Fake v. Addy's

The following opinion was delivered in this court: By the Chancellor. Two instalments of the principal upon this bond had become due at the time of the commencement of this suit, and if any iñ'terest was payable upon the principal of the second and third instalments, before they became due, the plea in bar is bad; and unless such a construction is given to the condition of the ’bond as to entitle the obligee to annual interest upon the whole debt remaining unpaid, from time to time, at least from the first of May, 1830, the whole of that part of the condition which relates to the payment of the yearly interest is perfectly senseless. There must, therefore, have been some interest due, at least upon the second and third instalments of principal, when this suit was commenced; and the counsel for the plaintiff in error are wrong in supposing that the rule of law that an action cannot be sustained for the interest oí a demand after the principal has been paid, is applicable to this case. The cases of Tillottson v. Preston, 3 Johns. R. 229, Johnson v. Brannan, 5 Idem, 268, and The People v. The Corporation of New-York, 5 Cowen's R. 331, were all cases in which there was no contract for the payment of interest, and it could only be recovered as damages for the non-payment of the principal debt when it became due. In such cases, if the party to whom the money is payable accepts the amount agreed to be paid, in full satisfaction of the principal debt, without requiring the debtor to pay interest from the time the debt became payable, he cannot afterwards maintain an action for the mere incidental damages which'he has sustained by rearon of the debt not being paid upon the very day when it became due. But where there is an express agreement to pay the interest as well as the principal of the plaintiff’s demand, I apprehend that the performance of one part of the agreement would be no bar to an action for the non-performance of another part thereof. It is a case of very frequent occurrence, that the interest is made payable before the principal becomes due ; and no one ever doubted that [50] in such a .ease an action could be maintained for tbe non-payment of the interest merely.(*) And where either the principal or the interest, expressly agreed to be paid by the condition of a money bond, remains due, the penalty of the bond is forfeited; so that the obligee may obtain a judgment thereon, for the whole amount, under which judgment he may levy whatever interest is equitably due. The dictum of the court in Williams v. Houghtailing, 3 Cowen’s R. 87, was probably misapplied to the circumstances of that ease, as there was an express agreement to pay the interest as well as the principal of each payment. The decision of the case was right, although this part of the reasoning upon which that decision was founded, was wrong. Tracy v. Wikoff, 1 Dallas’ R. 124. This construction of the condition of the bond would be sufficient for the decision of this case ; for if any interest was due at the time of the commencement of the suit, the demurrer to the plea was well taken, and the judgment of the supreme court must be affirmed. Itmay, however save expense to these parties, and prevent the necessity of . future litigation, if this court should express an opinion upon the question which was fully considered in the supreme court; whether, upon the legal construction of this bond, the interest was to commence at an earlier period than that fixed upon by the parties, for the payment of the first instalment of the principal. There is evidently a mistake in putting that part of the condition which relates to the payment of interest, in the disjunctive; so as to render the bond void, if the principal, or the interest thereof, or any part thereof, was paid.' It unquestionably should be read thus : “ The condition of the above obligation is such, that if the above bounden John S. Fake, his heirs, &e., shall and do well and truly pay, Ac., the just and full sum of $3,191, in the following manner, namely: $1,000 on the 1st of May, 1830, $1,000 on the 1st of May, 1832, and $1,191 on the 1st of May, 1834, and the interest thereof, and every part thereof, to be paid yearly and every year, on the 1st of May in each year, after the same commences, without fraud or other delay, then the above obligation to be void ; otherwise tc remain in full force and virtue.” If the words after the same commences refer to year, the last antecedent, the construction of the condition of the bond must be that the interest on the $3,191 is to be paid yearly, and every year, from the date of the bond ; and that the time of the payment of such yearly interest is to be on the first day of May in each year, after the year commences for which such annual interest is to be paid. In other words, that the interest for the first year from the date of the bond is to be paid on the first of May, 1828, and for the second year on the first of May, 1829, &c.; thus making the annual interest payable partly in advance, or before the expiration of the year for which it is payable. If that construction of the bond would not make it usurious, still it is such an unusual mode of payment of annual interest on a bond payable by instalments,' that I cannot believe this was the intention of the parties. The words after the same commences must, therefore, have been intended to refer to the interest, and not to the year. If so, it is evident that there has been a mistake in the drawing of the bond, and that the parties had fixed upon some time from which the interest on the $3,191 was to commence; which time, through inadvertence, has not been specified in the condition of the bond. We must, therefore, reject these words as senseless, in the connection in which they now stand; in which case the bond will draw interest from its date, payable on the 1st of May in each year : or we must endeavor to ascertain from the bond itself, what time was probably contemplated by the parties as that from .which the interest was to commence. The first alternative cannot be resorted to, unless the last should be found to be im [51] practicable ; as the court must give effect to every clause of a written instrument, if it can be done consistently with the intention of the parties, so far as that intention can be ascertained. I agree with the chief justice, who delivered the opinion of the supreme court, that the parties to this bond must have contemplated the payment of annual interest on the whole $3,191, which interest was to be paid on the 1st of May: and of course such interestmust commence before the time appointed for the paymentof any part of the principal sum. It must, therefore have been intended to commence either on the 1st of May, 1828, or the 1st of May, 1829 ; and if we cannot ascertain which was intended, we should adopt the former, rather than to reject both. The effect of such rejection would be to render the words “ after the same commences ” inoperative and senseless, and thus to compel the defendant to pay interest from the date of the bond. I think, therefore, that the court below was right in the conclusion that the defendant was liable for interest, on the money secured by the bond, from the 1st of May, 1828. If this construction does not correspond with the actual agreement of the parties which was made, or was intended to be carried into effect, at the time the bond was given, the remedy of the party who was injured by the omission to. state the time from which the inte■rest was to commence, was by an application to the court of chancery to reform the condition of the bond ; so as to make it correspond with the agreement which was really made in relation to the interest. Upon the question being put, Shall this judgment ¡be reversed ? twenty-six members of the court (twenty-seven being the whole number present) roted in the negative, and only one member voted in the affirmative. Whereupon the judgment of the supreme court was affirmed. Footnotes [*] (*) See Wafkins v. Morgan, 6 Car. fy Payne’s B. 661, where the plaintiff was permitted to recover in debt for interest which was expressly agreed to be paid, but not for that which was merely damages for the detention of the debt.