the breach, or default. In that class of cases it" has always been held, that after the principal of the debt had been paid, and received in full, no action could be maintained to recover interest. The reason is, that interest in such [189] [Fourth Department, Generar Term, at Syracuse, November 13, 1871. eases being a mere incident, cannot exist without the debt, and the debt being extinguished, the interest must necessarily be extinguished also. This rule has been too long and too well settled to be now overthrown, or disturbed. (Consequa v. Fanning, 3 John. Ch. 587. Tillotson v. Preston, 3 John. 229. Johnston v. Brannan, 5 id. 268. Stevens v. Barringer, 13 Wend. 639. Gillespie v. Mayor of New York, 3 Edw. 512. Jacot v. Emmett, 11 Paige, 142.) A distinction has been made between such cases, and those where interest was made payable by the terms of the contract. In the latter case the interest is as much a part of the contract as the principal. It is not a mere incident which may be awarded by way of damages, but a substantive part of the contract, which may be enforced after the debt has been otherwise paid. (Fake v. Eddy, 15 Wend. 76.) If the account is composed of principal and interest, and the payments are received upon account merely, the part remaining unpaid upon the whole account will be regarded as principal, and an action will lie to recover it. (People v. New York, 5 Cowen, 331.) That is not this case. The only amount, or balance, claimed to be due from the defendant by the plaintiff’s treasurer July 6th, 1869, was $9500, and this amount was paid and receipted August 7th, 1869. Hothing was heard, or suggested, about interest until three months had elapsed after the last payment. Then an account for interest was made up on the several amounts paid, for the term the defendant had* been in default in making payment after the day named in the call for payment. This was evidently an after thought suggested by the necessities of the plaintiff, for additional means, in the prosecution of its enterprise. The judgment is right, and must be affirmed. Mullin, P. J., and Johnson and Talcott. Justices.]