Le Branthwait v. Halsey

The Chief Justice delivered the opinion of the court. The defendant on the 7th October, 1819, gave his bond to the plaintiffs, conditioned for the payment of a sum of money. The plaintiffs assigned this bond, on the 18th of August, 1820, to Edward Webb, by an assignment made-on the bond and on the face of it absolute and unconditional. After the assignment, and while the bond wras held by Webb, the defendant made to him and to his agent,, sundry payments, and to a considerable amount. The7 plaintiffs afterwards filed a bill in the Court of Chancery, charging that the assignment to Webb was made in trust for themselves, and as a greater convenience for receiving the money, as Webb was coming on from Baltimore, where both lie and they resided, to this state, and that they were of opinion from his course of conduct he intended to collect tlio money on his own account'and defraud them of their rights. An injunction was issued restraining Webb from receiving, and the defendant in this cause from paying any moro money to Webb until the further order of that court. The injunction was served on the defendant on the 11th of September, 1821, and remained in force until the 10th of February, 1824, when the plaintiff settled with Webb, the bond was returned to them, their bill dismissed, and notice given to the defendant. The single question upon the state of the case, which was submitted to us, without argument, at the last term, is whether the defendant is legally chargeable with interest during the pendency of the injunction. By the act of the plaintiffs, done for their own benefit, the defendant was restrained, and legally prohibited from paying either principal or interest during the period in question. To the plaintiffs he could not pay, because they had voluntarily and unconditionally, as appeared by their own act, parted with the bond by the ^assignment to [*6 Webb. To him the defendant could not pay because forbidden by the authority of the Chancellor. No collusion with Webb, nor any desire or affectation of delay is charged against the defendant; and on the termination, it appears the bond was obtained by the plaintiffs, not by a decree of the Chancellor, but by an arrangement with Webb. During the pendency of the injunction the retention of the money by the defendant was not voluntary but compulsory. Whether it was convenient to hold it or more convenient to pay it, was not left to his discretion or choice. But to subserve the purposes of the plaintiffs he [8] was required and compelled to keep it. It may be said the defendant might have paid the money into court. Without, however, stopping to enquire whether the Chancellor would allow a payment into court, in a case where the assignor asked from the assignee only to return the bond, and account for what he had actually received, and sought for neither relief nor decree against the obligor, and only introduced him into the bill for the sake of the injunction, it can afford no foundation to support the charge of interest that the defendant might have adopted a measure, which, while it would have unequivocally precluded the plaintiffs from obtaining any interest, would at the same time have subjected them to the costs incident to the payment into court and to the commission or percentage of the clerk. Ho interest ought, in our opinion, to be charged. The loss and injury sustained by the plaintiffs are the consequence of their own imprudent act, in placing their confidence in Webb, an unworthy trustee. I have searched the chancery books, both English and-' American, with some care ; and somewhat to my surprise, I have not found a decision in point upon the present question. Principle, however, and cases bearing strong analogy, are not wanting. In the case of Conn v. Penn, 1 Peters 524, Judge Washington laid down the general rule on the accrual of interest to be as follows : Whenever the law prohibits the payment of the principal, interest during the existence of the prohibition is not demandable. ITe applied it to the case of a debt due from an American debtor to a British creditor during the .revolutionary war, and he further remarked, that a prohibition of all intercourse with an enemy during the war, and the legal consequence resulting therefrom, as *7] it respects *debtors on either side, furnish a sound, if not in all instances a just reason for the abatement of inter [9] •est until the return of peace. A similar rule was laid down, and a similar application of it made by the Supreme Court of Pennsylvania, iii the case of Hoare v. Allen, 2 Dall. 102. The legislature of our state prohibited the recovery of interest on certain debts during a portion of the revolutionary period. The prohibition and the reason of it, will be found in the eighth section of the act of 8th December, 1784, Fait. 59, by which it was enacted, “ That in all debts contracted before or during the late war, no interest shall be allowed on the demands of any creditors from the 4th of July, 1776, to the 3d of December, 1783, by whose conduct the non-payment of such demands has been occasioned, whether the same was owing to their removing or remaining within the lines of the enemy, or places in their possession, or to any other act of such creditors, by which their debtors were prevented from discharging their obligations.” In McCall v. Turner, 1 Call 115, the Court of Appeals of Virginia held, that where a creditor by his own act put it ■out of the power of the debtor to make payment, interest was not recoverable. Turner, the defendant, in January, 1774, had made a bond, conditioned for the payment of a sum of money in October of that year, which bond had been assigned to McCall, the plaintiff. In 1793, the plaintiff brought suit on tho bond. On the trial the defendant proved that the plaintiff went out of Virginia into foreign parts beyond seas, and was absent until some time in 1783, .and had not during that period any known agent or attorney in the commonwealth who could receive payment of the debt and give a legal discharge. During that period the interest was disallowed. On appeal the disallowance was unanimously approved by the Court of Appeals. One of the judges said, the plaintiff by absenting himself from the country put it out of the debtor’s power to make payment, and therefore it was unreasonable that he should demand interest during that period. Another judge said “As to [10] the justice of the case, I do not think that its being a-British debt or not makes any difference; the same rule would apply in a case between two citizens.” In all these cases, it will be observed, the money remained' in the hands of the debtor — he used, or might have used it. The trite adage that money is worth its interest, which is-*8] sometimes true *and at other times not, depending always on circumstances, did not fix the charge. The principle of these cases is, that when payment is prevented by the interposition of the law, or the act of the creditor, interest is not recoverable. In the case of Fitsgerald v. Caldwell, 2 Dall. 215, 1 Yeates 274, the Supreme Court of Pennsylvania decided' that a garnishee is not liable for interest while he is restrained from the payment of the debt, by the legal operation of a foreign attachment. The same principle was decided in Willings and Francis v. Consequa, by the-Circuit Court of the United States for the district of Pennsylvania, 1 Peters 321, and by the Supreme Court of Massachusetts, in Prescott v. Parker, 4 Mass. Pep. 170. Interest is not recoverable..